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Section Two The Canadian Statesman, Bowmanville, Wednesday, December 21,1994 11 New Home Construction Drops During November Construction of new housing units dropped 2.9. per cent in November, reported Canada Mortgage and Housing Housing Corporation. Starts fell to a seasonally seasonally adjusted annual rate (SAAR)* of 145,300 units from a revised revised level of 149,600 units in Octo- ber. The decline in activity affected both single-detached and multiple units in urban centres. The number of new single-detached dwellings fell 3.3 per cent to 58,600 units (SAAR) while multiple starts declined 3.5 per cent to 62,700 units in November. "New construction rose in B.C. and the Atlantic region, but the increases increases were not sufficient to offset weak performance elsewhere," said Michel Laurence, Economist at CMHC's Market Analysis Centre. "Housing markets, both new and existing, have settle down in the last few months. Although the economy's momentum remains favourable, high interest rates and low savings rates will constrain home buying and result in a continuation of current levels over the near term," Laurence added. As the bright spot, British Columbia Columbia urban starts surged more than 20 per cent to 40,000 units (SAAR) in' November. The advance in activity was province wide. While both the' single-detached and the multiple markets markets increased, construction of new rental apartments was the key. Urban housing starts in Ontario fell to 40,700 units (SAAR) in November November from 50,300 units the previous previous month. The Toronto metropolitan area, coming off a very strong month less all the dear children in Thy tender care, And fit us for Heaven to live with Thee there. - from "Away In A Manger" To all the loving families we're so proud to call friends, our thanks and best wishes for a wonderful Christmas season. From all of us at Grundy's Country Upholstery Orono - 983-9874 $ - / . / ' t r > / > V ;v . '■ '.>•••„'• ' 1 ■< ...... x *We appreciate the opportunity the ttodday Season brings to say "'Thankjybu " and uhsh you a tHappy and Prosperous 9{ezi) year. PROPERTY VALUATORS/ CONSULTANTS INC. Real Estate Appraisers 164 Baseline Rd. E., Unit D Bowmanville in October, accounted for all of the drop. Gains in condominium apartments apartments failed to offset losses in rental and single-detached units. Construction levels were down again in Quebec with 18,800 units (SAAR) started in November, compared compared to 19,400 units in October. Fewer single-detached starts were recorded. recorded. Multiple starts inched up as numerous condominium apartments were started in the Montreal area. Construction fell to an annual rate of 14,800 units in the Prairie region's urban centres during November, down from 16,500 units in October. Lower construction was reported in all three provinces. Saskatchewan,, where start levels were unusually strong in October, registered a marked slowdown. Urban starts rose to 7,000 units (SAAR) in the Atlantic region, up from 6,300 units the month before. Construction in Nova Scotia bounded back to 4,100 units (SAAR) while activity, activity, in Newfoundland inched up to 1,700 units. The number of starts stayed near the 400 unit mark in Prince Edward Island. New Brunswick Brunswick stood as the only province with reduced activity in the Atlantic. This SAAR is a monthly figure that is adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. Feds Announce New Program to Cut Red Tape Treasury Board President Art Eggleton Eggleton has announced a package of measures on regulatory reform and paper burden reduction to promote - jobs and growth by lessening the demands demands government places on business. business. Mr. Eggleton stressed that protection protection of health, safety and the environment environment will not be diminished. "Sensible "Sensible regulations will benefit all Canadians. New products will make it to market sooner. And with fewer barriers, our businesses will be more competitive intematiçnally and entrepreneurs entrepreneurs will be able to get on with creating growth and jobs." By changing the way it regulates, the federal government expects to: • lower costs; • improve the quality of federal regulations; and • better protect the public interest. The Minister tabled the proposed Regulatory Efficiency Act today in the House of 'Commons. The Act aims to reduce unnecessary barriers to business while ensuring that the intent intent of regulations is met. Under the Act, if businesses or individuals come up with new ways to comply with regulations, they can seek permission permission to use them. Only if such proposals fully respect the public interest, interest, the government would have the authority to enter into agreements to permit their use. The proposed Act will be referred to the Standing Committee Committee on Government Operations before before second reading in order for it to get a thorough review. Mr. Eggleton emphasized that any changes that may result from the measures must maintain or improve upon existing levels of protection of