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re6 economist suntribune july 2 1986 income splitting can save taxes editors note the following article is the first in a series on tax planning pre pared by mccabe burns and hubley char tered accountants one of the areas of tax planning which is generally of considerable interest is the potential for splitting income between family members where one member of the family is paying tax at high rates while the others have fairly low incomes consideration is generally given to having the income more evenly distributed for income tax pur poses prior to the may 23 1985 federal budget there were many methods of achieving the desired incomesplitting ranging from beautiful estate building lot on muskoka river minutes to downtown port sydney good level lot hydro phone j garbage collection paved roads this lot is already cleared for a building with a park like setting area is a retirement community phone 6405427 simple to mindnumbing complex the plans involved some or all of loans gifts trusts partnerships and corporations and could generally achieve most objections now that some of the smoke surround ing the new rules has cleared a description of the current status of family income- splitting is provided in this months update one of the most frequentlyused plans involved the higherincome spouse loaning funds at zero interest to the lowerincome spouse for ease of illustration called dad and mom respectively the old attribution rules did not apply to a loan as a bonafide loan was not consi dered to be a transfer of funds this meant that the income earned by mom on buy the lake 1 300 acre year round retreat stocked lake 1 vi hrs north of metro division and de velopment possible s25000 per acre prin cipals only call kevin fleetwood 4778188 wj warren realtor royal upage real estate services ltd realtor announcement lynn doyle darcy warner manager is pleased to announce the appointment of lynn doyle to our sales team lynn has had many years experience working in a legal office in markham we welcome her to our markhamunion- ville office 4714800 real estate i t88 what do these people have in common bookstore clerk mother of 4 lawyer truck driver secretary farmer assembly line worker shoe salesman bank clerk restaurant owner school teacher housewife hardware clerk contractor they are now all successful salespeople with family trust corporation realtor if you have been thinking of a career change you owe it to yourself to attend our career real estate seminar tuesday july 8 1986 starting at 730 pm seating is limited for further information call pauline mancini stouffville office manager 6402082 gerry b michael uxbridge office manager 8523443 the borrowed funds wa s taxed in her hands not in dads the tax saving would be equal to the in terest earned times the difference in the individuals marginal tax rates the pre sent rules relating to this type of arrange ment are 1 where the loan was made before may 23 1985 the income earned on the bor rowed funds will continue to be taxed in moms hands during 1985 1986 and 1987 however if the loan is outstanding after december 31 1987 any income earned in 1988 and thereafter will be taxed in dads hands 2 where the loan is made after may 22 1985 any income earned on the borrowed funds will be taxed in dads hands 3 the attribution rules only apply to the property income eg interest dividends rent not to business income therefore if mom used the funds to start up an incorpo rated business the income or loss for the business would be taxed in her hands 4 the attribution rules do not apply where the loan bears interest at a reason able market rate and where the interest is actually paid in the relevant taxation year or within 30 days after the end of the year of course charging interest lessens the amount of income which can effectively be split but where the funds can be invested to earn income at a rate in excess of the pre scribed rate there may still be some advantage to an interspousal loan 104 main street west stoufiville ontario town living stouffvuie 6402225 uxbridge 4732440 realty limited just listed ballantrae 3 br brick bungalow immaculate finished rec room with fireplace 2 car attached garage vi acre lot listed at 13990000 call tom stephenson 640- 2225 only 87900 starter or retirement home with 2 bed rooms separate dining room and large living room 160 deep lot with fenced yard dick fintelman 6402226 8525531 for the growing family 2 storey 2 baths and 5 bedrooms on 100x100 lot stuffville north dale matth ews 6402225 8523006 the town and country specialists onluik gerry meharg ltd truck garage 109900 on 68 acres with paved access south of ux- bridge major limestone depositi investment possibilities abound with this 475 acre parcel of excellent ranch- land fenced and located close to operating quarry on paved road asking 150000 call joanne mcneill 8526106 6402600 res 8525813 immaculate 3 bdrm brick 2 storey on beautifully landscaped lot family rm has brick fire place central air fenced yard a pleasure to show listed at 5129900 call brian meharg 6403131 res 640- 5000 looking for 10 prime acres ballantrae treed 8i private on paved road min to 404 over 600 frontage price 129900 call brian meharg 6403131 res 6405000 hwy 48 commercial stouffville area 107 acres 58333 frontage 57 acre hwy commercial c2 2 buildings 6000 sq ft 600 sq ft offering excellent potential 2nd to nonei for only 325000 call phil glen- dinning off 6403131 res 6403210 i yyys v 1 tttttjr build your country dream home approx 6 acres with 1 acre hardwood trees remain der cleared good site for hobby farm west of peter borough 24900 dennis irwin 6402600 res 852- 5009 uituli