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PAGE 1j8, WITBY FIREF1RSS, WEDNEISDAY, JANUARY 25, 1989 AXTETAX TIM TAX IME «TAX TIMETAX lNME TAX IME T'rAq '88 retuürn Taxpayers will sec a numnber of changes to tiîcir rcturns for 1988, prirnarily as a result of the first- phase of "tax reforrn". But Revenue Canada insisis therc's no cause l'or alarm. Essentially, com- pleting the return involves a straightforwa rd fivc-step process. The l'ivc basic steps are: Step 1 - identification; Step 2 - calculation of total income; Step 3 - calcula- tion of taxable incomne; Step 4 - calculation of non-refundable tax credits; and Step 5 - sumnmary of tax and credits. The TI General Tax Guide, available to ail taxpa-.yers, also fol- lows duis step-by-step and line-by- line approach. So, by following the Guide carefully, most Canadians shoulId have no trouble conpleting their rcturns quickly and accurate- ly. Step 1 is simply basic in forma- tion about your name, date of birth, SIN number and so forth,. It is es- s sentiall'y unchanged from previous. ycars and you should have no problem complcting this stcp. Stcp 2 is calculation of total in-. corne and this too is similar to pre- vious taxforms. The employment expense deduciion from previous years has bcen eliminatcd; this will contribute to broadening the tax base, thus penniitting the enhance- ment.' of the basic personal credit. Maximum allowable child care expense deduction wilI be in- creased frorn S2,000O to $4,000 for each child age six and under and for ail children with special care needs. Step 3 - Calculation of taxable in- corne is also familiar. It involves listing aIl those deductions which have not becn converted to tax credits in o rder to cialculate your net income and your taxable in- corne. Major items from this step 'easier than you thi nk5 which have been rnoved to tax credits are Canada and Ouebec Pension Plan calculations, UIC prcmiums and uition fees. The previous incorne and dividcâ.-d deduction has been revised. Other than these* few changes, your calculati'ons to arrive at net incorne and taxable income will follow much the same process as in past years. Don't Uc alanned if your taxable ineome figure is higher than in previous vearç. It al- most certainly will be. But there are still the tax credits to corne. Step 4 - Calculation of total non- refundable tax credits is the key new element in the new tax return, where you enter alI those items prcviously listed which have been convertcd to tax credits. This t.oo is quite straight forward if you fol. low the item-by-item explanation providcd in your tax guide. The Guide will tell you what amount you can enter for each item. For examiple, the basic per- sonal amount. is $6,000, the age amount (over 65) is S3,236, and s0 on. Then, when you have entered ail the amounts for v,hich you are eligible, you simply totaltuiern and multiply by a factor of your total non-refundable tax crcdit., There is one exception to this process. This deals 'with charitable donations or gifts te Canada or a province' . Here, the conversion factor to arrive at your tax credit is 17 per cent for thie first $250 but riscs Lo 29 per cent for donations above this level. So now you have arrived at your total of non-refundable tax credits. It's importart to nocte that "non- refundable"' means you may use these tax credits to reduce your federal income tax payable as far as zero. But they cahanot be used to go beyond that point and actually create a tax rebate. Having dSjermine.d the level of taxable income and the" total of non-refundable credts, we now move to Step 5 - tuie Summrary of tax and credim.s. This too, is very similar to previous years. You first cale ulate your federal and provin- cial tax payable, deduet any fur- urier federal or. provincial credits that mnay apply and arrive at a final figure indicating your tax refund or balance -due. In caleulating your tax payable, you will note that the number of tax, brackets has bcen reduced from 10Oin previous years, o r etTc- tively four for Ontario taxpayers. New brackets, tax rates for '88 Starting in 1988, the new brack- e ts and tax rates are 17 percent for the first,$27,500, 26 per cent for amounts froin $27,501 to $55,000, and 29 per cent on amounits more than $55,001.This 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 !'ederal incomne tax that most ?'anadians will bc required to pay. Grwthcount. Manv RRSP investors select The