~ Page 22, March 11, 1979 . Suadey News TAX TALK | ‘onversations about renting a house | Mr. and Mrs. Taxpayer owned an old house which they had rented for the last few years. They hadn't made any profit on it and were sur- ‘when their chartered . accouritant told them they should have been filing a statement of income for the house in their income tax return. They should have been using Schedule 7, which comes with the tax return. 7 Recently, they talked their financial: affairs over with ‘the chartered accountant and the conversation went | like this: Mr. ‘Taxpayer: We're not making any money renting that place. Chartered Accountant: It may be you're not makitig a profit but the Income Tax Act requires you to report all your income and ex- penses from any source. Besides, we've been talking about how to save you some $1,500 in repair expenses to | replace all the carpets and fix a lot of other things. We also ‘spent about $500 on painting. Oh, and we paid $300 a month on the mor- tgage. Chartered Accountant: Yes, but remember it’s only — ‘the interest portion of your mortgage payment that's . deductible. The principal is a capital payment and is increasing ‘your equity. How “income tax. You may have a loss from renting this house. Mr. Taxpayer: What good would it do us to have a loss? Chartered Accountant: Well, if your rental expenses exceed your rental income, before claiming capital cost allowance, you can offset your rental loss against income from other sources.., Mr. Taxpayer: Do you mean that, if we have a loss from renting, it would be deducted from our em-. ‘ployment income? Chartered Accountant: Yes. The loss would be deductible in arriving at income for tax purposes. However, you can only claim enough capital cost allowance to reduce your rental income to nil. Mrs. Taxpayer: But what is capital cost allowance and how do we get a loss if we can only reduce our income to zero? Chartered Accountant: Capital cost allowance is the Income Tax Act equivalent of an allowance for depreciation. To find out how the system works, lIet’s consider this house of yours. First, what was your rental income last year and what were your expenses? Mr. Taxpayer: Well, we rented the place for $400 a month. We have about THE UNIVERSITY OF BRITISH COLUMBIA about insurance and _ property taxes? Mrs. Taxpayer: Oh yes. Our insurance was $250 and our property taxes were $750. I've got a bank statement here that shows our mortgage interest was $3,250. Most of our payments went to interest. Chartered Accountant: Okay, let’s just ad all those up. Rental $400x12 $4,800 income . Repairs "1,500 Maintenance 500 Insurance 250 a Property Taxes 750 Mortgage 7 Interest 3,250 Total Expenses 6,250 Loss $ 1,450 Mr. Taxpayer: Now, what about this capital cost allowance? Chartered Accountant: Well, in this case you couldn't claim capital cost allowance because there's no profit after claiming other expenses. However, you should report your capital costs for future claim purposes on Schedule 8, provided with your tax return. Capital cost allowance is based on an allocation of your cost between land, building and appliances and other fur- nishings. CONTINUED ON PAGE 23 MT by, 3 Fis FOREST WORKERS WHO work in this type of area regularly could be pacesetters fn upcoming wage hikes. Woodworkers to Major labor-management contract negotiations are expected to be one of the most vital influences on the economy this year and the biggest pacesetter of all is likely to be the International Woodworkers of America’s eventual settlement with the B.C. forest industry. Contracts for some 38,000 IWA members expire in June and August. DEPARTMENT OF METALLURGICAL ENGINEERING REQUIRES A TECHNICAL RESEARCH ASSISTANT (GROUP Ill) The person will assist in the design, construction and operation of a 100 kw electron-beam melting installation used on a research program con- cerning zirconium alloy melting. Applicants must have knowledge of vacuum system operation and intermediate/high voltage electrical techniques. A background in metal metting processes, a familiarity with vacuum sytem construction techniques and a knowledge of simple electron optics is preferred. Salary for the position is $1,376 OO per month. Please apply in writing only to Employment Administrator Employee Relations Department University of British Columbia 2075 Wesbrook Mall Vancouver,B.C. V6T 1W5 The University of British ba offers equal employment op portunities to quaified male and femate appbcants Did you know it takes about $181,000.00 to provide a monthly income of $1,000 for 20 years. Occidental Life has a low premium Adjustable Term Plan that is renewable to age 80 - with an option to have decreasing term to age 100. Thats right - to age 100! We have a term plan that doesn’t stop In 20 years or at age 65 and the monthly premium is very low. A Term Insurance Plan you can't outlive! $10,000.00 or $1,000,000.00 ican get you the best rates! Annultive or Regtetered Retiremens Sone Pane, Please call me - today ‘ Cdlike to be your agent - for ite, | | have over 20 years of business and Lite Insurance experiance: MARVIN P. HUNTER District Agent Term insurance Specialist Occidental Life . A Transamerica Company Bus. 736-2621 Res. 988-9884 Below the border in the U.S. woodworkers recently ‘won a three-year contract with increases of $3.80 per hour by 1980 — equivalent to 38 per cent. The B.C. union is reported to be looking for a_ set- dement not too different from that of their American counterparts. Their hopes may not be unrealistic, because industry profits ere at a high level — up 117 per cent over the same time last year — and B.C. forest industry com- panics are presently operating to capacity. The effect of such a scttUlement on negotiations in other key industries is not difficult to forecast. Meanwhile, wage sct- Udements for government employces are now lagging well behind those of the private sector after a Unrec- year period (1974-77) when set wage hike pace? . the public sector was well in the lead. ~ During the last quarter of 1978 unions in private in- dustry achieved average annual increases of 8.5 per cent, while government unions managed to obtain an average of only seven per cent. In the government area the 1979 pacesetter is ex- pected to the Public Service Alliance of Canada which is currently bargaining on behalf of 20,000 mem- bers. Governments generally had earlier set targets of four to six per cent for their employees this year, but there are signs that they may be casing up on that figure, while still striving to hold increases below the current level of inflation. The 12-month inflation rate in Jahuary stood, nationally, at 8.9 per cent, up from 8.4 per cent in the January 1977-78 period. Vancouver residents, however, came off more lightly -- with a 7.7 rise in the Consumer Price Index for the year, 1.2 per cent below the national average. Main contributors to the cost-of-living rise in Van- couver were restaurant meals, fresh vegetables. bread and dairy products and increased houschold operation charges.