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Page MONEY MANAGEMENT 89 Wednesday February 1989 88 return is easier than you think Taxpayers will see a number of changes to their returns for primarily as a result of the first phase of tax reform But Revenue Canada insists theres no cause for alarm Essentially com pleting the return involves a straightforward fivestep process The five basic steps are Step identification Step 2 calculation of total income Step calcula tion of taxable income Step 4 calculation of nonrefundable tax credits and Step 5 summary of tax and credits The Tl General Tax Guide available to taxpayers also fol lows this stepbystep and lineby line approach So by following the Guide carefully most Canadians should have no trouble completing their returns quickly and accurate ly Step is simply basic tionabout your name date of birth SIN number and so forth It is es sentially unchanged from previous years and you should have no problem completing this step Step is calculation of total in come and this too is similar to pre vious tax forms The employment expense deduction from previous years has been eliminated this will contribute to broadening the tax base thus permitting the enhance ment of the basic personal credit Maximum allowable child care expense deduction will be in creased from S2000 to S4000 for each child age six and under and for all children with special care needs Step 3 Calculation of taxable in come is also familiar It involves listing all those deductions which have not been converted to tax credits in order to calculate your net income and your taxable in come Major items from this step which have been moved to tax credits are Canada and Quebec Pension Plan calculations premiums and tuition fees The previous income and dividend deduction has been revised Other than these few changes your calculations to arrive at net income and taxable income will follow much the same process as in past years Dont be alarmed if your taxable income figure is higher than in previous years It al most certainly will be But there arc still the tax credits to come Step4 Calculation of total non refundable tax credits is the key new element in the new tax return where you enter all those items previously listed which have been converted to tax credits This too is quite straight forward if you fol low the itembyitcm explanation provided in your tax guide The Guide will tell you what amount you can enter for each item For example the basic per sonal amount is S6000 the age amount over 65 is S3236 and so on Then when you have entered all the amounts for which you arc eligible you simply total them and multiply by a factor of your total nonrefundable tax credit There is one exception to this process This deals with charitable donations or gifts to Canada or a province Here the conversion Step Calculation of Total NonRefundable Tax Credits Clam JJOO a unoimi it you Aoru born earlier if you did rocvii tin- Aire Seuuriiy pension Clafi Married u lotmt details on iwge 3 to children do ails on page 3 personal amounts computed Schedule JOS or Quebec Pen j mo Plan contributions Contributions through employ mem Iron Bon 0 T4 slips minimum Contribution payable on ell employment Irom page Insurance on all T4 slips maximum Eligible pension income amount maximum u amount lor tell claim S3 111 Disability amount lor dependant than spouse 111 Tuition lees tor self attach receipts Education amount lor sell attach form or Tuition and education amount ran tier red child attach form or T2202A 324 Amounts transferred spouse attach completed Schedule Medical expenses attach receipts and complete Schedule 5 Z Subtract 3 of Net Income lime above maximums 1 Allowable portion medical expenses I Add linos to 326 and Imc 332 HI IKS MOOT lit IK US 3E Nonrefundable credits of line or see Tax Table A mitruclroni Guide ill 1 Add Charitable donations and gifts to Canada or a province attach receipts Charitable donations attach completed Schedule Gifts to Canada a province or gifts of cultural property 34 Total Donation On the first or less On balance the credit at is Ihe credit at s Total NonRefundable odd i and Tax Credits proceed Step on 360 Heres the fun part of your return It shows he credits you get to reduce the taxable portion of your earnings factor to arrive at your lax credit is 17 per cent for the first 250 but rises to 29 per cent for donations above this level So now you have arrived at your total of nonrefundable tax credits Its important to note that non refundable means you may use these tax credits to reduce your federal income tax payable as far as zero But they cannot be used to go beyond that point and actually create a tax rebate Having determined the level of taxable income and the total of refundable credits we now move to Step 5 we Summary of tax and credits This too is very similar to previous years You first calculate your federal and provin cial tax payable deduct any fur ther federal or provincial credits that may apply and arrive at a final figure indicating your tax refund or balance due In calculating your tax payable you will note that the number of tax brackets has been reduced from lOin previous years or effec tively four for Ontario taxpayers Starting in 1988 the new brack ets and tax rates are 1 7 per cent for the first 27500 26 per cent for amounts from 1 to and per cent on amounts more than should make it simpler for most taxpayers to cal culate their tax payable Readjust ment of tax brackets will also con tribute to the overall lowering of federal income tax that most Canadians will be required to pay Cannie Maes offer profit liquidity security Maes are taking off like Theyre the new Na tional Housing Actmortgage-back- securities combining the qualities of a government bond and a direct investment in prime first mortgages Theyre now on the road to sales of 2 billion having passed the SI billion mark in October after less than two years on the market ac cording to John mini ster of state for housing in the pre election government The mortgagebacked securities are investments in pools of insured residential first mortgages with a government guarantee of timely payment of principal and interest Theyre traded over the counter so owners can offer them for sale at a fair market price at any time The MBS program was launched in January and by October of 88 had made 18 issues averaging Units are traded like government bonds on the over-the- counter market in multiples of Theyre both and eligible and there is no with holding lax for foreign investors o- Canadian expatriates Issue term is for a minimum of five years with no upper limit and the coupon interest rate is deter mined by the market at slightly higher rates than for government securities of comparable maturities Cannie Macs arc also fully redeemable on maturity and month ly payments start days following the dale of issue in midmonth Guaranty Trust Co is the central payor and transfer agent holding records issuing certificates and statements and making payments lo investors Additional information is available from Joe OBrien Director NHA Mortgage- Backed Securities Centre CMUC 650 Lawrence Ave Toronto M6A VIKING CANADIAN FUND RRSP ELIGIBLE Are You Interested In Results VIKING 1YrfAR 24- CANADIAN FUND 10YEARS- FOR MORE INFORMATION ON THIS AND OTHER EXCEPTIONAL RRSP INVESTMENTS CONTACT ME TODAY BERNE Home 4168772362 Bus FINANCIAL SERVICES Located In Eatons Stores Put Hot MuKw Of Resulti ORA ftSSBBrSgflSS