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the examiner Friday Feb 23 1979 13 RRSPs recommended for savings By DENNIS LANTHIER Of The Examiner For Tom Delaney national director of the Consumers Association of Canada registered retirement savings plans RRSP are relatively simple If person is paying taxes and wants to save money he has no alternative but to look at RRSPS says Delaney author The Delaney Report on RRSPS The RRSP is pension plan introduced in 1957 by the federal government The idea said Delaney is to give persons who did not belong to pension plan at work the sme kind of tax break persons belonging to pension plan had The plan is also to encourage Canadians to plan for the future and to save money Everyone in Canada is per mitted to contribute up to 20 per cent of their yearly income into an RRSP The most person who does not belong to pension plan can contribute year is $5500 Persons who do belong to pension plan can contribute maximum of $3500 minus his contribution to his own pension fund year It means for example the Dear Sir person earning about 313000 year can invest $2600 of it into an RRSP However if that same $13000 year wage earner is con tributing $1000 to pension plan he will be left with $1600 that he can put into an RRSP The wage earner will save about $700 on his 1979 tax return if he invests into an RRSP says Delaney The wage earner will then earn interest on the money says Delaney The amount of money available to an RRSP holder in the future will be substantial ly greater then to the person who doesnt invest in the plan he says The number of plans are varied and shoppers are advis ed to phone around to deter mine the best deal for them But Delaneynsays there are four key points which can be remembered when shopping around for an RRSP The first point Delaney says is that the money should be guaranteed It means the money should come from areas such as ings or temi deposits fou ih banks or credit unions Guaranteed investment cer tificates tGlti from trust com panies are also recommended Dollarsé sense Emtox credits An example of non guaranteed funds would be money taken from mututal funds or the stock market The money value can go up anti down depending on the market Buyers are advised to stay away from this type of plan says Delaney Second the rate of return should also be examined close ly Delaney says All plans have different in terest rates attached to them The higher the interest rate the better the plan says Delaney Delaney says it is important the person intending to invest in RRSI shop around on the day he plans to purchase the plan Interest rates can fluctuate from day to day he says Generally the longer per son invests money in plan the greater the rate of interest he is going to get The longer youre willing to leave money the more interest youre going to get he says The third key thing to look for is in the flexibility of plan says Delaney common stock plan is not good for example because the stock market might be down when you need to withdraw the money Another indication of plans fchihility is the penalties for early cancellation Delaney says Life insurance companies while penalizing for early cancellation of plan do not have maximum penalty for early withdrawal Says Delaney Many financial institutions such as banks or credit unions will have maximum penalty not exceeding $100 says Delaney good flexible plan can benefit the student who wants to take year off work to go to university Delaney says The student can invest in plan and then cash it during the year he is unemployed says Delaney He will have little or no tax income to pay on the return Delaney says It is an important point to look at particularly when look ing at the unemployment figures in the country today Delaney says The fourth vital considera tion Delaney says is the inat tcr of front end loading Front end loading is commis sion taken off your inVestmcnl during the first year of the plan In many life insurance companies says Delaney 30 per cent of the money invested family allowances By RALPH ALEXANDER In January along with our regular famin allow ancc chi que received form entitch hild Tax redit for this Family income Rasc sump Family incoiiic iii cxccss of Base 0000 per cent of excess is 300 Tax crcdit $Ht0 snoo 500 What is the purpose of this form Will it affcct the amount of family allowance get for the four children that my husband and have III Dear This form was necessitated by the latest change in family allowance payments introduced by the federal government in 1978 to take effect in 1979 This change reduced the mon thly family allowance payment per child from an avcragc of $2568 to $2000 At the same time the liild lax rcdit was established to increase the benefits going to low incomc families It has roughly neutral impact on tlic ayciagc family and decreases the benefits going to high income families The mechanics of this Tax redit arc as follows credit of $200 per child eligible for family allowancc payments is given Total Net Income for incomc tax pur poses of the two spouses is calculated and swoon is sub tracted from that amount per cent of the cxccss over 318000 is subtracted from the initial credit For example Assume wife with no incomc linsbands net income is 324000 and there are four children number of children $200 $200 $800 Wifes net income il Husbands net income 73240 Family income 324000 Another look This seemingly innocuous cliangc docs however involve several major dcparturcs from tlic previous situation The concept of family income is new to anada in come tax law and could perhaps be the beginning of trcnd towards joint incoiiic tax returns for spouscs This tax credit is paid whcthcr or not any incomc tax is payable by tlic