Business _

27 - Sunday, March 16, 1986 - ‘vurth Shore News

Revenue Canada changes the rules

OVER THE past year, a
number of Revenue
Cauada’s rules have been
changed slightly.

But those little rule changes can
add up to a lot of dollars at in-
come tax time.

Here are just a few of the
“technical amendments”’ that have
been made since last May:

*The way in which certain inter-

est income is reported at tax time

has been altered.

This change affects those who
decide to declare interest from, for
example, a Canada Savings Bond,
by the ‘‘annual accrual method.”

If you report interest on a bond
in a lump sum, either when it
becomes payable or when you ac-
tually receive it, your interest in-

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est income deduction.

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report interest as it is earned each
year (even though it has not yet
been paid).

To make the switch, all you need
to do is make an “election”
(enclose a letter with your tax
return) to report interest by this
method.

In the past, if you made this
election, you would simply start by
declaring the interest accrued in
that particular tax year. Any
unreported interest accrued by the
bond prior to that tax year was
declared upon maturity of the
bond.

DECLARE ALL INTEREST

But now you must declare all in-
terest accrued by that bond up to
and including the tax year in which
you make the election, after first
subtracting any interest you have
already reported.

Any subsequent interest is then
declared annually, as it is accrued.

*Revenue Canada has given
taxpayers more time in which to
settle an estate.

Upon the death of an individual,
it is possible to “roll over’’ certain
assets to a spouse, child, or trust
for a spouse, without a capital gain
resulting.

If a capital gain did result, the
spouse or child could have to pay
tax on their inheritance.

PERIOD EXTENDED

In the past, the transfer of assets
had to take place within 15 months
of the death. This time period has
now been extended to 36 months.
In some cases, where a lawyer has
written to Revenue Canada within
this 36-month period to ask for
more time, an extention might be
granted,

Ses Charitable
Page 30

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