Business

Save tax with a kids’ fund

25 - Wednesday, Febraary 20,

1985 - North Shore News

whont taxable income is being spent for

T>: YOU have a child or grandchild on
. RY bl rae 7 7 1 at + od 7%
education expenses, sports activities,

musical training, cle? Hf so, read on, A children’s
trust may be for you.

Here are recent: examples
of substantial tax savings:

A professional couple have
three children attending
private school. I is costing
$20,000 a year to keep them
there. Ina 50 per cent tax
bracket the parents had 10
warn $40,000 before taxes to
have $20,000 left to pay the
school fees. By using a

N. SHORE
CREDIT

“North Shore Community
Credit Union’s 1984 finan-
cial results will be one of the
best in British Columbra.’’

That's the word from Ron
Davies, general manager of
the NSCCU, who emphasiz-
ed that while some of the
credit unions competitors
will “‘be wading in red ink’’,
the North Shore credit union
achieved both a positive net
earnings and was able to in-
crease its reserves far in ex-
cess of the legal requirement.

The credit union’s assets
rose by eight per cent in 1984
to almost $160 million, dou-
ble the provincial economic
growth for the year.

During the year, 6,700

"mew member accounts were

See page 26

children’s trust, they are sav.
ing $20,000 a year.

A single parent with a
snodest income and some in-
vestment capital is spencing
$3,000 a year on her
daughter's high-level swimm-
ing activity. [na 25 per cent
(an bracket it was costing her
$4,000 a year before taxes.
She now has an extra $7,000
# year to spend on herself.

Here's how it was done:

In both the above cases
there was some taxable in-
vestment or interest: incoine
above the S1T,Q00 interes: ex-
emptian. The objective was
io create the necessary ine
come in the child's name and
not have it taxed to the
parent. This was achieved by
setting up a trust for the
child's benefit and then fen-

ding the necessary capital to
the trust.

There must be a legitimate
toan to the trust, rather than
a gift, to avoid income at-
tribution back to the donor.
The income is then
legitimately reported as the

BERT WICKHAM
child's and can be spent on
the child's behalf.

Almost $7,000 annual in-
come can be produced this

; Neighbourhood
- Legal Clinic oF

DONALD E. JABOUR

-. Called to the Bar 1959

Barristers & Solicitors —

© Wrongful: Dismissal. A
& Fi r

way with no tax payable by
the child. Up ta $2,450 can be
earned by the trust: without
loss of the “dependant
child’? deduction and finally,
vducation expenses can be
deducted by the child) for
CVG Breater HAN savings.
There 3 nothing under-
handed ar sneaky in these ar-
rangements. Revenue
Canada is fully aware of the
principles invoked and bas
even published booklets and
bulletins detailing what is ac-
ceptable and what is not.
Remember the laws vover-
ning trusts are extremely
complex and vow should not
under any circumstances at-
tempt to do this yourself,
Several investment dealers

and trust companies offer
Children’s ‘Trusts for very
nominal fees and you should
shop around carefully te find
the one that ts right for you
and your investment
philosophy.

Otherwise, if vou have suf-
ficient funds to invest, it
might be better to have your
own lawyer draw up a trust
itgreement that suits your
precise situation.

(Bert Wickham is one of
B.Cos Foremost authorities
on financial planniag for
retirement. This series of ar-
ticles is designed to help you
make the most of your in-
come iu retirement and keep
your taxes to the legal

Compare... then
choose the pick
of the crop.

RRSP

Loy. rate

10%

Guaranteed deposit :

2,3,4&5 yr.
Rates up to

minimum. However, as these
articles ure of a general
nature only, readers are ad-
vised to check carefully
before upplying them to their
personal situation.)

‘24 HOURS
TELEPHONE. -
ANSWERING SERVICE.
ONLY |.

$50 PER

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_.. CLASSIFIED -
“ANSWERING SERVI

- RRSP loans’

1154% 104%

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