18 - Sunday, January 21, 1990 - North Shore News

BUSINESS

NORTH
SHOR E
CREDIT
UNION

$2

“I’m here to remind you, at North Shore Credit Union we pay our
members to use our ATMs.”

“Come to our newly renovated Dollarton Branch, now with an ATM
and Night Deposit, and start calculating your savings,’

O40 ~~, | Visit one of our convenient
\) > ATM Locations:

Y
Lonsdale Branch
em ‘ oy \ $100 Lonsdale Ave.

—. North Van. Ph. 986-4321
<2

Lynn Valley Branch
1247 Ross Rd.

~ ~
st N \ North Van. Ph. 980-6556
x < Village Branch
x NS XQ) 3131 Edgemont Blvd.
; N\ North Van. Ph. 985-8221

S > e SS Marine Drive Branch
WWM SS 1080 Marine Dr.
SSS North Van. Ph. 986-1116
; Park Royal Branch

South Mall
West Van. Ph. 926-8571

Dollarton Branch
399 Dallarron Hwy.
North Van. Ph. 929-8111
Whistler Branch
4321 Village Gate Blvd.
Whistler Ph. 932-5314
Davie Branch
1195 Davie St.
Vancouver Ph. 688-0436

Alberai Branch
101-1166 Alberni Se.
Vancouver Ph. 685-9302

North Burnaby Branch
6626 E. Hastings Sz.
Vancouver Ph. 299-1404

INCOME SPLITTING

Save taxes for
family business

DO YOUR spouse and/or children
help you in your business? And are
they in a lower tax bracket than
you?

You can make everybody hap-
pier if you pay them a fair wage
for their time and effort — and
take advantage of one of the few
income-splitting (and tax-lowering)
approaches left.

Several local certified general
accountants recently drew up a list
of ways to shift income to family
members in a lower tax bracket.

“There’s no doubt that paying a
salary to your spouse and/or
children is one of the most effec-
tive ways to save tax if you have
your own business,’ said one of
the CGAs.

‘*What’s more, by paying such a
salary, the family member may
then be eligible for Canada Pen-
sion Plan benefits and also able to
make contributions to an RRSP.
In addition, this enables those
family members in the lower tax
brackets to make other investments
~~ and so pay Iess tax than the in-
dividual in the higher tax bracket
would have.”’

Here’s an example.

Let’s say you have a business,
whether it’s a sole proprietorship,
a partnership or an incorporated
company.

You might earn $48,000, which
puts you into the second highest
tax bracket. So you pay tax of
about 40 per cent on every dollar
of taxable income above $28,000.

Your spouse has a part-time job
and earns about $8,000 a year.
You are able to pay your spouse
$20,000 a year of your income to
work in your business, to do more
of the day-to-day work to free you
up to drum up more business for
the future.

Now, your income has dropped
to $28,000 and your spouse's in-
come has risen to $28,000.

You would have paid $8,000 in

tax on that $20,000 which you are
now splitting with your spouse,
who pays only about $5,000 tax.
That’s a $3,000 annual saving year
after year.
” If you had no spouse or couldn’t
pay him or her, perhaps you could
pay your five children $2,000 each.
The children would probably pay
no tax at all and you’d probably
still be able to claim them as
dependents.

So you would save $4,000 a year
in tax by splitting that $10,000 in-
come among the children.

“To deduct such payments, you
must pay the salary for actual
work done, an employer-employee
relationship must exist and the sal-
ary must be reasonable,’’ said the
CGA.

If one of the family members
died, you might be able, as
employer, to pay up to $10,000 in
a death benefit. And if wages were
owing to the individual at death,
possibly a second tax return could
be filed — and a second set of tax
credits claimed.

Contact references

From page 17

You could also ask why the ad-
viser feels qualified to provide the
advice and help you are after. Ask
about professional qualifications,
length of time in business, special
expertise and references.

“Ask how the individual gets
paid — whether there’s a fee or
whether the money comes from
commissions on products sold, or
perhaps it’s a combination of the
two,”’ the CGA said.

“Disclosure is very important,
especially when the adviser stands
to benefit financially from the ad-
vice given.

“Still, you do need both advice

Quid’ og
qosnsct™

OUR

wt Uag A

s 7
re-tire-ment:
The Act of Retiring.

The State of Living a Retired Life

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1205-675 WEST HASTINGS 8T., VANCOUVER, B.C. V6B 1N2

PHONE 688-9877
TOLL-FREE 1-800-663-0644

and help with implementation, so
make sure you get both, whether
it’s from one individual or several.
When fees are involved, ask for an
estimate of the total cost so there
won't be any unpleasant surprises.

“I’m always happy to provide
references, so you should ask for
the names of some other people
who have dealt with this individu-
al, or perhaps some written
testimonials. Then contact those
references.”’

Again, stressed the CGA, “The
personal chemistry must be right. -
The financial adviser must talk to
you in language you can under-
stand, and take an interest in you
as an individual.”*