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By Adrian Mastracci
North Shore News
Business Section, "Loose Change"
Sunday, May 5, 2002
Don't be in a hurry to put away your 2001 income tax return just
yet! It assists the spring tune-up of your 2002 tax stuff.
My advice is to plan early. Get a handle on your 2002 expectations
while last year's results are fresh in your mind.
Anticipate your financial affairs for 2002 and prepare your game
plan to accommodate them. I follow this approach with my clients.
Here is a summary of activities that may apply in 2002:
For Individuals
- Estimate your expected income sources, all deductions and tax
credits for 2002.
- Assemble a taxable income projection for 2002 along with some
"what if" scenarios.
- Determine whether you are subject to income tax instalments.
- Review your capital gain and loss strategy. Consider the losses
you may be carrying forward from 2001 and refresh the $100,000
exemption figures from 1994.
- Start your 2002 RRSP contribution either to your account or
to your spouse.
- If you turn age 69 in 2002, review the alternatives available
on converting your RRSP to a RRIF. The conversion must be finalized
by December 31st.
- If an RESP contribution has a priority in your plan, it must
be made by December 31st.
- The 2002 charitable donations, political contributions, childcare
expenses, alimony, maintenance, medical expenses, professional
dues, moving expenses, safety deposit box fees, accounting fees
and investment counsel fees must be paid by December 31st.
Business Owners/Professionals
- Review your personal remuneration, and that of family members.
A salary and bonus combination totalling $75,000 creates the maximum
$13,500 RRSP room for 2003.
- Examine your remuneration mix, such as salary and dividends,
that is appropriate for your business.
- Ensure that a current shareholder loan will not be included
in your income as you approach the second fiscal year end since
it was issued.
- Assess the prospect of obtaining a loan from your company at
the prescribed rate of two percent before June 30. Professional
counsel can help unravel the complex rules.
- Analyze whether crystallization of your business qualifies
for the $500,000 capital gain exemption. This also applies to
operating farms. Full use means tax savings of $109,250.
- Review the capital gains deferral rules if you sell your business
and buy another qualifying one.
The USA Connection
- Canadians who spend time living in the USA may require some
filings with the IRS.
- Canadians who own property in the USA should review the new
estate tax rules that apply.
- US citizens living here should seek advice on the filings that
the IRS may require.
The centerpiece of financial success for my clients is the game
plan that outlines the policies and strategies they will follow
to reach their unique personal goals
Spring ahead time is near. Start an in-depth assessment of your
2002 finances, plan early and you may just retain more of your nest
egg.
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