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By: Brian Lewis
Smart Money
The Province, October 29, 2000
The mini-budget also proposed significant cuts
in personal income tax rates effective January
1 2001, and investors should keep that date in
mind when deciding when to sell an asset for a
capital gain.
"From a tax planning point of view, anything
you can defer to 2001 will be to your advantage
when you take into account all the mini-budget
changes, assuming they'll all be passed into law
soon," says tax expert Evelyn Jacks.
That's because the mini-budget proposes cutting
rates in all brackets:
- The rate on taxable income of $31,000 or less
will be reduced from 17 percent to 16.
- The rate on taxable income of $31,000 to $62,000
that was cut from 26 percent last July to 24
is further reduced to 22.
- The rate for taxable incomes between $62,000
and $100,000 will be reduced from 29 percent
to 26.
- And the top rate of 29 percent applies to
taxable incomes in excess of $100,000.
- The five percent deficit-reduction surtax
on incomes above $85,000 also will be removed.
"So, if you're thinking of withdrawing money
from an RRSP or a RRIF to take a winter vacation,
don't do until the new year when that income will
be taxed at a lower rate," Jacks suggests.
But investment adviser Adrian Mastracci,
president of Vancouver based KCM Wealth Management,
says the new tax rates shouldn't cause individual
investors to change their long-term investment
strategies.
"Too many investors who come to see me put the
tax considerations before the investment considerations,"
he says. "I think it's better to realize I gain
or loss when it's appropriate from an investment
point of view, not a tax plan view."
"People who put taxes before investing generally
end up making the wrong investment decisions."
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