The Canadian Jewish News, Friday, December 16,1977 - Page 9
Getting along together
(Leo Hausman photos)
At recent banquet celebrating 60th anniversary of B. Borochov Branch 124, Dr. Sydney L. Wax (right), chairman of Israel Hlsta-drut Campaign, receives $10,000 cheque from branch cludrman Charles Wise. Money goes to the Dr. Samuel B. Harwich Diagnostic Centre in Jerusalem. Looking on are BoHs Sperber, secretary of Toronto's largest Labor Zionist branch and Mrs. Charles Wise.
Ways to finance education
estate planning
A sincere concern and the desire to assure a solid foundation in Jewish knowledge and ethics is resulting in continuing growth in the Jewish day school system. Today, there are more than 6,100 children attending Jewish day schools outside the normal school system in
Ontario.
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Although the schools are subsidized by Toronto Jawish Congress with fuj\ds from the United Jewish Appeal and other charitable donations, fees can be a heavy burden on a young couple. These fees are in addition to the high tnunicipal taxes which everyone must pay to support the public school system.
While the provincial government is adamant in refusing to divert part of these municipally-collected school funds to the Jewish day schools, inr come tax law provides interesting possibilities for easing the fees burden.
Question: I have three children I would like to send to a Jewish day school. Some friends have suggested it is possible to relieve the heavy cost by establishing trusts.
Answer: Yes. Possibilities do exist to make it easier to finance day school JFees. And ihore people are exploring the different avenues available within the framework of existing legislation.
Let's consider the problem first. Suppose the fees for • dur three children totui about $5,000 ann,ual-ly. This is a far heavier' burden than is immediately apparent. Assume approximately half of these fees is deductible as a charitable donation and you are an Ontario resident in the 50% tax bracket. That is. you probably have a taxable income of $36,500 for 1978. Vou would have to earn $7,500 to be left with $5,000 for the fees. • .
The finahciial planning technique we'll outline here can be made to work under many circumstances. For example, grandparents, uncles and aunts can undertake this method to finance the cost of Jewish day school education for their grandchildren and nieces and nephews. Often it is easier and makes, more sense for grandparents who have already accumulated considerably more assets than their still-striving children. Even two sets of . grandparents could share the arrangement we'll suggest.
The method to follow is establishment of a trust for the benefit of the children. Cash is loaned free of interest to the trust through a demand note. The three essential ingredients to emphasize are '*cash," "loan," and ' repayable on "demand." This permits income from the trust to be effectively allocated to the children to be used to pay the school fees without the children actually receiving the funds.
Naturally, the person establishing the trust foregoes the income from the trust.
If the father has established the trust, he loses the deduction of the. exemption claim for each child — a quite modest amount which would have only a minor effect on his income taxes.
Of major importance is that this method of pro: viding for school fees also reduces the total tax impact. For you to achieve the maximum reduction.^ the numbers might work' out something like this. Set aside $150,000 of assets in a trust for the three
children. The cash must be loaned to the trust on a demand basis.
Investment return at
. 10% would be S15.000. Divided three, ways, this means $5,000 for each child — obviously more than is needed for the fees. People of more modest means can, of course, set aside considerably less than the $150,000 — whatever amount is sufficient to provide the fees in any particular case.
The $5,000 of investment income applicable to each child is significantln seeking the maximum reduction in income taxes. Each youngster has the basic exemption of $2,430. another $100 that applies to everyone filing a return, and is entitled to the $1,000 of interest and/or dividend, income free of tax. Add these and other minor factors together, than the $5,000 from the trust probably is effectively free of tax.
As for your tax position, you lose the normal exemption applicable to your children — $460 for those under 16and $840 for those over 16 — so that you might have to pay an additional $650 or so in income tax.
However, if the trust
'. had not been established and the $150,000 of assets had earned $15,000 directly for you. the tax payable likely would be $5,500
assuming you are deducting half the tuition fees. In effect. the trust has saved you $5,500 of income tax.
This arithmetic illustrates the tax savings aspect of this trust. In addition, there may be other tax planning possibilities with the money that remains after paying the school fees.
Fine points can refine this approach and are for your own tax advisor to help you work out.