fainin in this way the crcdit can bccoinc ncgativc income tax for lowir inconic families It lhc spouse claiming the tax tlttlll is rcquircd to filc an iiicoinc tax rcturn wlicthcr or not shc or occasionally lici as any incoiiic lhc theoretical contidcntiality of intoiiic tax rctiiiiis cvcn from tll spousc is now liiokcn as both spouses must disclosc liltll lfltOIIlt on this tax credit application lhi evolution of Family Allowancc payments is typical of socialist stratcgy thu thc program was first introduced it was made universal so that opposition was sparse As all parents were getting few dollars pcr month they were not liltlllll to complain Later the benefits crc made taxable so that the hiin incoiiic taxpaycr who is paying proper tionatcly more of cvciybtxlys bcnclits gcts to keep less of his after tax Now the bcncfits arc bcing rcdticcd and thc dccrcasc is bciiig rcplaccd by form of wclfarc called Tax rcdit Anyonc who has cvcr uscd wcdgc to split logs would understand this tcchniipii Solution to plunging dollar sound economy common sense By DOLOLAS GREENWOOD If your child told you the reason why his face is dirty is because its not clean youd probably tell him not to be cheeky If businessman told you the reason his company was going bankrupt was because he didnt have enough money to pay his debts youd probably do doubletake and then realize why it was really going broke person in charge who can state the obvious so ridiculously must be either fool or knave Well the Prime Minister was reported to have said recent ly that the only solution to Canadas plunging dollar is sound economy Brilliant Just what wed expect from an intelligent leader Thats what they always say about him isnt it That hes intelligent Really Then if so why does he respond to such critically important question as to why Canadas dollar is so sick with such an obvious pointless bit of verbal flimflam Of course the reason for our skydiving buck is that the economy is in mess And who made such mess The MacDonald government The BordcaningSt LaurentDiefenbaker governments Hardly MAKE THINGS WORSE What makes things worse is to read that Tory leader Joe Clark asked Trudeau what new strategy the government has to stop the slide What question to ask government It may seem simplistic answer but the only valid one would be for the government to get the heck out of the hair of business and industry said it may seem simplistic Just seem It isnt really Whats been happening to the revious 1y healthy capitalist economy of the western worl over the last fifty years or so is that more and more its freedom has been regulated by governments The ultimate of national lack of progress is total control by government Thats what Russia and China for example suffer from now Oh know in Sweden for example where they have almost total socialism life is supposed to be pret ty good Supposed is the key word here An acutrc housing shortage for example is almost as effective as govern ment restriction as in Russia of employment mobility In this sense aong with many others Sweden is more like vast minimumsecurity prison where everyone is guaranteed relatively high standard of life and comfort They can even leave the jail if theyve been able to keep some money of their own away from the governments clut ches If know it sounds terrible to say thing like that about reputedly socialist paridise and an historically free nation But if you read book such as Sweden 1975 Trouble in the Welfare State by Paul Hurmuses youll begin to understand that theres certainly something rot ten in Sweden 0f couise they are all free there to indulge in much pornography and sex as they want but thats about the only freedom they now have apparently think thats also allowed in some minimumsecurity jails too On the face of it it isnt bad for many millions of Swedes And in truth many people would be quite happy to spend their lives in such an institutional zoolike confinement Its not what things are like now though its rcally what things could be like if they werent so controlled BREAD AND IIHISES In book by Taylor aldwell about linpcrial Romc she has Roman saying If this is tyranny then give me more of it If nothing else during acsarist dictatorship the Romans got free bread and circiisis which served to keep them contented Later of course terror chaos and poverty became the fate of those Romans who didnt care about tyranny so long as their bellies and carefree lusts wcrc kcput filled By the way must point out in comparison to the analogy made about chdcu being minimumsccurity jail in which the Swedes dont even Itilll7 they are living Russia must be likened to brutal concentration camp whcrc the inhabitants are well enough aware of their plight The point is that humans are so adaptablc And they tciid to regard their immediate circumstances whatever they may be as no worse or no better than what things in gcncral could be Except in Communist countries must repeat And the sad part about it all is that if we were all much freer from government interference in our livcs theres almost no liinil to the blessings in general that could be ours and which would flow from an unfettered industrial capitalist economy Its always hard to convince people of what things could be likc as Ayn Rand has pointed out Try tin your im agination to explain the advantage of electric power and the telephone to person in the midrnincttxnth century More difficult still would be trying to explain to Middle Ages serf how the only way modern technology could be developed would be by free enterprise undcr nonvfcudal or nonstatist government LIKE SCIENCE FICTION It would be like science fiction What benefits could it ours in the future tpcrhaps could have been nowt if real human