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Page THE HERALD OUTLOOK Saturday 1983 Business Outlook Tax reform what it means to per year and let it com pound after taxes For a free brochure on mutual funds ask for Why Doesnt Everyone contact Peter C Pagan Drive Georgetown Ont Or phone Paul J Is the author of the best seller Why I Invest in Mutual Funds and President of Regal Capital Planners Ltd your investments ITS YOUR MONEY PaulJ Lower tax rates But are we going to pay lower taxes The answer is probably yes our tax bill may be a lower percentage but we will be paying that lower percentage on a higher taxable income The one thing we know for sure is that the govern ment will continue to extract at least the same amount of money from us the taxpaying citizens and the corporate world that employs many of us We Canadians are good savers I wish I could say we are good in vestors but in practice we are poor investors of those savings I believe we here in Canada are the second highest saving nation in the world exceeded only by Japan Statistics tell us we save over 14 per cent of our earned income whereas Japan they save over 20 per cent In the United States the savings rate is below 5 per cent What do we do with those sav ings Mostly put them and keep them in banks trust companies credit unions and other places where we lend our money to that institution and they pay us rent interest Often people from other countries then come to our banks etc borrow our monies to buy our industries develop our natural resources and the profits then rightly belong to them not we Canadians even though it was our monies that were lent to these foreign people When we lend our money to banks etc we earn interest The government loves us because in earnings are fully taxable at your tax rate They have even now taken away the investment income deduction which made the first of interest or dividends or capital gains tax free Now its gone The government has always pro vided incentives for you and I to Invest ownership If you in vest by owning shares of profitable corporations or an apartment building etc you receive dividends distribution of the pro fits and a capital gain SYSTEMS ACCESSORIES YOUR HOMES AUTOMOTIVE RECORDS STAPES CO J Wt BRIAN G00DLET RRSPs GICs Mutual Funds 8775129 Annuities MUTUAL GROUP OF COMPANIES increase in value of the company or apartment building When I entered the mutual fund industry over years ago there was no tax on capital gains and very little dividends Today dividends are taxed about one third less than interest for the average wage earner a little higher for the higher income per son and come virtually free to the lower income person It all revolves around something called a dividend tax credit In 1972 the government deemed that Capital Gains would now be taxed They have played with capital gains ever since and a few years ago introduced a capital gains holiday phased in over several years of up to without any tax liability The new proposed tax rules thanks to the June 18th white paper will make 75 per cent of capital gains subject to tax with only 100000 tax free When you have ownership as I do in equity mutual funds you get two types of return namely dividends and capital gains or losses With interest lending you get only one type of return interest Lets compare interest earnings vs Capital Gains from a tax point of view If you have earning per cent interest and I have invested earning 10 per cent capital gains plus dividends what is the difference in taxes assuming a per cent tax rate combined federal and provm cial Your 1000 per year would lose 440 to taxes leaving you with 560 gain My 1 000 capital gam would only have 75 per cent taxed name ly at per cent resulting m taxes of 330 leaving me with 670 gain your 560 Yet we both earned 10 per cent If I have not used up my 100000 capital gams holiday there would be no tax at all on my 1000 Assuming all the capital gains were subject to tax at the end of years I would have an after tax value of 20677 whereas you who earned exactly the same amount in interest would have a value of Yet we both earned the same RYISASP FEBRUARY IS A SPECIAL MONTH AT THE STEAK LOBSTER LASAGNA VEAL PARMESAN Includes Salad 50 95 NORMANDY PLAZA 116GualphSt RESERVE NOW FOR VALENTINE DAV GEORGETOWN Industrial Growth Fund When it comes to RRSP investing one word says it all Results There in ways to RUSP doll irs And ich RRiP iltenutive claims it s the best for one reason or another Hut none of these claims hold water unless one lung is then to back them up i record of performance There are man things we could say to attempt to establish the credentials of The Industrial Group of Funds we manage more than 7 billion for more than 600 Canadian imestors that we pursue growth but never at the expense of consistency and that our record of anticipating developments in the h is been excellent But onlv hard numbers count And we urge to make decision on the strength of comparison of results Here are ours 20 yr Industrial Growth Fund 1 For more information on this and other exceptional investments contact me Today DOMINION SECURITIES John Brown Dominion Securities Iik Queen Strcu Suite Brampton Ontario Ills The Industrial Group or Funds Mackenzie Financial Corporation I both ivs In manage KRM For growth mil inconu All figure to Dpi mber 1988 are at erage minimi reurns based on the net income miestedand including tut tit idends Past net is not necessarily future result Ait offers Inch contains details all Plum read before a and it for future referena AC DETAI AT YOUR COMMAND Soft water is no longer considered a luxury Its an investment that pays for itself through actual savings Standard softeners regenerate each week at the time you set on the clock regardless of whether you need soft water not The Commander regenerates only when you need soft water Salt savings of up to SO percent It remembers how much soft water you use It has a selfadjusting reserve capacity It is very dependable It never regenerates too late or too soon ft uses reliable solidstate electronics It requires no homeowner adjustments It has only one moving part in the metering system For a limited time only We offer off the purchase price on any softener we sell OR If you are leasing the unit well install It without our normal service charge A few copies of our beautiful 1989 Calendar STfTCHERY are still available from any of our branches FREE