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After Hahn; over the busing. Miller setouttorebuildit.Thebusin-ttad been owned by somebody who had had no previous expennece in the tlower shop business before opening the store,' He then bought Petals 'ii'"Yots, an established business which had been in operation since 1980. "l wasn't really keen on starting a new butnneats, simply for the reason that this humus ig one that is largely built on trust," Miller says. "Customers want to know that what they order in going to arrive on tteandtutit'.rsirtgtisbe what they ordered." At that tune, he and some colleagues bought leay ilowers and moved the operation down the street. Miller re- manned there for two and half years. mm] he came to the conclusion that it was ume he "did hit own thigg: Miller had been an employee of Kiway Market m Kitchener, as manager of the flower shop. garden centre and hard. ware departments until ttg closing al. most three years ago. "I prefer to run my business on volume," Miller says‘ "i want to see more customers come through that door and buy more roses. rather than sell just a handful of roses at a more expensive price, And It's worked out pretty well." When Miller bought the flower and gift shop on Weber Street, long stem roses were $45 per dozen He is now selling them " $21 per dozen, and has no attention of raising the price, even near Valentine's Day as most flower shops do. Business Week PETALS AND POTS Where everyone can afford to buy fresh-cut flowers Gary Miller thinks everyone deserves freshlycut flowers. And be thinks everyone should be able to afford them. As owner of Petals 'N' Pots m Waterloo, he rum his business mg that Piglaophy: __ PAGE 22 _ WATERLOO cums. EMMY. WY 17, mo when it that and Why'n'. rentalimm-givinutoineome taxe.Nemtdtr.ifruetmtoeiith. ru, may lead many individuals to Jump at these opportunities. But buyer beware, the price is right but what about tax implications? We are no longer sunply dealing with Canadian tax laws. wluch by themselves are not all that simple, but we also have the added complexity of us. federal and state taxes as well. When looking " investmenu in real my there are tmakally three cir. cumnnces which no . 0 rise to Income tagat It is ""lf,U'th unleu yousreretiredywvmnotbeebleto occupy your "can: hone yes: round Ind thus may look tom the my It has come to that time ofyear when even the hardieet of Canadians are becoming ted up with another timetable and unpredictable winter and look south for potable vacation destinations. Whether it's a family vacation to Florida or a ski trip to the northern New England sates. one thing will become apparent to than looking for a perma- nent holiday retreat. Real estate prices for notion properties appear to be somewhat lover in the Us. than here in Ontario even after the exchange rates are taken into effect. The tax traps of investing in US real estate Petal: 'N' Pot: is located at 85-11 niver- sity Ave. E (in the valdifrim Horton Plan) in Waterloo. The store in open daily hom 8:30 am. to 6:30 p.m.. and until 9 pan. on Thursdays and Friday; Call 8852180 for further information. The business, he says is building a steady clientele, both through advertis- ing and by word of mouth. He says Waterloo provides an tverittereasittg corporate market, something which is vital to a flower shop business. "Ag tar as I can see, the business is going to keep growing," Miller says. "I thoroughly enjoy this business, and I Plan te btyeapd. few quite a while." mm: ofroeei tiiL1iGpTo iii 1C1ftl/l'dl'2lgln'ih1t1at,tatlr, Before I go any further with this dimuion. perhaps I should briefly explain how foreign source income is lured to residents of Canada. CInndiine residents are taxed in Canada on their world-wide income for the year. Any are. paid to a foreign country (or late) on foreign source income is eligible for I foreign tax credit This means. general- lr,tht.-rreanrsiuAii"GrTir fteheAsioir in pnynble by the Miller says his previous experience has helped in the area of marketing and advertising his business, which offers everything from fresh and silk arrange- ments to fruit baskets. balloons, and non-alcoholic wines. "Coming from Hiway Market, I learned the concept of taking less mark. up and operating on volume, and cus- tomer service has got to be tops." gain and again taxes may be payable. Third, if you were to unfortunately pass away while still owning the property your estate may be required to pay related taxes on your behalf. So, thy should you worry about tax implications before you buy the proper- ty? Because the structure of the purely one can greatly reduce the amount of tonal tame payable over Tour lifetime. “On top ofthat, I think the 903 is going to be a decade in which people will demand very good service, and that's something that I'm very willing to take care of." My. it Till give rise go a capjial and bushes had waned subsequently. He not out to initiate a number of changes, the moat drastic of which was price reduction. "I run :1 special every week - a little canh-and-carry special, just to bring people in. Last week for example I sold a bunch of market races. with 10 in a bunch, for $1.98 a bunch. This week you can come in a get a bunch of 10 carnation: for $2.98," Miller says. "What I'm trying to promote is the fact that everybody can afford to have flow. ers on their table every week. At $2 or $3 a week, that's a luxury that every- body can afford. Your Business Ihwelkll ametg' hi: terFGiiuiiiriiii"ii"a m. to eapital gains which are and in the noun-l fashion. The IM. on the However, this generalization is not always true as it applies to sources of income from US. real estate. If you were to sell your US. property for a gain, the full gain is taxed at the U.S. federal rate of 28 per cent plus additional state taxes which vary among states. In Canada, two-thirds of the capital sin is taxed (for dispositions in 1989, tfr1'l.l,',ede/i, for 1990 and subsequent years) at your marginal tax rate and may be eligible for the capital gain exem tion. This could mean that your Omega income taxes on the sale could be less than your US taxes paid and thus your foreign tagged“ 170qu lifted. ndly, per greatest tax risk on holding us. property arises due to at!tethyryi-irfthiGr6uraitaiii the Us. derive-their taxes when an individual dies. A Canadian resident is deemed to have disposed of essentially ttllle?,eetaatt.htitieorluiiitTir'iii'e on the related foreign source income. Since Canadian income tax rates for individuals are slightly higher than in the us. it would be expected that a full foreign tax credit would always be available on US. taxes and thus no mixer” erect. from US. source income. Mime. mi Hobbit-ii; _ V - “""‘""‘“'l " . We: with the Waterloo tinn of%n E. Bruno Chartered Accountant. The complexity of the issue should now lttyrrrtit.tto.iournpriliiiFirGiii; additional insight in future articles. The need for professional tax advice in this area is essential to minimize the Mheta of taxes on your investment deciliou. in Canada. Consequently, combined Canadian income taxes and US. estate taxes which arise due to the death of a Canadian could be as high " 80 per cent. Estate taxes apply only to Canadian individuals not corporations, since cor- porations never die. Thus there may be some advantage to holding the real estate in a Canadian corporation. If the property were held jointly, say with your spouse. you could double up on the unified credit. In fact there are a number of ways you could structure the purchase each of which would give rise to different '.eot1ntafrttrtypesutaxea,aswuai different legal and tax rtling costs. The complexity of the issue almuld no- other hand, levies an Estate Tax at a rate between 18 per cent and 55 per cent on Us. property held by Canadian, less a Unified Credit of $13,000. This estate tax is not eligillle for a foreign tax credit Ihms Bell., flPtef 4mwu51u