=i 54 - Wednesday, February 16, 1994 - North Shore News ASK ANYONE who works for a living to describe the ideal job and they'll most likely tell you it is one where you get paid for doing some- thing you really enjoy. By Anne Starret Contributing Writer There may very well be such jobs out there — but they're few and far between . And not everyone is lucky enough to have one. Rather, many people today may - have jobs that they simply don’t enjoy, to say the least. Too many jobs may be dull with no challenge, and therefore personally unreward- ing. So those holding down such jobs are missing out on that scarce commodity known as job satisfac- tion. And this could be one.reason why a.great_many Canadians are turning to hobbies for the enjoy- ment and satisfaction their jobs don’t provide. Nearly every hobby costs some ‘ax plan ar § A. ‘good news-bad news situa- tion forthe hundreds .of thousands of Canadian “snowbirds” who migrate south to the sun-each win- , ten: : a ‘By lan-Rieh! Contributing Writer _ As a result of Ontario's recently tightened health-care rules, coupled with soaring medical ‘costs’ in the U.S; out. of country: travel health insurance costs have'also sky-rock- eted. That’.s the bad news. ~~ ‘The good news is that Canadian tax law.allows taxpayers {including - snowbirds) to claim certain credits against their income, tax’ for medical ‘expenses, Fortunately, health insur- “ance premiums qualify as allowable _ expenses. This means that about 27% of all 5, such expenses over. and above 3% of net income could be claimed as a reduction in taxes owing. - Supposing your net income for the'year is $30,000..You would then be cligible for medical expen- ses in. excess of 3906 (3% of $30, 000) . ; In this’ case. if your medical expenses in the U.S. amounted to- $400, and your travel health insur- ance premiums were $1,500 (by no means unusual) for a total of $1,900, then you could claim a 10 ne Oe «A TE AVIS M. LAPHAM R.F.P..CLU,CH.F.C. Chartered Financial Consultant } I'm pleased to announce the opening of my new office at #300-1497 Marine Dr. West Vancouver, B.C., V7T 1B8 925-1009 A warm welcome to all my clients and friends! amount of money. And depending on which one you take up, it can cost a lot — or comparatively little. Just how much is all up to you. Take photography as an cxam- ple. If you go overboard with expen- sive cameras and equipment, it could cost you several thousand dollars, Quite apart from what you spend on supplies, there inay be courses you want to take, material you have to buy or the hidden costs of upgrading regutarly. All of this costs money. Any moncy you spend on a hobby for your own enjoyment, of course, is a net expense to you. There's no tax break, of course, untess you turn your hobby into a source of income. In this case you'd really be cre- ating a small business. Now you not only have additional revenue coming in — you’re doing some- thing you really enjoy. Once you start to gencrate credit of 27% x, ($1,900-$900) $270. Not a huge amount — but it helps. : For many retired Canadians who spend, or plan to spend, a signifi- cant amount of time in the U.S. — or may actually own a second home there — these costs could pose a real problem. There are rules under the U.S. Internal Revenue Code which can result in a Canadian being deemed to be a U.S. “tax resident” at the same time he or she is also a Canadian tax resident. In this case “tax resident” has nothing whatsoever to do with citi- zenship, so Canadian citizenship is never in jeopardy. But it’s a tricky situation. So much se that many snowbirds seek professional advice on how to avoid the U.S. residency rules, and have taken corrective steps to avoid income from your hobby, any money you spend on it becomes a business expense and therefore is tax deductible. However, it is not all that sim- ple. First of all, your hobby must have the potential to become prof- itable. Even it your hobby turns out to be reasonibly profitable, the amount of deductions you can take must have a relationship to the amount of revenue you're earning. For example, youl have a much tougher time justifying many expenses on $100 a year versus $1,000 a year income. Doing something that you enjoy is a’great stress-reliever; that is. unless your hobby-business grows: to the point where you can’t keep up with demand for your product or service, But that’s another kind of stress you might be happy to cope with. Anne Srarret is a chartered accountant with Starret Starret & MacDonald, for U.S. residency being U.S. tax residents. However, serious consideration should be given to giving up one’s Canadian tax residency and becom- ing a U.S, tax resident. There are certain advantages to such a move, Currently U.S. taxes are substantially lower than Canadian rates, particularly in states such as Florida which don’t levy personal income. taxes. (In some cases overall U.S. tax rates are one- half of Canadian.) ; It may be possible to completely eliminate tax altogether on certain types of investment income. U.S. tax laws also permit certain deduc- tions (like home mortgage interest) in computing taxable income: that are just not available in Canada, which would also further reduce the effective rate of tax. ; lan Riehl is a chartered accoun- tant and a managing partner of Riehl & Associates. - The Working Opportunity Fund is a tox ossisted pr pro- gram. For every dollar you invest in the Working Opportunity Fund, you receive a 20¢ Provinciah Tax Crecit and a 20¢ Federal Tax Credit. If you conirisule your Working Cipnortuniiy Fund shares fo an RRSP your fotal immediate tax savings could be approximately 80¢ on every dollar invested.’ WORKING Ovrorrunity For details call: 668-1668 Jim Dartnell, CIM, Manager-Research or Augusto Yep FCS. GEORGIA PACIFIC SECURITIES CORPORATION ‘Based on a subscription of $5,000 by a qualifying B.C. resident with an onnlral.fnxchle income of opproximately $35,000. The equivalent total tax savings per dollar i : approximately 67¢ for a taxable income of $25,000 and approximotely 85 ¢ income of $60,000. This advertisement is not a solicitation or an offer to sell securities of Working’ (EVCC) Ltd. The offer is made solely by a prospectus which contoins full detail presenis ... INVESTING TODAY FOR TOMORROW “Examining Your Investment Options in These Turbulent Markets” Featured guest speaker: Mr. Barry LaValley Vice President AGF Management Ltd. “Mr. LaValley is a noted writer and speaker on financial planning in Canada.” PLACE: Lonsdale Quay Hotel North Vancouver, B.C. DATE: Thursday, February 17, 1994 TIME: 7:00-9:00 PM The seminar Is free, but seating is limited. Please call Riz Alikhan at 668-6819 to make your reservations. Refreshments will be served. 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