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b. 23, 1994 THE OAKVILLE BEAVER 19 MUTUAL FUNDS Call 849â€"8666 AFP MONEYSTRAT INC â€" Free Consultation â€" ive days BY REBECCA HUGHES Special to the Beaver ost Canadians are aware of basic Registered Retirement Savings Plan RRSP) concepts; such as the fact at payments to the plan are pductible up to certain limits, come in the plan is not taxed, and ithdrawals from the plan are taxâ€" le. There have been a number of nanges in the past few years which ave made saving for retirement ore complicated. The changes also iean that the benefit of having an RSP has increased. RRSP BASICS The maximum deductible amount hich you can contribute to an RSP is the lesser of 18% of your rior year‘s earned income and nnual dollar limit. For 1993, the mit is $12,500. After 1993, this mit will increase by $1,000 each ear until 1996 when it reaches 15,500. The limit will be indexed n an annual basis after 1996. If ou‘re a member of a registered bension plan (RPP), your deductible ontribution is reduced by the penâ€" ion amount reported on your prior ear‘s T4 slip. Revenue Canada will nform you of your current eductible contribution limit on our assessment notice for the preâ€" ious year. A contribution made before Mar. , 1994, is eligible for deduction on your 1993 tax return. If you‘ve already made your maximum contriâ€" bution for 1993, you can contribute now for 1994. To the extent that you don‘t make a contribution or the contribution is less than the contriâ€" jpution limit, the unused limit is carâ€" ied forward to the subsequent year. he formula calculating the carryâ€" forward amount is fairly complicatâ€" »d, but it effectively allows you to arry forward at least seven years of RRSP contribution room. You should note that the carryâ€"forâ€" ward only begins with the 1991 conâ€" tribution limit. As well as your salary, earned income includes net selfâ€"employâ€" ment income, net rental income, and alimony. It‘s reduced by amounts such as net rental and selfâ€"employâ€" ment losses, employment expenses, alimony paid, and professional or union dues. R You can also contribute to an RRSP, where your spouse is the beneficiary and still gets a deducâ€" tion. This can be of great advantage if your spouse has little or no income, or you are already entitled to a substantial pension. Where your spouse is the beneficiary of the plan and receives payments in his or her retirement years, he or she pays tax on them. However, you get the tax deduction now. This is an effective way to split income with your spouse in your retirement years. You will, at that time, be able to ‘ake maximum advantage of the graduated personal tax rates and pension income credit. Your contributions to your plan and your spouse‘s plan can‘t exceed your normal contribution limit. If your spouse withdraws funds from the plan in the year a spousal contriâ€" bution is made or the next two years, the amount withdrawn, up to the amount of the spousal contribuâ€" tion will be considered to be your income rather than your spouse‘s. There is an additional spousal contribution available for 1993 and 1994 only. For each year, you can transfer up to $6,000 of periodic pension payments received to a spousal RRSP. Another way to use RRSPs to your advantage is to withdraw funds in years in which you have an unusually low level of income. This is an effective way to shift income and the ultimate result is the overall reduction of tax. However, withâ€" drawing funds will reduce the amount ultimately available to you in your retirement. OPTIONS ON RETIREMENT When you reach age 71, your RRSP must be terminated. Two basic options are available. First, you can use the RRSP funds to purâ€" chase an annuity. Secondly, you can transfer the funds into a Registered Retirement Income Fund (RRIF). A RRIF is essentially an RRSP except, you are required to withdraw a minimum amount each year based on your age. The decision as to whether you should purchase an annuity or a RRIF is not an easy one. A RRIF is more flexible and would generally provide better protection against inflation. However, an annuity purâ€" chased during a period where interâ€" est rates are high could provide subâ€" stantial benefits in the future. When choosing your annuity issuer, ensure that your investment will be secure. HOME BUYER‘S PLAN In the December 2, 1992 Federal economic statement, the Home Buyer‘s Plan was extended by one year. If you have not already made use of this plan, you still can particiâ€" pate if you withdraw funds prior to Mar. 1, 1994 to purchase a home TAX FINANCIAL CONSULTING Investment in RRSP s should be a basic eleâ€" ment of anyone‘s personal finanâ€" cial plan, says Hughes prior to Oct. 1, 1994. The plan allows you and your spouse to each withdraw up to $20,000 from your RRSP to be used for the purchase of a home. If you decide to participate in the plan, you should not make an RRSP contribution until after Mar. 1, 1994. If you have made a contriâ€" bution after Dec. 2, 1992, it is advisâ€" able to request a refund of the amount contributed. Contact your local district tax office for further information. ACCOUNTING s Diversified Investments Group Would you like your tax return _ processed in 10 days? DIVERSIFIED TAX HAS BEEN APPROVED BY REVENUE CANADA FOR ELECTRONIC FILING You could have your refund directly from Revenue Canada in as little as 10 days using EFILE and Direct Deposit. E FILE FOR FREE Up Until February 28, 1994 Of course, we also do regular paper returns for the years 1986 through 1993 Our office is open to serve you year round. Drop in to our office or call for details. 