Industrial Group of Funds and Mackenzie Financial Coporation primarily because of our reputation. And, frank[ y, it pleases us that our naine is a good one to financial consumners and financial advisors alike. But we'd rather you selected us for another re.ason: our performance record. After ahl, resuits are really wliat count. For both of us. One example: 1l1yr.1 3 yr. 15 yr. 1 10 yr120 yr. Industrial Growth Fund i20.5%j 11.2%j 13.0%j 16.7%j 16.2% Ron G. Brown Office: (416) 474-4352 Ajax Evenings: (416) 683-7845 EhReputation and results botl count for me. Please send me more information about an Industrial Group of Funds RRSP. NME: ADI)R.S.S: POSTAL CMr: PROVINCE: COD)E: PIfONE: (Reidence) (Business) Mail to: Midland Doherty Limited Looking hoth m'ays. To manage your RRSP. For growth and income. 7030 Woodbiné Avenue, Suite 100 Markham, Ontario, Canada L3R 1A2 Attn: Ron G. Brown Th nutialGrupofFlis Ai/figures Io Decemnber 1, 1988 are average ainuat compound relurrus r ba.sed on/ibe net incomne iii ested anti iniclut/i y renv.elnent of*diz 'deniis V~Lil Pasperormnance is nlo necessarihy ndz .catn e offuiure resuls. Auj' ffeo mat/e oni> blpropectus u'ich contains completé de/ais ofail charges. Please read it before rnaking a purchase and retain ilforfidure reference. Step 4 - Calculation of Total Non-Refuridable Tax Credits ______ mi buL' ltCaim $ 6,000.00 300 îîijuîîOtrîi i m , eî<. hum ti i1923 iori.jîr li(i vout dîdflot - t .tici ,1jAîit,,S sutrity 'pew;'.on. itachi a lcter gisig ieasons> Claie, $ 3,236.00 301 Marieilo îiuini plovirle detais on 5pageiO3) 303 Aiinotnir)s i)#diipLndenl it riicilî,roivdtdetauls on page 3) 304 Aîid1tioiiiii iscîsonal amotinis (itt.ucii coifileted Scheduie 6) 305 Camidu <jr Oîîcbec Penson Plai contributions Coiiilbtiîjis thrriut i tloiieii ion, Box (D) on ail T4 slips (maximum!S 47800)30 C I oîiiutcîijdybe nslf.îi»nyfuui erlflg fom page 3> 310 unetiiulôyii.in nsweanri petniuns ironi Boxs(E> on aIl T4 slips (maximumi $ 690-56) 312* EW Euiblis pension iîcîn nilount (yixavinuini S 1.000) 314 0 Dstoulty anîountfoirîll claini S 3.23600>) 316 0 Disabiluy uiriotint for dipeidant other than spouse 318 > eutnles lor self lai tich icceupi sI 320 Edîîicatiun niouett(sl(pat i loin T2202_ni T2202A> .322 C Ttitiuoiî ees and eduîc,îion alrimunt ian!slîumed iorn, cild (attach form T2202 xi T2202A> 324 G t>>Atîîowiiît îaîsfurred loni spouse latt'acli cornpletcd Schedule 2) 26E Mie.icui exiensesl(att,îcliecipisandcomplete Scheduie 5)>133010 0 Siltiaci 3 of 'Net? lcome une 236 abovo> (maximum S t.500<î -- Alowabile portioiinifmedicai ospenses 3 Add l ines 300 Io 326 in clusive and fine 332 JF THIS AMOUNT EXCEEOS THE AMOUNTUT UNE 260 SEE 114E 3W IN GUIDE> 1335 _________ Noi-ielondable tas c redits- 17' of fine 335 or se Tax Table A instructions inGuidje-1 8 Anld Chiaritable dionations and gis tri Caniada or a province atach receipîs) Cliaritabli. donations (ai tiich conipleted Schcdule 5) 340 10 Gulis Io Cainauda. a proivice or jî lis oi cutural piopoitV 342 Total Donations 34.= On tie furs? $250 or ioss the credit at 17% s 346 j __ Ouhebaanethe ciedta29 s 348 Total N nRf dabl ad fines 338. 346 and 348> Tax Credlits îpiroceed to Step 5oit page 4)> 350o llere's the fun part of your rcturn. It shows the "credJits" you get to reduce the taxable portion of your earnings. There's a 1lot of interest iri Mutual Life's RRSF " No fees, no charges " Cô'mpetitive interest rates " RRIF' and Annuity options Save with confidence with Mutuail Ufe. For details eall Herb Tran' 40 King St. W., Suite 710 Oshawa, Ontario. L1H 1A4 Bus: 725-6564 Res: 668-5968 Agent for Muttial Lufe of Canada and Mu"ua Investeo Inc. The Mutual Croup Timely tax tilp A dlaim for a deduction or credit that is flot supportcd by the required reccipt, certificate or forrn mai, be disallowed. A photocopy of a reccipt is flot acceptable unless the issuer has certif ied iL as a truc copy. If you bought bonds through your payroll savings plan, you may dlaim the intercst charges you paid to pur- chase the bonds as a deduction. If you are self-employed, you may bc required to make Canada Pen- sion Plan contributions on your earnings. Sce the tax guide. Nisi mloves can not dajim travci or other expenses. Travel te ainc ['romi work is flot an allo,,.'ed If you had net capital losses in 1988, you may only be able to deduet them against taxable capital gains of aLlier years and not against other sources of income. I I ............