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wr" 6 -- Scugog Citizen -- Tuesday, April 16, 1996 RAK TPS & WNVESTIENT ADMICE It has long been recognized that small business owners could defer taxes for a significant length of time by: judicious choice of a fiscal year-end. This is because business income - has traditionally been taxed in the year in which the fiscal year ended, not necesserily in the year in which it was earned. This meant that a business with a fiscal year- end of January 31, for example, could defer taxes on 11 months of income for one full year. As of 1995, this deferral has' been effectively eliminated. If you are a small business owner, you must now report your A FINANCIAL SERVICES COMPUTERZED ACCOUNTING & TRAM, | AXES ACEH | | | +} --_---- |EEEEEE I¥ KELLY CAMPBELL | | 07 ConSL TG NEW BUSINESS SET.UPS 1.905.985.7531 busimess income on a calendar-year basis, just like everyone else. Depending on your fiscal year-end, this could mean reporting several months' worth of extrabusiness income in 1995. To ease the tax bite, you are allowed to spread restrictions, the ten-year reserve mechanism will result in 5% of the "extra" income being taxed in 1995, 10% in 1996 through 2003, and the final 15% in 2004, "as shown in the example below. The original tax proposals called for a mandatory change to solendar year community, however, this requirement 'was dropped. If your business cycle makes it particularly difficult to close the books at the end of December, therefore, you may make a special election, to use a fiscal period that Today, banks can grant Joan does not coincide with the calendar year. However, most of the tax advantages associated with this strategy have been removed, as you must still report the income on a calendar-year basis. This is accomplished by adding in the estimated "husiness income increfises - income earned from the end from one year to the next. of the fiscal year, when the Conversely, of course, a books were closed, tothe end. prepayment or overpayment 'of the calendar year. Since the estimate is based on prior year income, a small of taxes may occur if income decreases. (This article was submitted tax deferral may occur if by HER Block, Port Perry.) * R means revolving credit. a loan, the lender asks either of the two national credit bureaus for a I information is gathered from public records and lenders, eg, of the customer's credit. if | lenders had to collect and verify this After with the business th ves, the loan granting process would take much 174 PERRY ST., Because it's your money. Lr IR ------------ PORTPERRY © 985-9803 Open Weekdays 9 to 8; Saturdays tos col '|No more tax _--- THE INCOME. TAX SPECIALISTS requests in as little as 24 hours All Canadians who have One example of this is a credit -- whether you require $500 borrowed money have, credit card, to which you charge or. $50,000 - due to the histories their loan" up to a given dollar ; llent services provided by ivities -- including paying limit, with the balance being credit bureaus. habits; current address; and paid overtime. When a consumer applies for ~~ ¢gmployer's * name. - This - I means instalment credit. This is a loan with a defin term and regular. paymentd, such as a mortgage or car loan. - O means open credit. An history 1 ions department stores and oil jos. Any unfi Hl 1 information information, such as a bankruptcy, is genefally kept on file for seven years: multiple bankruptcies are permanently recorded. Credit ratings have two elements, identified by three letters of the alphabet, and numbers, from zero to nine inclusive: * Letters of the alphabet identify the type of loan. of this is using an American Express card and paying the entire balance each month. * Numbers identify How quickly a borrower pys a debt. - Zero represents a new, unused account, - One signifies that the borrower pay$ according to t| specified payment schedule, usually Within 30 days. - On the opposite end of the Ontario LL 1J2 FORDER - PARKS INSURANCE BROKERS INC. 34 Water Street, Port Perry, 9858471 PERSONAL ATTENTION TO ALL OF YOUR GENE RAL INSURANCE NEEDS it pays to know credit rating: scale, nine identifies a bad debt that has been written off by thelender. ; Therefore an Rl rating indicates a revolving credit 7 loan that is paid on time. If the loan is rated as R9, it has been turned over to a collection agency. + As a consumer you have the right to review your credit history. Because of the size of the credit bureaus' databases and the numerous sources from which they gather information, errors can gecur when files aré updated. Double-check your personal , formation, especially prior to __dpplying for a major lpan. A d credit rating can result in ~your loan being denied. Be aware that when there is probf of an error in your file the credit bureau must correct it and notify lenders of any changes. If you and the lender disagree abayt-your credit rating, a note is appended to your history explaining the difference of opinion. For instructions on how to obtain a copy of your file, call Equifax Canada at 1 - 800" 465 -.7166 or Tgans Union of Canada at (416) 201-7082. 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