847â€"0029 2441 LAKESHORE RD., OAKVILLE (Bronte Village Mall) I am recommending Fipeuity LatiN AMERICAN GROWTH FUND for investment in the unprecedented longâ€"term _ growth opportunities in Latin America. This is the aggressive investor‘s opportunity to invest in the rapidly expanding economies of Mexico, South and Central America. With just under 25 years of DEACON BARCLAYS de ZOETE WEDD A part of the Barclays Bank Group Michael Judge, V.P. Portfolio Manager at Deacon BZW is pleased to offer Fipeuty Latin American Growth Funp . at NO LOAD 0% sales commission on purchases of $25,000 and up experience, . Fidelity â€" professionals know you don‘t manage $7.7 billion* in a region by long distance. They are there. They know the local economies. They speak the language. And with LATIN AMERICAN GROWTH FUND in your portfolio, you‘ll get to know the territory like Fidelity does. *as at December 31, 1993 Eligible for 20% RRSP foreign content portion for 1994 I am recommending this exciting new fund to investors seeking global diversification and I am pleased to make this initial offer to waive sales commission on purchases of $25,000 or more. Please give me a call at (416) 350â€"3260 for more information. Michael Judge, V.P. Portfolio Manager Clients all over the world have entrusted the BZW group with over C$70 billion to manage. AUSTRALIA * CANADA * CZECH REPUBLIC GERMANY * HONG KONG * HUNGARY * KOREA * MALAYSIA * NETHERLANDS * NEW PHILIPPINES * POLAND * SINGAPORE * SPAIN * TAIWAN * * ENGLAND * INDONESIA FRANCE * JAPAN ZEALAND * NORWAY THAILAND * USA < C The amount used is repayable in 15 annual instalments. The first instalment is due Dec. 31, 1995. For those of you who participated in the first phase of the plan, take note that your first repayment is also not due until Dec. 31, 1995. To the extent that the instalment amounts are not repaid, they will be included in your income for that year. If you overpay, the excess reduces the annual instalâ€" ments due in future years. As a rule of thumb, you should maximize your deductible RRSP contributions before making a Home Buyers Plan repayment in excess of the amount required. Investment in RRSPs should be a basic element of anyone‘s personal financial plan. With the higher limâ€" its introduced in recent years, the RRSP will play an even greater role in helping Canadians secure their financial future. Rebecca Hughes is a senior tax manager in the Oakville office of BDO Dunwoody Ward Mallette. B ADVERTISING FEATURE by Don Wall ere‘s a word of advice to investors about to sit down â€" with Martin Kosterman at the Fiscal Agents‘ office on Speers Road: be preâ€" pared for a dose of reality. While he can be a nice enough fellow, Kosterman, the retirement income specialist for the savings and investment centre, likes to deal with realities, hard facts and identifiable trends. He expects his customers to be prepared to preâ€" sent an open book when they come to him for advice â€" and not only offer a full declaration of their current investment status, but also of their attitudes and hopes for the rest of their lives. "I like to engage people and find out what they‘re thinking," said the 40â€"yearâ€"old Oakville native. "I‘ve learned not to be content with what people say, I try to pursue what they mean." Rapport "Rapport is critical. If you‘ve got poor rapport with a client, you‘ll get poor or inappropriate recommendations if it gets to that point. But once you reach that level of a candid exchange, the rest of it is not that difficult to articulate." In Kosterman‘s view, the key to drawing up a portfolio that each individual feels comfortable with is determining their "risk temperament". If the client is able to let Kosterman know what they want in their retirement, and what they fear, he can do his job propâ€" erly. A customer who is comfortâ€" able with the financial plan preâ€" pared for them can live the rest of their life without unnecessary worries. The Fiscal Agents‘ office is a oneâ€"stop financial services agency offering a variety of services for investors looking to put their money into conservative funds (i.e fixed rate investments, GIC‘s and incomeâ€"oriented mutual funds). It truly is a business of the Nineties â€" Fiscal Agents researchers gather investment information on a daily basis from over 50 