Lake Scugog Historical Society Historic Digital Newspaper Collection

Port Perry Star, 24 Mar 1998, p. 13

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12- PORT PERRY STAR - Tuesday, March 24, 1998 "Scugog's Community Newspaper of Choice" Doing your taxes may seem difficult, but with some help it can be done A few hints for figuring out your taxes this year Taxes & Investment Income [t's hard to pay taxes, and it's also hard to pay taxes. No, I didn't just repeat myself. What [ mean is that paying taxes is not something that people gen- erally like to do, and that it's also difficult to calculate how much you owe. So, it's hard in two ways. Our tax system really seems like a maze some- times. Case in point - not all investment income 1s treated in the same way by Revenue Canada. Income from certain types of invest- ments is taxed at more favorable rates than others. The upshot - investments should be evaluated on an after-tax basis, not a pre- tax basis. Interest Income Revenue Canada treats interest income - such interest from savings accounts - in the same way as most other income. It is taxable within each tax bracket at the applicable rate. In other words, there is no tax advantage with income from interest. Reporting this sort of income can be tricky. How you report it depends on when the investment was made and also on what type of investment it 1s. If the investment was made in 1990 or after, any accrued interest earned must be reported annually. Accrued interest 1s defined as interest which you have not yet received, but has built up in a particular investment. Income from compound- ing securities - like GICs, strip coupon bonds and Canada Savings Bonds - must be reported by the same method, called the accrual method. It must be reported every year, even if you don't actually receive the income in that year. [f the investment was made prior to 1990, then you have the option of reporting the income by the accrual method - or when you receive it, with the exception of the securi- ties named above. However, when using this method, you must report interest income every three years, even if you don't receive it. Capital Gains A capital gain occurs when you sell an asset. The proceeds from the sale above and beyond the cost hase of the asset 18 consid- ered a capital gain and, yes, itis taxable. The good news? Your net capital gain 1s taxed at three quarters of the applicable combined federal and provincial tax rate. A net capital gain 1s described as your total cap- ital gains minus total capi- tal losses. Dividend Income Of the three types of investment income dis- cussed here, dividend income from a Canadian corporation is taxed at the most favorable rate. This 1s due to the dividend tax credit that is applied to the federal tax payable. The tax payable is cal- culated like this: the amount of the actual divi- dend is "grossed-up" by 25 per cent. The federal tax 1s calculated. Then the divi- dend tax credit - 16.66 per cent of the actual amount of the dividend - is deducted from the federal tax. Provincial taxes are calcu- lated based on federal tax payable minus the tax cred- it. In the end, you pay sub- stantially less taxes on div- idends from a Canadian source than on interest income, and somewhat less than on capital gains. Investing in companies that pay dividends is cer- tainly an attractive option, but it is also important to consider other factors, such as risk, liquidity and the RBC DOMINION Personal Wealth Management™ Index Participation Units The Way To Go Talk with Investment Advisor Robert J. Gow 434-7156 or 1-800-267-1522 SECURITI ES 111 Simcoe St. N., Oshawa, ON L1G 454 Member CIPF _ SHEPHERD & POWEIL J ---- CHARTERED ACCOUNTANTS ---- ACCOUNTING, INCOME TAX, FINANCIAL and ESTATE PLANNING & CONSULTING SERVICES geared to INDIVIDUALS ~ SMALL BUSINESSES ~ FARMS TAX RETURNS PREPARED « 'E-Filing' At No Extra Charge Assistance In Filing Government Forms & Returns New Business Planning & Startup Experienced, Courteous Staff Evening & Weekend Appointments Available FREE INITIAL CONSULTATION ® PERSONAL, CONFIDENTIAL SERVICE DAVID R. POWELL, B.COMM., M.BA., CA. 250 Queen Street, Port Perry ¢ 985-9791 (next to Shoppers Drug Mart) [_ SCUGOG FINANCIAL _ 8) UY (0 IND WYO GUARANTEEDIINVESTMENTS: e Annual Rates GIC 5.100% 5.050% 5.250% Rates subject to change without notice Serving Scugog For Over 15 Years 250 Queen Street, Port Perry 985-3832 (next to Shoppers Drug Mart) opportunity for capital appreciation. By now, you're probably thoroughly confused. But who said paying taxes was easy? Yes, I mean that in two ways. Note: the above article 1s for information purposes only and should not be con- strued as offering tax advice. Individuals should consult with their personal tax advisors before taking any action based upon information contained in this article. Courtesy of, Robert J Gow, Investment Advisor RBC Dominion Securities, 11 Simcoe St. N., Oshawa IF YOUR AD WAS HERE in the PORT PERRY STAR & WEEKEND STAR more than 50,000 people would have been exposed to Its message this week For Advertising Made Easy CALL (905) 985-7383 or Fax (905) 985-3708 (3d B=. $1 = 2{ =o) go] = THIS NEWSPAPER Van Camp & Keller Chartered Accountants Income tax planning and return preparation. Personal tax returns electronically filed. Financial, estate and retirement planning. Personal Tax Returns are being processed now. OFFICE HOURS UNTIL APRIL 30. Monday to Friday 8 - 6, Saturday 9 -1 204 Casimir St., Port Perry Telephone: (905) 985-9725 Toll Free: 1-800-215-3852 afety starts wath diversification, the experts agree. So, what could be more diversified than investing in the Toronto 35 Index® in Canada, Don't Forget...You Can Always Buy A Stock Index, Rather Than A Stock. Choosing One Or Two Stocks Can Be A Risky Business. Consider Diversifying Your Portfolio With TIPS 35™ Or Spiders. decision » convenient, one-stop equity investment RSP chgible + diversified equity exposure Both TIPS 35 and Spiders trade at 10% of the value of trade hike a stock or the S&P 500 Index in the US? That's what vou can do when you S&P 500 Index: How Index Trusts Perform: Total Returns** 1-Yr 5-Yr Product Name | Indexes So Toronto 35 Index: 16.4% 17.9% TIPS 35 take a TIPS 33.0% 20.2% SPIDERS [from the ther respec tive benefits invest in TIPS 35 in Canada, or Spiders in the US These securities offer you many * returns mirror the index return * "™ Trade mark of The Toronto Strack Exchange ® Registered trade mark * Value of a TIPS 35 unit 1s exactly one-tenth of the value of the Toronto 35 Index® Value of a Sprder tenth of the value of the S&P 500 Index *#* Total Returns are ac of De Umit values wall fluctuate over nme Past performance do remembering For more information on TIPS 35 and other index-based investment trusts, please call Investment Advisor Robert J. Gow at (905) 434-7156. Toll-Free 1-800-267-1522. RBC DOMINION . SECURITIES Professional Wealth Management [ook into how TIPS 35 or Spiders could enhance your portfolio And thats worth of the Toronto Stock Fac hang cs not assane amilar tun protessionals 6 exactly one 11 1997

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