Adrian Mastracci, president of KCM Wealth Management says, "Start an in-depth assessment of your 2002 finances, plan early and you may just retain more of your nest egg."

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

• Refresh your retirement goals and the size of investment portfolio required to sustain them.
• 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.
• 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.
• If you own mutual funds, or are contemplating one, they make the capital gain/loss distributions usually in December.
• Seek out your tax deferral requirements early in 2002. The better ones are usually available earlier than later.
• Start your 2002 RRSP contribution either to your account or to your spouse.
• All 2002 charitable donations, political contributions, child-care expenses, alimony, maintenance, medical expenses, professional dues, moving expenses, safety deposit box fees, accounting fees and investment counsel fees must be paid by December 31.

For business owners and 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 2% before June 30. Professional counsel can 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 in BC.
• Review the capital gains deferral rules if you sell your business and buy another qualifying one.
• Review your vision for the business succession. It's one of the best investments you'll make.

For those with U.S. connections:

• Canadians who spend time living in the U.S. may require some filings with the IRS.
• Canadians who own property in the U.S. should review the new estate tax rules that apply.
• U.S. citizens living here should seek advice on the filings that the IRS may require.

The centrepiece 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. Start an in-depth assessment of your 2002 finances, plan early and you may just retain more of your nest egg.
 

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.