Adrian Mastracci, president of KCM Wealth Management, says “Tweaking the tax tidbits and making the appropriate adjustments are two important steps. You may just retain more of your nestegg. Perhaps, an even greater financial security for yourself.”

For Immediate Release

Vancouver, BC (October 1, 2003): It won’t be long till we’ll be dancing to the tax talk tune once again.

Adrian Mastracci, investment counsel & financial advisor with Vancouver based KCM Wealth Management comments, “No doubt, your 2002 income tax return is safely tucked away. However, it can still pay dividends in finalizing the tweaks for your 2003 tax stuff. The year’s end is almost within sight.”

“A few moments to refresh your expectations of the 2003 taxable events is time well spent,” notes Mastracci, “Retrieve last year’s return and use the numbers as guides for this year’s results.”

“By now you have a pretty good idea of the events likely to unfold for the whole year,” says Mastracci, “The preferred habit is to start this exercise in April, followed by a tweaking now.”

“Know what’s ahead. Some planning may be welcome advice,” explains Mastracci, “A lot may have happened since the start of the year.”

Here is Mastracci’s summary of tasks that may apply in 2003:

Investment Strategy

• Review your capital gain and loss strategy. Contemplate the appropriateness of selling securities whose fundamentals have changed.
• Consider the capital losses you may be carrying forward from 2002. Keep in mind your adjusted cost base from the $100,000 capital gain exemption filed in 1994.
• Take into account the capital gain/loss distributions, typically made in December, if you own mutual funds or are contemplating new purchases.
• Ensure that the mix of investment income (interest, dividends and capital gain) is appropriate.
• Consider donating securities to a charity. The resulting capital gain attracts an inclusion rate of 25% instead of 50%.

Retirement & Registered Accounts

• Refresh your retirement goals and the size of investment portfolio required to sustain them.
• Deposit the 2003 RRSP contributions to your account and/or the spousal plan. The $14,500 maximum requires earned income of $80,500 in 2002. RRSP room carried forward may also apply.
• Review the alternatives available on converting the RRSP to a RRIF if you turn age 69 in 2003. The conversion must be finalized by December 31.
• Consider a family RESP where applicable and deposit the 2003 contribution by December 31.

Employer Stuff

• Assess your stock options strategy, plus your portfolio dependency on the employer fortunes.
• Inquire about a prescribed rate loan from the employer.
• Revisit your taxable benefits from your employer, such as the automobile standby charge.

Income & Deductions

• Estimate all your expected income sources, deductions and tax credits for 2003.
• Finalize your 2003 tax deferral requirements. The better ones are snapped up early.
• Pay the charitable donations, political contributions, childcare expenses, alimony, maintenance, medical expenses, professional dues, moving expenses, safety deposit box, accounting fees and investment counsel fees by December 31.
• Rework your 2003 taxable income projections, along with some “what if” scenarios.

Income Splitting & Estates

• Consider a prescribed rate loan to the spouse who is in a lower tax bracket. The rate is 3% to December 31, 2003. Interest for 2003 must be paid by January 30, 2004.
• Mull over which spouse ought to concentrate on accumulating saving capacity.
• Ponder the need and suitability of strategies using trusts and estate freezes.

Crossing the Border

• Canadians who spend time living in the USA, or earn income there, may require US filings.
• Canadians who own property in the USA should review the estate tax rules that may apply.
• Canadians who have a flavour of a family trust with a beneficiary residing in the US should review the cross-border tax implications.
• US citizens living in Canada should seek advice on the required IRS filings, along with the gifting rules that apply.

“Anticipate your financial affairs for 2003 and finalize your game plan to accommodate them,” concludes Mastracci, “The goal is to ballpark the tax consequences for your situation and avoid surprises.”

“Tweaking the tax tidbits and making the appropriate adjustments are two important steps,” summarizes Mastracci, “You may just retain more of your nestegg. Perhaps, an even greater financial security for yourself.”

2003 Top Tax Rates for Individuals

Your 2003 tax rate depends on your total income. The top tax bracket starts at taxable income approximating $104,600. The rates below include all announcements to February 2003, and may be subject to change.

NOTE: “Part 2 of 2” coverage of taxable events for owner-managers in our next newsletter.

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.