freedom and thus economic freedom were still ours would also sound like fiction But it could be fact Its also fact that if the samc restrictions on the econ that exist now cxistcd in the late l700s when in ustrial capitalism first got going it would never be allchd to start What we take for granted now would be still science fiction It would also be an unattainable dream That is the real reason for the fall of the Canadian buck Were standing still We may even now have started moving back into the past where scrfdom and tyranny were living nightmare to the general mass of mankind How sad if our Canadian dream turns into nightmare of collectivist tyran ny Will Durant in recent TV interview defined sin as an infringement of individualism on social collectivism IIow scary that man of such towering erudition could utter such profound philosophical error with such syllogistic convice tion social conscience Mill called it social tyranny is all very well for collectivists and assorted altruists to chase after But unless its based upon strong and free economy and even then its nothing but an idiological abstraction chimera And chashing after illusions and foolish fancies is luxury that belongs more in the confines of mental home than healthy community of free men will go to the salesman as coni mission In general any type of en croachment such as this will adversely affect the rate at which the fund can accumulate says Delaney In the front end loading scheme the money will be lost after that first year and there is no way the person can recover the money says Delaney There is no limit to the number of years person can invest in an RRSP plan he says Another point to remember is that interest rates do not change when person invests into long term RRSI plan if for example person iii vests in five year plan the iii tcrest rate he invested the money in will remain the same for those five years An important change in the plan for persons aged 30 and over was made in 1074 says Delaney Persons using spouse plan can put all or part of allowable RRSI funds in the spouses name It means that when person retires the income in the spouses namc will attract lower rate of tax If the spouse had no othcr Ill Scotts acquires Hohdoy Inn chain TORONTO lll Scotts Restaurants Co Ltd of Toronto has acquired major chunk of shares of omiiionwcalth lloli day Inns of anada Ltd and may be seeking to takc control of the national motcl chain Scotts best known as thc frauchisc operator for oloucl Sanders Kentucky Fricil hickcn Ltd in Ontario and Qucbcc aclt uircd million shares of London tint based Commonwealth chain at $10 share in cash The acquisition gives Scotts 46 per cent interest based on the 53 million issucd shares Rut analysts believe that the exercise of Commonwealth warrants and conversion of preferred shares will dilute the interest to 38 per cent Scotts bought the shares from two in shareholders holiday liins Oversea Capital orp anti the family interests of David Rubinoff founder and honorary chairman Analysts predict that Scotts will try to take over oin monwealth now that the two principal shareholders have ac ccptct the offer to buy thcir sharcs Scotts plans to offer $10 share in cash to rcinaining minority sharclioldcis rcsidcnt In anada on or DtlOIO April ti The company opcratcs 223 Kentucky Fried liickcn outlets and it other restaurants in tario Quebec and Florida ommonwcalth opcratcs 104 motor inns in anada one in the US six in Britain and five in the Caribbean its profits have been rising since 1075 when it had brcak evcn ycar lra iluskin an analyst with Brown Baldwin Niskcr Ltd said Rubinoff liad bccn scar ching fora buyer for I1tl than year and Scotts was the one ly bidder of any legitimacy to appear Council says competition to increase TORONTO ll Siipci markets Will become incrcas ineg competitive in 1070 in an effort to maintain their sliaic of constantlyexpanding market says the president of thc Retail Council of anada Alasdair McKichan said in an interview that the industry is not earning enough to give it decent imagc in the stock mar kct As result it is finding it in creasineg difficult to find in vestmcnt funds for expansion Supermarket chains are bor rowing inoncy to expand and the question now is how long their borrowing power will last He said that as food retailers feel the pinch of competition with restaurants and fastrlood outlets they will continue to ex perimenl with ways of trying to attract consumers They will promote such things as frozen pizza ex panding thcir tlclicatcsscn counters and putting more restaurants in stores come the tax rate paid to the government is lower and pro vide considerable tax savings in the long run says Delaney Another advantage is that when spouse is over 65 the first $1000 of his her income from RRSP is tax free says Delaney In April of 1978 the federal government broke the monopo ly of the life insurance com panies with regards to after retirement plans Previously when person retired life insurance com panies would take control of the contract and pay out sums of money in monthly installments But now banks trust com panies and credit unions have come up with their own ar rangements Delaney says In one of the new ar rangements person who retires at 65 will receive mon thly income from his invest ment until he reaches age of 00 The sum would then run out at that time says Delaney registered retirement in come fund offers increased payment to users each year un til the person reaches 90 Exactly how much person will need for comfortable retirement is impossible to say Delaney ays But youre going to have hell of lot more money available on retirement then if you dont invest in thSls he says Thousands of people now are saving money on