health, safety and the environment. "Many federal regulations simply do not make sense," Mr. Eggleton said. "They are more than just an expensive expensive nuisance, sometimes they prevent Canadians from benefitting from better products, such as the most up-to-date x-ray equipment. Because Because of unnecessarily rigid technical requirements, our regulations stopped a manufacturer in this country not too long ago from marketing in Canada a crib that helped parents with disabilities disabilities reach their babies easily. "The government will reform the regulatory system to make sure these kinds of problems do not recur," said Mr. Eggleton. by Brian Costello CUMULATIVE NET INVESTMENT LOSSES While millions of Canadians are bugging their financial advisors about how to crystallize up to $100,000 in tax free capital gains before the exemption disappears, many will be bitterly disappointed. They will be hit with CNIL, or cumulative net investment losses, that have been growing since 1987. Back then Ottawa introduced a rule that effectively says any investment expenses we claim as deductions against income earned through non investment sources must be deducted from our capital gains before we can use the $100,000 tax free capital gains deduction. CNIL may not be a big problem in the future when capital gains are taxable anyway. But, right now, when we want to squeeze the last dollar out of this deduction we can, indeed, feel the pain. In the simplest of terms, if you borrowed $100,000 to buy an investment one year ago and claimed $10,000 interest expense as a tax deduction against your salary, you must earn $10,000 in taxable capital gains, or other investment income before you can claim any tax free capital gains. The sad part is that Canadians who voluntarily claim capital gains this last time without considering CNIL may trigger a big tax problem rather than creating tax free gains. They may have been better off hanging onto the cottage property or other investments for years or decades and paying the tax in the future. So, what type of investment expenses must be included in your calculations? The obvious one is all your investment carrying charges and interest. Interest expenses incurred when you borrow to operate a business are not included though. In fact, it was often advisable to borrow for business purposes while paying cash for investments. However, many Canadians borrowed to buy investments that produced little or no yield. It looked good at the time in that the tax deductions wiped out tax on other forms of income while giving them the ability to own large investments that might have paid off in the future. Losses incurred when you were involved in the rental or leasing of real estate and 50% of resource flow through deductions and losses incurred when investing in limited partnership type investments are others that must be included. . However, there are types of income that will reduce your CNIL account. For example, if you earn dividends or interest income it will reduce your CNIL even though they don't come from the same investments that produced the losses in the first place. While investing in limited partnerships often creates a CNIL problem income earned by owning LPs, as they are called, will reduce your CNIL balance: The same can happen when you invest in flow through shares. You are allowed to claim flow through deductions. However, if the investment pays off you can earn substantial profits. They should be added to your CNIL account to reduce its balance. If you own rental real estate that produces positive cash flow those amounts should also be added to your CNIL balance. Many investors have already triggered some capital gains in the past. Don't forget that the non-eligible portion of those capital gains can also be used to reduce your account. If you are considering using the capital gains deduction there are a few things you might want to do to eliminate your CNIL account in advance. . Some investors buy high yielding shares or mutual funds just before they go "X dividend." You are now guaranteed the dividend. Usually, the share prices are knocked down the next day as they no longer include the dividend. The dividend will count towards your CNIL account and you can sell the shares at a loss. That loss will also allow you to sell other investments at a capital gain. One will wipe out the other. If you own a small business corporation you may want to pay yourself dividends rather than salary. The dividends will be useful in reducing your CNIL account but they may reduce the amount of money you can contribute to your RRSP or your Canada Pension Plan benefits for this year. If you have investments that have accumulated income attached to them you might also be able to trigger a substantial amount of income that will reduce your CNIL exposure. The real problem, of course, is time. We have until the day we file our tax return to decide whether or not to trigger the capital gains exemption. However, these other steps must be taken before the year is done. Accountants and financial advisors are already I .swamped so you will have to move quickly.