Vancouver, BC (June 7, 2001): The newly elected Liberal government has delivered on its promise to reduce income taxes for British Columbia taxpayers. The reductions apply over two years: the first is retroactive to January 1, 2001 and the second takes effect January 1, 2002.

Adrian Mastracci, fee-only investment counsel and president of Vancouver based KCM Wealth Management, comments, "This reduction is a very positive impact for British Columbia. It puts more money in the pockets of taxpayers, where it belongs, and is a welcome step towards restoring a prosperous investment climate."

"The taxation of capital gains and dividends will also feel a positive effect", notes Mastracci, "Both of them have become more desirable for individual investors and business owners."

The new BC personal income tax brackets and rates are now as follows:

*Brackets are indexed to provincial inflation.

Mastracci calculates the combination of the Federal and BC rates to be these marginal tax rates (MTR):

Mastracci comments, "This means that next year British Columbia will have the second lowest top marginal tax rate in Canada at 43.7%. Alberta will have the lowest rate in 2002 at 39% in the same category."

"Further, the recent reductions in the BC rates also reduce the income tax rates payable on capital gains", says Mastracci, "Accordingly, BC's highest tax rate for capital gain income is 22.85% in 2001 and 21.85% in 2002. Happily, dividend income also benefits from the Provincial tax reductions."

In view of the changes, Mastracci outlines his approach to client matters:

• Prepare taxable income projections for 2001 and 2002 to estimate income taxes payable as early as possible; thus, allowing implementation of the tax plan much before the year's end.
• Revisit the capital gain and capital loss strategy for 2001 to ensure consistency with the client's long-term goals, such as financial independence and retirement.
• Review the 2001 personal remuneration mix of salary and dividend for business owners consistent with the results achieved in their company.
• Review the impact of the different capital gain inclusion rates applicable to businesses that operate on non-calendar year-ends and have realized a capital gain in fiscal 2001.

"I counsel my clients to review all elements of their tax planning and capital gain strategies to maximize the benefits of the applicable provisions", summarizes Mastracci, "Clearly, the 2001 strategies require considerable thought to capture all the Federal and Provincial changes of the past twelve months."

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.