48 - Wednesday, July 1, 1992 - North Shore News BUSINESS BRIEFS Finding a way to help college daughter THERE IS more than one tax-deductible way to help a child with schooling. And you can lend money to a relative — while doing some tax-sheltering at the same time. Into the reader mailbag we go... “Em a federal employee and also have a sideline consulting business. 1 have paid maintenance for my daughter which ends now She is 18. But my ex-wife wants me to continue the payments until my daughter's second post- graduate degree. “IT get along well with my daughter and would prefer no legal intervention about her col- lege plans. Is there another way to help her and still get a tax break? — B.H. Pay her to work in your con- sulting business at the same rate you'd pay an outsider — plus a bonus to reflect higher productivi- ty. As long as your business has ‘‘a reasonable expectation of profit’’ you could even incur a loss — and (assuming you are unincorporated) claim this against your employ- ment income. You deduct what you pay your daughter, which saves you tax; she will pay little or no tax on her in- come. And this asrangement is Michael Grenby DOLLARS AND SENSE completely flexible. “4 cashed a $19,000 RRIF. The bank withheld tax. But when I got my tax slip for the whole amount, I ended up doubly taxed —- on my principal as well as the interest. The bank person said, ‘I know it’s rotten, but that’s the way it jis.’ What do you say?”’ — R.H. Yes, you pay tax when you get back your RRIF (or RRSP) prin- cipal. But remember, you received a deduction for your original con- tribution. So there’s no double taxation. Ideally, you contribute in a higher tax bracket and withdraw the funds in a lower tax bracket. Taking out lump sums, however, can push you into a_ higher bracket. . “My brother and sister-in-law needed to borrow some money. Instead of lending them the cash, we. made their RRSP contribution so the tax savings equalled the money they needed. When they eventually cash the plan, they'll repay us the principal plus all the tax-sheltered growth. Is this a sound approach?’’ — M.K,. That’s certainly an criginal way to broaden the use of an RRSP. When your relatives withdraw your funds, they wil! pay tax. You will need to reimburse them for the amount above the original ‘loan/refund.’’ (As noted above, they should try to withdraw the money when they are in the lowest tax brackets.) And both parties must feel comfortable with the whole arrangement. ‘How does one arrange a will to protect. for example. a daugh- ter married to a man with two children of his awn, or a divorced alcoholic son with three children? ‘Uf the daughter dies before her husband, do all her possessions end up with him? And how do you protect the son who is unable to manage money?"’ — J.V. Your daughter’s will can specify that on death, some or all of her personal possessions and financial assets are left to other members of her family, rather than to her husband and his family. Money left to the alcoholic son could be put into a trust so the income would be paid out to him while the capital passed to his children on his death. Those are just two approacies; depending on the circumstances, a lawyer may weil suggest other ar- rangements. “Should we buy a second home as a revenue property? We are in our 30s, two children, no RRSPs, no savings, no debts other than cur $37,000 mortgage. I have $20,000 in a government pension plan which I can leave, cash or NEWS photo Paul McGrath JODY EVANS (left) ancl audience-member Shelagh Musgrave get some verbal encouragement from Dan Jackson as they slice through a log in team competition at The Log Show on Grouse Mountain which is running threugh the summer. NATURAL GAS MONTHLY INCOME FUND 15 Year minimum 25 Year proven potential, substantial Natural Gas reserves in BC. Minimum Projected Return: 16.7% after tex $5,000 per unit — minimum 5 units Major Bank financing available on approved credit For further information contact: - Coastline Gas Income Fund Ltd. Phone 685-6600 Fax: 685-6601 This advertisement does not constitute an offer to sell nor a solicitation to buy a security which can only be made by offering memorandum. ~ FREE BOOKLET One often hears Canadians com- plaining about the high amount of tax they pay. What many individuals [ do not realize is that simply by structuring their investments carefully, they can pay far Jess tax. This guide will provide you with ideas for saving tax through ‘your investment program. Call today to receive your com- plimentary booklet. Mark Osachoff 661-7433 ScotiaMcLeod Tested mestoent aduce sence 1931 transfer to an RRSP. I'm starting a part-time job and will take home $300 a month."’ —. D.W. Before you invest, try to build up more of a reserve, both inside and outside your RRSPs, and/or pay off your mortgage. tn your present position, you'd have to borrow the entire purchase price of revenue property, which means expenses would probably far ex- ceed rental income for quite a few years. And what happens if prop- erty prices fall, or interest rates rise? “1 want the most money when I convert my RRSPs to an RRIF. Do some companies pay more than others?" — O.P. Yes, so shop around. An extra $30 a month, for example, means an extra $7,200 over 20 years. Also, the most competitive RRIF company today might not be the best five years from now. Review your RRIF(s) at least an- nually, the same way you reguiar- fy reviewed your RRSP perfor- mance. Mike Grenby is a North Shore-based columnist and in- dependent financial adviser who works with individuals; he will answer your questions as space allows — write io him c/o The North Shore News, 1139 Lonsdale Ave., North Vancouver V7M 2H4, Program seeks volunteers to - share Canada THE IMMIGRANT Ser-. vices Society of B.C. (ISS) invites volunteer hosts to join the Host Program, a new project that helps new immigrants learn about Ca- nadian life. Volunteer hosts are recruited, trained and matched with im- migrants to lend support, to help with language barriers and to show newcomers about life in’ Canada. The program also offers a unique and exciting opportunity for resident Canadians to make new friends, learn about other - lands and different cultures. - Being a volunteer host does rot, involve a financial commitment and volunteer ‘hosts are not re- quired to provide accommodation. - Hosts are sirnply asked to spend two to four hours a week with their new friends for six months. To become part of a whole new world of friendship, contact the Host Program at 684-7499. INTERNATIONAL MANAGEMENT Asia Pacific Incernational (affiliated with East Asia Open Instisute) invites applica- tions from managers and executives for the fifth intake of our EXECUTIVE MBA program beyinning September (2, 1992 in a downtown Vancouver location. This unique two-year program offers: ® A New Zealund government-accredited degree © Outstanding intemationally-experienced Faculty ® Career enrichment, reasonable fees, tax-deductible ® No interference with full-time employment © Monthly weekend classes (Saturday and Sunday) Admission Requirements: © bachelor’s degree or equivalent or professional designation AND © at leust wwo years’ significant experience OPEN FORUM On Thursday July 9, from 6 to 8 p.m.. the program will be described and enquiries answered in the Garibaldi Room (3rd Floor) at the Four Seasons Hotel at 79{ West Georgia Street (enter at Howe St.), Vancouver. All interested are welcome to at- tend. Free admission. Tea and coffee served. Further information may be obrained from Asia Pacific International, 300-515 W. Pender Street, Vancouver, B.C. V6B 1V5. Vancovuer Area telephone: 688-3115, Orher B.C. areas (toll free), 1-800-661-8788.