| Income Level |
$35,000 |
$65,000 |
$85,000 |
$115,000 |
$250,000 |
| Taxes Paid |
6,246 |
15,344 |
$22,892 |
$
35,083
|
$94,078 |
| Average tax rate |
17.85%
|
23.61% |
26.93% |
30.51% |
37.63% |
| Marginal tax rate |
25.15% |
33.70% |
39.70% |
43.70% |
43.70% |
| Marginal tax rate dividends |
8.40% |
19.08% |
26.58% |
31.58% |
31.58% |
| Marginal tax rate gains |
12.58% |
16.85% |
19.85% |
21.85% |
21.85% |
ALBERTA
| Taxes Paid |
$6,675 |
$15,984 |
$22,984 |
$33,820
|
$86,470 |
| Average tax rate |
19.07%
|
24.59% |
27.04% |
29.41% |
34.59% |
| Marginal tax rate |
26.00% |
32.00% |
36.00% |
39.00% |
39.00% |
| Marginal tax rate dividends |
7.83% |
15.33% |
20.33% |
24.08% |
24.08% |
| Marginal tax rate gains |
13.00% |
16.00% |
18.00% |
19.50% |
19.50% |
| Better (worse) living in B.C. |
$429 |
$640 |
$92 |
$(1,263)
|
$(7,608) |
LEASE
NEGOTIATIONS
While there are many considerations when leasing your
business office space, one of the most important items is the term.
Many business owners assume the 5-year term offered by the landlord
is their only option and inadvertently sign. In a growing business,
a 5-year term can be too long, as needs can change and the term
becomes an anchor for successful business operations. A good
solution to uncertainty is to engage a short 1st term with an option
for longer-term renewal when growth is uncertain. An example would
be a 3-year term with a 5-year renewal option, and to ice the cake,
pre-negotiated rental rates for the renewal option
period.
RRSP
CONTRIBUTIONS
If
either you or your spouse are not yet 69 this year, then you can
normally make contributions to a registered retirement savings Plan
(RRSP) and deduct them from your income for tax purposes. Your RRSP
limit for 2004 is based on your 2003 earned income adjusted for
employer pension plan contributions. Your available RRSP room will
be printed on your prior year Notice of Assessment that you received
from the Canada Revenue Agency after you filed your 2003 tax return.
The deadline for contributions is March 1, 2005. Some consideration
should be given to making a spousal contribution in the event your
spouse's income is projected to be less than yours at
retirement.
ARE RRSP'S A GOOD
THING?
Well
that really depends on how you invest it. In your early years,
nothing beats the RRSP vehicle for the 1st time buyer's home loan
provision of $20,000.00. You and your spouse can withdraw this
amount without penalty from your RRSP. The payback is over 15 years,
with no interest expense, plus you received a tax deduction each
year when making the original contributions. A simple and tax
effective way to get your $40,000.00 down payment into the real
estate market.
Any
contributions after that should be wisely invested or you may end up
with less than you started with. Too often the mentality with RRSP
investing is high risk, which is activated by the feeling the money
is not all yours. After all, you just received the refund for the
tax portion, "thanks Mr. Martin", "I have your money invested in
my RRSP with Green Pasture Gold Fields". No matter what, RRSP
money should always be invested in low risk ventures to ensure when
retirement comes, the money is there.
DISABILITY SUPPORT
DEDUCTION
There is a new full deduction, instead of a tax credit,
for individuals with a disability who incur medical expenses to work
or go to school. Ranges of work-related medical expenses are
allowed, including Braille and computer devices for the blind,
note-taking services, talking textbooks, voice recognition software,
tutoring services and attendant services. The new deduction was
introduced in the March 23, 2004 federal budget. While the
legislation has not yet passed, it will eventually, and will be
retroactive to 2004.
PASSIVE INCOME
Passive Income, the key to financial freedom, is money
that you earn even while you sleep. The secret is to leverage your
time and money instead of trading time for dollars. There are two
ways to acquire passive income: create a business system that
operates without you and create income through passive investment
vehicles such as real estate. There are creative ways to make money
with elegance and ease. Just ask yourself this question before you
go to bed at night: "How can I create one dollar per month passive
income?" Your subconscious will work out a solution. (July Ono,
entrepreneur and owner of On The Beach Education Corporation,
creates joint venture partnerships to acquire passive income.
Financial freedom is what we teach; we help our investors retire on
the beach.) july@jasire.com .
Hope
all are well and please call if you have any questions regarding any
item on this newsletter.
