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gSo-endon'Ip.y-cmb 5 1995 as the "clawback" of the age § amount, which was introduced in & January of 1994, is fully impleâ€" _ Emflm-fl.flfl *# also find their Old Age Security benefits reduced, starting in July l”‘.Nowhhmw than ever for seniors to arrange their affairs in order to take advantage of those tax breaks that * & w | * | § . ; f â€" ‘ JR C >. .‘; K5 i g â€" our personal guide to income tax savings Most medical expensés not covered by provincial health care or insurance can be used to reduce your tax payable. You may claim the cost of items such as eyeglasses, hearing aids, pacemakers, orthopedic shoes, walkâ€" ing ards, dentures and insulin, among others, Don‘t forget to include health insurance premiums you pay to a priâ€" vate health insurance plan, as well as the cost of health protection you buy for the time you are outside Canada. Because only medical expenses in excess of 3% of net income or $1,614 can be clarimed, it is usually better for the lowerâ€"mncome spouse to claim all the expenses incurred for both of you. If you are receiving pension income (including foreign pension taxable in Canada) or annuity payments, don‘t forget to claim the pension income amount for up to $1,000 of your qualiâ€" fying pension income. The age amount of $3,482 is still available in full to seniors whose net income is $25,921 or less. For seniors with incomes over $49,134, however, lhcagemismefi.'- nated. For those whose income is bflmnthelwomua’ mmismdpm. a rate of 15%. For example, if you are a semior with‘a net income of $26,921 ($l.(ll)merthelh!uhold)yow.’ amount would be reduced by $150, to §3,332 Tax planning important for seniors Because many senior credits and benefits are incomeâ€"dependent (e.g., the age amount, OAS, medical expense credit), it is important for seniors to reduce their net,incomes for tax purposes whenever possible. One way to reduce net income is by makâ€" ing taxâ€"deductible RRSP contributions ~ or transfers. > Since RRSP deduction room can now be carried forward, you may have unused deéduction room carried forâ€" ward from previous years even though you have since retired. If so, you may make regular RRSP contributions to your own RRSP or to a spousal RRSP. If you received a retiring allowance in 1994 you may transfer the eligible RRSP deductions deduct the cost of an attendant, or fullâ€" time care in a nursing home, as a medâ€" ical expense. However, you must usually make a choice between claimâ€" and the disability amount. An excepâ€" tion is made for attendant care expenses of $5,000 or less: these may be claimed as a medical expense withâ€" out affecting your claim to the disabilâ€" ity. amount. This is only true, of course, if the lowerâ€"income spouse has sufficient fax payable to absortb the expenses. If both you and your spouse have made charitable donations and the combined amount is over $200, the donations should all be claimed on one return in order to take advantage of the higher tax credit rate of 29%. It is also possible to save charitable receipts and pool donations for a period of up to five years in order to take advantage of the higher rate, since donations can be claimed any time within a fiveâ€"year period. If you are disabled, you may be . able to claim the disability amount of $4,233, provided you have proper cerâ€" tification from a doctor or optometrist. maing Many provinces offer special tax credits, tax reductions or grants to senior citizens in order to help ease their tax burden. Be sure to check th assistance available in your province. Senior citizens should make sure that they take advantage of all the deductions and credits to which they are entitled. Those mentioned above are only some of the income tax proâ€" visions that could apply to senior citiâ€" Many senior citizens qualify to receive the goods and services tax | credit, which can be obtained by fillâ€" | ing out Step 2 of the 1995 tax return. | For married or commonâ€"law couples, one spouse must apply for both. Eliâ€" | gible seniors who did not apply for the GST credit for 1990 to 1994 may still do so. Likewise, it is not too late to _‘ apply for the federal sales tax credit | for 1986 to 1990. In each case, the appropriate tax return for the year | must be submitted, together with the | required credit application. | Refundable credits If you do:not need all of your availâ€" able personal amounts to reduce your tax liability to zero, you may transfer any unused age amount, pension income amount, disability amount, education amount or tuition fees to your spouse. This creates a substantial tax saving by reducing the tax paydble by the higherâ€"income spouse. Amounts transferred only allowed if you (or your spouse, in the case of a spousal RRSP) are | under 72 throughout 1995. | All RRSP contributions and transâ€" fers must be made by February 29, | 1996, to be deducted on your 1995 portion to your own RRSP. However, f O ane i P io rias C oc M such contributions and transfers are I the Wmmm e ~ se ze e u7 mm * ~ 6 0 0 0 Suite 201 Waterioo Place ' 80 King St. S. s Waterloo, ON N2J 1P5 Telephone: 886â€"2361 Fax: 746â€"5306 Know what your free no obligat 54+ yrs. preparing business and rental retu, 5+ yrs. preparing U.S. retwns & We Offer Year Round Service 4 Your Satisfaction is Guaranteed! tax preparation needs? 7410744 CA What is a mut $ A mutual fund is a tru: : individual investors with tal and expertise to pool | So that the fund does m have to pay tax, the incon that is left after deducting expenses is paid out to _mutual fund uit at any gi fdymlbfleufliu ments in the fund divided units. For example, if a fu and bonds worth $1,500,0 100,000 units, the value 0 Investors buy the units at :nmo{um as the value of the un ments rises or falls. 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