funds which theyre already paid tax dollars on says Delaney But they could be increasings their savings in this tax frcc way In 1976129 million taxpayers in Canada put $21l billion into individual RRSI trusts Delaney says The diadliiie for RRSPs this year is March Wins trip to Bahamas Mr and Mrs Watson of Barrie will be spending week In the Bahamas courtesy of Georgian Mall and Travelworld The Watsons ticket was drawn during promotion held by the mall during January From left are Harry Popiluk mall manager Tina Chitty of Travelworld Edna By IfltllHtl IIIOM Of Ilic Eamiucr fcdcral governiiicut pro posal to llltltilSt grants paid in HENRY lIllIIID no liciicfit licu of inuuicipal property taxcs will have little effect on municipalities in Simcoc oun ty say scvcral rca treasurers lcau hrcticn lcdcral finance minister announced this week the grants would in crease by $255001 over fouryear period The grants are given to the municipalities to make up the loss in taxes on government propcrt ics which are exempt Tlicrc is not that much federal land in the county said Duncan Grccn Simcoc ounty trcasurir The biggest piece that comes to mind is Canadian Forccs Rasc liordcn said irccu Straddling Essa and losoion tio lowusliips Rordcn falls into the category of major dclcnce basos on which full grants will be paid in lieu of property taXes for thc first limc Last year federal grants on the bascs property falling within losorontio were about Watson and Watson Examiner Photo Grants wont affect county treasurers $40000 covering the land and permanent marriage quarters only said Gordon McCracken township treasurer JEAN IIRETIEN $55 in grants The grant increase would on ly make difference to the township if it was applied to the other buildings on the basc such as the hangars and bar racks but no confirmation of this has yet been rcccivcd said McCracken Other categories of federal land on which full grants ill bc paid for the first time include national parks reclaiiiicd land and conservation prnjccts None of these would licnciit Oro Township said llcnry Neufeld township tiiiisurcr The only federal lands in the township on which grants wcrc made for the first tinic last year are the wharves in Shanty Bay and ilawkstonc said Neufeld The total cainc to slim he said The grant increasi will have no effect in Vespra lowuship said Wilma iriflcn township treasurer We dont get any lcdcral grants at all said ll tiiit fen Canadian companies preparing for presidential kidnappings OTTAWA lt What if soincbody kidnapped the com paiiy prcsidcnt About 100 anadian corpora tious have picparcd for this possibility since the early 1970s purchasing ransom iii surance Only few highly placed ex ccutives of these firms and small group of insurance salesmen and iindcrwritcis all pledged to sccrccy could idcn tify the companies with coverage Buyers arc advised to tell no one of their policy Discretion is such cardinal rule in this business that it created considerable uneasiness in the field three months ago when the Canadian subsidiary of one company the Philadelphiabascd Life In surance Company of North America began openly adver tising in widely circiilatcd Canadian businessmcns magazine Two months after opening its branch office in Toronto the company ran magazine advertisement warning Although the rash of kidnap pings in Europe and South America has not yet spread to North America US and ana dian firms are increasingly be ing forced to confront this possibility In addition to defensive measures most com panies should probably con sider insurance against this multimillionidollar threat Three United States com panies Chubb and Son Inc American Home Assurance Co and Insurance Company of North America and one British firm Lloyds of London offer kidnap and ransom insurance in Canada Although the first kidnap in surance policy was written in 1932 following the kidnapping of the infant son of famous flyer Charles Lindbergh there was little interest in such coverage until the midl970s FEAR DEVELOPED Industry officials say new mood of fear and security cousciousncss has developed fed by spate of horrifying headlines in the last couple of years The possibility of abduction suddenly became much more real in the eyes of many businessmen when Charles Marion loans officer at the Sherbrooke credit union was kidnapped If an ordinary banker could be held for 82 days and freed 0n ly after his family paid 550000 ransom how safe were other businessmen spokesman for one company said there was flurry of inquiries as the Marin case dragged on In the event of kidnapping company with coverage meets the abductors demans out of its own picket and is later reimbursed by the insurer up to the limit of the policys liabili ty Sources in the field indicate an average corporate liability level is about $5 million Premiums are set on the basis of the insurers assess ment of the clients exposure to risk business with offices in politically volatile countries such as Italy or Argentina would pay more for coverage than one with exclusively domestic operations Certain types of bUsiucss such as banks and automobile companies pay more for their policies than less visible iii dustries such as engineering firms or agricultural con sultants One of the first questions iii surance agents are asked by potential corporate clients is whether their company is more likely to be victimized if kid napper suspects it has in surance to guarantee is ability to meet ransom demands This is the main moral issue we face said one spokesman for the industry When con fronted with these questions he assures the client no one has any chance of finding out about the policy all records are carefully coded locked away and inaccessible through nor mal computer means