future.

«STEP ONE. What do you
want out of life and your money?

If you live totally for today and
plan to let the future take care of
itself, then spend away and forget
registered retirement savings plans.

Or if you are a successful in-
vestor — building your own
business or a real estate empire,
for example —- RRSPs might only
slow you dewn.

deduct your contribution (within
limits) from your income. That
saves you tax.

(b) The money in your RRSP
can grow tax free.

(c) You must de-register your
RRSP by the end of the year in
which you turn 71, although you
may take out your money sooner.
As you get back your funds — in a
lump sum or spread over many

BUSINESS

Strategy: the last-chance pension
break. Ottawa has said 1989 will
be the last tax year in which you
may contribute to your own RRSP
up to the total amount of all your
pensions. You might choose this
“rollover’’ but leave out $6,000

EXPECT
. EXCELLENCE
eS

29 - Wednesday, January 17, 199} - North Shore News

for a spousal rollover. (You might
also want to leave out another
$1,000 to benefit from the pension
income credit.)

© STEP FOUR. Shop and com-
pare before you buy; review what

11%4%

TERM DEPOSITS

Take RRSP business one step at a time

TAKE THIS RRSP business one step at a time. That’s the
key to a smaller tax bill now and a larger nest egg in the

you have.

Decide what's right for you
(term deposits, mutual funds,
stocks, etc.), then find the place(s)
offering a competitive return, low
or at least reasonable costs, com-
fortable risk and good service.

11%

years — you must add that money
to your income the year you
receive it.

Ideally, you will be in a high tax
bracket when you put money into
an RRSP and in a lower tax
bracket when you get back the
money. That way, the tax you pay
will be less than the tax you saved.
Also, the money will have grown
tax free in the meantime.

NOTE: Contribution limits for
both 1989 and 1990 are unchang-
ed: still 20 per cent of your earned
income — maximum $7,500 if you
do not belong to a pension plan;
$3,500 if you do, minus any money
you put into the pension plan.

STEP THREE. Choose the
RRSP strategies best suited to your
situation. Talk to the RRSP ex-
perts, those who specialize in
retirement income planning. Do
this now, well before the March 1
deadline for contributing for the
1989 tax vear.

Strategy: the spousal payoff. If
you have a spouse likely to be ina
lower tax bracket than you when
you draw out the RRSP money,
contribute to a spousal plan.

You get the (high) tax break
now, your spouse pays (low) tax
later. You contribute according to
your limits, whether or not your
spouse contributes to his or her
plan.

If you have pension income,
check into the special $6,000
spousal rollover. Also check the
three-year rule, so you don’t in-
advertentiy end up paying tax
when your spouse takes out the
money.

dollars
and sense
Michael Grenby

SE

Perhaps you want to pay off ex-
pensive debts, or save toward a
first or better home. If you are in
the lowest tax bracket, an RRSP
probably can’t help much; howev-
er, if you are in a higher bracket,
an RRSP strategy might be prof-
itable.

e STEP TWO. Understand how
an RRSP works.

An RRSP is an ordinary invest-
ment with extraordinary tax
features.

(a) When you put money into a
savings account, term deposit,
Canada Savings Bond, mutual
fund, stock and other qualifying
investment — and register that in-
vestment as an RRSP — you may

JANUARY 22 - 25, 1990
Capilano College
12:30 p.m, N.E. Cafeteria

Monday to Wednesday - Chinese Films
Thursday - Students In China: A Panel

7:30 - 9:30 p.m.
South Campus A117

Monday - Behind The Gate Of Heavenly Peace
(Tiananmen Square): Understanding China Today.

China’s Modernization: Oo Canadian’s Have A Rote?

Hong Kong mmigration: How Coes It Attect Us And Our Community?
A Community Celebration: Music And Entertainment

Cafeteria, South Campus

Tuesday -
Wednesday -
Thursday -

For More Intormation:, Advising Centre 984-4990

CHINA

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