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PAGE 8 â€" WATERLOO CHRONICLE, TUESDAY, OECEMBER 21. 1982 Carol, their 19â€"year old daughter and only child, earns $900 from partâ€"time work and lives at home while attending university. Her tuition fees, which Al pays, are $2,000. In 1982, Betty, his wife, a fullâ€"time homemaker, has $1,550 investment income of her own from money she inherited. Betty pays no tax on this because it is fully covered by her basic personal exemption of $3,560. Nor does it add to Al‘s taxable income because her first $550 income does not affect his married exemption and the remaining $1,000 is offset when he claims her unused investment income deducâ€" tion. Al‘s job pays him $30,000 a year and he earns another $4,500 in interest from acâ€" cumulated savings of $45,000. His marginal tax rate is 37%. Here‘s an example of investment income splitting: â€" . e Loans to children under 18 should be made to a trust for them. It‘s best to get professional help with this. e Capital must be transferred in the form of cash. e Transfer must be made as a loan, except in the case of children age 18 or over. In return, you must receive a bona fide demand note. It may be interestâ€"free, but should provide for regular repayments. Although you may give cash to children 18 and over, you might prefer to lend it to retain control. ‘‘Splitting"" your investment income with family members can reduce your income taxes. It involves transferring some of your capital to your spouse or dependants in such a way that, for tax purposes, the income from that capital is treated as theirs. To avoid unintended results, certain rules should be followed: KPâ€"2500 Inâ€"Dash Car Cassette Player with AM/FM Stereo, locking fast forward and rewind, plus autoâ€"replay/autoâ€" eject. Includes a pair of Tenna Phase 3, three way 6x9 flushâ€" mount speakers. 10. ‘34" maxell UD Câ€" MrRioncer BOB COPLAND 90 CASSETTE e N TAPES rciery [ WESSELIN Tired of yelling "TURN IT DOWN‘? Solve your problem with the Pioneer SEâ€"2 "lightâ€" weight ‘ headphones. Put them on your Christmas gift list toâ€" day. (Also on sale the SEâ€"4 $39.95) record brumh All in all, this is a very good record brush «combining unâ€" fussy use with excellent funcâ€" tion at a.reasonable price. For most records it‘s all you need. MrmoOnNceEen §P, | recca messe s c« $‘| 495 investment income investment income deduction taxable investment income tax at 37% Carol â€" employment income investment income deductible tuition net income basic personal exemption taxable income tax Total tax on $4,500 investment income Bob Copland is a chartered accountant and personal financial planning consultant with Executive Compensation Consultants, Kitchâ€" ener. Al realizes that he should retain $10,000 of capital in his own name to generate his $1,000 taxâ€"free investment income. He also knows there is no point in transferring income to Betty because it will reduce his married exemption. He decides to liquidate $35,000 of his savings and lend the proceeds to Carol, who in turn will reinvest. Here are the results: â€" Al â€" Al wants to split his investment income to reduce his taxes in 1983 and later years. He assumes that interest rates will average 10%, and uses 1982 exemption levels in his calculaâ€" tions. he claims the full dependent child exemption of $1,220 for Carol, because her net income does not exceed $2,440. Your money KDâ€"D10, Metalâ€"Ready Cassette Deck, with Dolby Noise reducâ€" tion. Includes 3 year extended warranty CQâ€"1K, Walkman Type Portable Cassette, Dolby NR., metalâ€" ready with antiâ€"rolling mechaâ€" nism for super sound. ©‘139 JVCGC Before $4,500 $1,000 NIL $2,000 NIL $3,560 NIL NIL $1,295 $1,295 JVC $3,500 $2,000 $2,400 $3,560 NIL NIL After $1,000 $1,000 NIL NIL NIL es s Kris, 23, is a recent honors graduate in psychology and history, and currently teaches child modelling at the Gemini ‘School of Modeliing and Selfâ€"4mprovement. Miss Kâ€"W of 1980 _ and former Ontario and Canadian champion in baton twirling, she also studies dancing. “olw the masgiic and mirth of Ch ristmas shower you with happy surprises! We thank you especially dear friends and patrons for your support. 884â€"7 100 Mins' ' 885â€"5620 MASTER‘S AUTO BODY 888â€"77 1 1 wareRtoo