banks, trust companies and insurance companies and makes it available to its local clients and also newspapers like the Toronto Star, the Financial Post and the Toronto Sun. Fiscal Agents surveys the marâ€" ket to be able to recommend the best possible rate of return for the client, completes all the necessary paperwork and deposits the cusâ€" tomer‘s funds into the financial institution of their choice. d with Gordon Pape Commonâ€"law couples will have to declare their status for the first time when they file their 1993 tax returns. Whether that will mean more or less tax payable depends on your situation. Canadlans livin common law (Statistics Canada) : You are considered to © 1994 ArtPress International Gordon Pape is a financial author and broadcaster. On the Money provide : tlon on money management For specific advice, consult an app{opri es uie o Fiscal Agents‘ Kosterman understands needs of retirees new retirees feel vulnerable. Frequent reports and updates proâ€" vide the client with all of the information they need to keep track of their investment. Clients who are nearing the end of their working days and are planning for their retirement years are referred to Kosterman, an ebullient, thoughtful man who has been in the financial planning business since 1979. He joined Fiscal Agents in 1987 and has specialized in the retirement marâ€" ket since that year. Peace of mind Kosterman says his job is to provide his clients with security of income â€" and peace of mind. "When you retire you begin to feel vulnerable," he comments. "You‘re living off your assets, and this changes the perception, the psyche of the investor. They can‘t go back and earn money." The first step is determining current sources of income â€" penâ€" sions, government benefits and others. A review of net worth is then conducted and the tax status is ascertained. "T‘ll ask how much income splitting has been done, how the assets are distributed between spouses, those kind of questions," says Kosterman. Their personal situation is then analyzed to determine how the couple wants to live and who dependents are. Closely tied in with this is that allâ€"important conâ€" cept of risk temperament. PAPE‘S TIP: "Declaring commonâ€"law status may cut your tax bill, depending on your circumstances." Tax and living common law Commonâ€"law couples double in 10 years LIKELY TO LOSE... LIKELY TO GAIN.. I If you collect Child Beâ€" nefit: Income from both partners determines what you can claim. ‘be l:ving common law if : $ you ve been cohabiting w iyouownls home: * a con/ugal Felation, One pnpcnpal residence ship" for a year, or exemption per couple have a child together. is allowed for capital Status declarations of ue childless couples are _ W !!f you‘ve been income taken on trust splitting: Income attriâ€" s bution rules now apply, \There is no provision so you can‘t reduce tax for commonâ€"law status on interest earned by ;.for sameâ€"sex couples giving cash gift to lowerâ€" income partner to invest. Retirement income special Martin Kosterman understands that On the Money 1,451,900 973,900 1986 7113,200 1981 Et If only one partner is working, he or she can claim married credit. l# You can now set up a spousal RRSP and have the advantages of income splitting after retirement. ## If one partner has unused tax credits: Commonâ€"law couples can now transfer unused pension, age, disability, tuition or education credits between spouses. GRAPHICS SYNDICATE 20/2 N: Kosterman tries to determine how the client feels about risk. "There are two types of risk â€" the risk of loss of return, the risk of loss of capital. I try to manage those components and warn them that ultimately, all investments carry some degree of risk," he says. He feels it is his duty to preâ€" sent a realistic picture of the world of investment, he says. "Most people usually say they want security of capital and a reaâ€" sonable or moderate rate of return," Kosterman pointed out. "That can be achieved in different ways, depending on how the client determines his risk profile." Drawing from the vast inforâ€" mation resources available to him at Fiscal Agents, Kosterman is then able to make recommendaâ€" tions and draw up a financial plan with combinations of RRIFs, annuities, GICs, prescribed annuâ€" ities and mutual funds that meet the needs of the client. Longâ€"term trends are relied upon, says Kosterman, with fads identified and then ignored, making for a conservative, reliable portfolio for his clients. Fiscal Agents was founded in 1977 and is owned by David Newman. The firm is located at 466 Speers Road. To contact Martin Kosterman to arrange for a discussion of retirement planning, call 844â€" 7700. PERSONAL WEALTH CREATION, PRESERVATION MANAGEMENT DO NoOT BUY ANOTHER RSP THIS YEAR:! First, create a personalized retirement Call for your complimentary consultation! 845â€"2477 Merritt H. Goddard HBA., ERIL, CEP. Executive Vice President, Senior Fmanczal Advisor plan. THE EQUION GROUP l