Questions of general interest are welcomed. Individuals should consult their business, and financial advisors regarding specific personal situations. The United Jewish Welfare Fund Endowment Committee is available to lawyers, accountants, life underwriters and trust officers concerned with estate planning. For information on how the endowment fund functions, ■ write or call Benjamin Schneider at the UJWF. 150 Beverley Street, Toronto, Ont. IVIST 1Y6
Keren Hatarbut Inst.
mgPrm (Curses in maLJ Conversational Hebrew Winter Season
Adults. Teenagers. All Levels. Mornings & Evenings Fof Registration Call Joseph Klinger 787-0197
IN NEED OF LIVE MUSIC? ONLY GO WITH THE BEST. . .
ITHE NOVA SOUNDS ORCHESTRA
WILL HELP MAKE YOUR PARTY A SUCCESS!
CALL TODAY
(416) 783-4556
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The Jewish Connection
Singles Disco Venture
Boxing Day Mon./ Dec. 26, Sp.m.-la.m.
CANARY COTTAGE DISCO
HOTELTRIUMPH 2737 KEELE ST. AT WILSON
(Just North of 401)
Fully Licensed To Age 39 1/2 Ample Free Parking Entrance 53.00 Casual Dress No Jeans Door Prizes
ARE YOU GOING TO ML\MI BEACH? DON'T MISS OUT ON THE GAI.A FESTIVITIES OF THE 1978
International Bond Conference Celebrating the 30th Anniversary of The State of Israel
If you will be in the Miami area in February please fill in the following information and return to: STATE OF ISRAEL BONDS, 3130 Bathurst Street, Suite 210. TorontoOnt. M6A 2A1
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This is what Ontario is doing to help develop understanding between people.
Community counselling is one of the major roles of your Ontario Human Rights Conrmiission. We endeavour to break down communication barriers among groups by working together with agencies, institutions and the community itself. By explaining both the rights and responsibilities of all residents in this province, we believe that the aims and the objectives of the Code can be achieved.
If you would like more information or assistance, contact the Ontario Human Rights Commission office nearest you:
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Ontario Human Rights Commission
Bette Stephenson, M.D., Minister of Labour
William Davis, Premier
Province of Ontario
LUBAVITCH YOUTH ORGANIZATION
presents the
4th CHASSIDIC SONG FESTIVAL
featuring
THE BROTHERS ZIM
North America's foremost exponents of Jewish, Chassidic and Israeli music.
CHASSIDIC SINGERS & DANCERS
Young talented Chassidim, that sing and dance.
HENNY YOUNGMAN
"King of the One Liners"
O^REEFE CENTRE
SUNDAY MARCH 12,1978 8:00 P.M.
I am pleased to be the Chairman of'the Fourth Lubavitch Chassidic Festival to be held at the O'Keefe Centre Sunday, March 12. 1978. This cultural event has generated a tremendous amount of interest in the Toronto Jewish Community. We are looking forward with a great deal of anticipation to this exciting festival, which promises to be ari enjoyable and rewarding experience.
Charles S. Diamond, Chairman ; >
CONCERT COMMITTEE • Barry Appleby • Ronald Appleby • Nachum Eizicovics • Herbert Green • Joel Greisman • Michael Kestenbaum a Rabbi S. Hochler • Al J. Latner • Alan Liernian • Leyns Litwin •^Gerald Marr o David Nisker • DovParshan • Donald Resnik • Jack Schv/artz •. Chaim Shainhouse
______Rabbi I. Witty - Program Chairman
Reserved Seats Only. Tickets: Patron $50; Sponsor $25; Chai$18; Contributor $10-$5; Student $3 All contributions donated to educational purposes and are tax deductible. For further information call any committee member or 633—8020. For tickets, detach and mail ^ouponbelow.
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LUBAVITCH YOUTH ORGANIZATION 44 Edinburgh Drive, Downsview, Ontario M3H 1B4
Name; ... ...... . . . . . . . . .
Address: , . . . . . .... . . . . .
Citv: . . . . . ..... . . . . . . Province: .
Postal Code: . . . ... . . . . . • • ■ • ■ • Telephone:.
Please find enclosed $..............for............... tickets of the following.
□ $50 □$25 □$18 □$10 □$& . □$3