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economist suntribune february 24 1988 c15 be sure to report earned interest on tax form to get lower tax rates in 1988 and a more equitable tax system we had to give up some of our tax breaks one the elimination of the 1000 investment income de duction will affect virtually ev ery canadian worker this is the deduction that allowed most canadians to ignore the interest they received on their bank accounts or gics or even canada savings bonds when they filled out their tax returns until the end of 1987 up to 1000 of canadian interest and dividends could be received taxfree but that changes this year for example if you earn 200 of interest on your savings or che quing account in 1988 it is tax able that means you could pay about 80 tax on that interest 80 that you did not have to pay in 1987 this assumes that you are in the middle tax bracket income above 27500 so that your com bined federal and provincial tax rate is about 40 per cent if you bought say 5000 of canada savings bonds last year the 450 in interest 9 per cent on 5000 is fully taxable this means that your tax bill will be 180 higher than you may have ex pected 40 per cent of 450 all interest income that you re ceive in 1988 is taxable including interest on term deposits on t- bills or other government or corporate bonds on the mortgage you may have taken back when you sold your house and the in terest that you earn on your mutual fund investments even notice to taxpayers in high taxemgkets taxwosldtmncml services 7665 kennedy road box 96 milliken l0h iko n p h j enjoys grandfathered protection from the proposed new tax rules- c hmfflbmbwbhi jmihibiam bqlimelgos 1 1 mm iwumw ll ml be ready to take advantage of perhaps the last and most decidedly the best taxsheltering opportunity which will not be adversely affected by proposed tax reform please call donald burgess or gordon miller at 4799477r4499184 an excellent tax sheltering opportunity you are invited with no obligation to learn about a programme which stouffvitie 18 main street west markham8 wellington street west uriionville105 main street 6402082 2944405 4771270 family trust corporation member canada deposit insurance corporation the interest paid by the govern ment on the tax refund that you were late in receiving is taxable reporting woes and to add to your woes you may not receive a t5 slip for smal ler amounts of interest earned the t5 is the slip you would file with your tax return reporting the amount of interest inome earned t5s are not required to be issued if the interest earned is below a certain amount 100 earlier this year thus to obey the law you may have to add up your interest in come from your bank statements or pass books and include it in your income tax return there are fairly severe penal ties for not reporting this interest and paying the appropriate amount of tax and bear in mind that ignorance of the tax la w is no excuse for not reporting the in terest if both you and your spouse are earning interest income you will be hit doubly hard by the new reg ime suppose that each of you earn 1000 of interest and your tax rate is 40 per cent you could be paying as much as 800 extra tax in 1988 40 per cent of 1000 plus 1000 spouse taxable even if your spouse is not tax able because his or her income is too low you will be affected for example assume that your spouse earns 1500 1000 of which is interest income in 1987 you could transfer the 1000 in vestment income deduction to your tax return and there would in effect be no tax on that interest in 1988 there is no deduction to transfer the married status tax credit to which you are entitled will be reduced because your spouse has earned more than 500 in this case 1000 more you dont have to sit back add meekly accept this new tax on your income there are several ways of rearranging your finan cial affairs to reduce or even eli minate the impact of the tax these techniques should also im prove your overall financial health editors note this column is provided by don zelisko manager of standard trust in markham more money now more mon later siiiiisssis guaranteed vfifli a guaranty trust best rate gicrsp more money now because not only can you defer some of your 1987 taxes but we can even lend vou up to 7500 to maximize your contribution then you neednt make a payment for a full 4 months by which time you should have received your tax rebate more money later because our best rate gicrsps guarantee the highest rates among the major banks and trust companies and since both yonr principal and interest are guaranteed for the full term no investment could be more secure other guaranty trust rsps you might want to consider a daily interest rsp a tax sheltered savings account equity income and mortgage funds plus spousal and selfdirected plans the tax deadline for rsps is february 29th this year so hurry call your nearest guaranty trust branch and enquire about extended hours and our 15month hss bonus gicrsp guaranty cwnurofcuum tax deadline february 29 whywait best because well milch iny major bank or trust company offering a higher rale canadian imperial bank of commerce royal bank toronto dominion bank bank of nova scotia bank of montreal canada trust royal trust vc national trust subject to credit worthiness interest is calculated from and the four month payment deferral period commences at the date of advancement of funds offer not available in the province of quebec 81 main street west stouffirille 6404000