The Canadian Jewish Ne^vs; Thursday, October 12, 1989-Page 45
s Dutlaak
rates
As we enter the fall season and the onset of the High Holidays, one is reminded of the annual, bond drive sponsored by your local synagogue. Coincidentally, the Canadian government gears up its sale of Canada Sayings Bonds (CSBs) at the same time.
Every October, Canadi- : ans flock to their favorite • financial institutioato pur-■ chase CSBs. CSBs are attractive as investments for several 4"easons. Firstly, they are an extremely liquid security. They can be turned into cash at any time, with inferest payable up to the end of the last full month that the bonds are held. ; Secondly, the interest rate offered on CSBs has historically been competitive with other iriterest-, based investments; The interest rate is set only for the .. first year and is changed annually to reflect current ' rates. Sonie series of CSBs even have guaranteed minimum rates.
Finally, the bonds are backed by the Government of Canada, thus making' CSBs one of the safest in-' "vestments in town. ' In the past few years, CSBs haye been issued with 10-year terms to maturity. Recent announcements from the. flnance department indicated that this year a new issue of CSBs will be sold with a 12-year term.
Ttie interestTate on the new issue won't be an^ noiinced until niid-October. ■ The longer term has been iritroduced to save on administration costs by delaying the time when the bonds . mature.
r The two types of bonds thiat may be purchased are categorized as Regular Interest Bonds ("R Bonds")
. and Compound Interest Bonds ("C Bonds"). The - •'^■n payments on these bonds depends on the type of bonds held.
Holders of "R" bonds receive their interest by cheque each Nov. 1. On request, these payments can
: be directly deposited in the registered owner's bank accoiint, . ■
I
V
I
s
I
s
r
\ \
s
\
■s
\
s,
Sonny Goldstein, CLU, CH.F.C.
President
Bv
AKl CHENCINSKI
&. ;■■ ■
LAURIE STARKMAN
Holders of "C" bonds do not receive annual interest payments. Rather, the simple interest is automatically reinvested each year, earning compound interest (interest on interest) until the holder cashes the bonds or until bonds mature. When the bonds are cashed, the holder rbceives one lump-sum payment that in-, eludes principal and accumulated interest.
All CSBs dated prior to 1983 (Series lto37) have matured as of Nov. 1, 1989 and are no longer
earning interest, li is important to check safety deposit boxes and other places where bonds are stored to ensure all of these older bonds have been cashed.
The reporting of the interest earned on CSBs for income tax purposes, is dependent on the type of-bonds held. Owners of'' R " bonds receive interest payments each year and-must-report the interest in the calendar year it isjeceived. Taxpayers receive either a T5 or T600 slip indicating
WE BUY STATE OF ISRAEL BONDS
CALL OR WRITE FOR QUOTES
SIEGEL TRADING CO. CANADA LTD. 533V2 EGLINTON AVE. W. TORONTO, ONT. (416) 481-3515
- HARRY J. PACHTER -
SPECIAL UAIL ORDER SERVICE FOR OUT OF TOWN CLIENTS
May 5750 Bring Ydu Happiness & Health
Arnold Pdlan CA.
Vice-President & Director
863-7575
.Box.433 Commercial Union Tpwer Toronto-Dominibn Centre, Toronto, Ont: M5K 1M2 .
Trusted investment advice since 1921.
Planning For Retirement?
Are you 71 this year? Act now to maximize your after-tax net income!
Call sonny goldstein
Chartered Life LJnderwriter Chartered Financial Consultant
440-0060
HIGHEST QUOTES ON BRIF's, ANNUITIES; etc.
Creative Ideas in Financial Planning
IS YOUR FLAT ROOF
WE FEATURE A SINGLE-PLY SYSTEM THAT INSTALLS RIGHT OVER YOUR EXISTING ROOF AND COMES WITH A FULL 15 YEAR WARRANTY * * *
QUICK AND EASY INSTALLATION - NO MESS, NO-SMELL . NO FUSS ' :
COMMLRCIAL ■INDUSTRIAL • APARTMENT BLDG.
FOR A FREE ESTIMATE & RDQTREPGRT CALL:
RAINBOW ENTERPRISES CANADA
Single-Ply Roofing Specialists
\
the amount of interest income that is taxable. ~ ~"
Owners of "C" bonds have some flexibility in reporting their interest income; Under the current regime, individuals may defer the reporting of interest income for up to three years op "C'^'-type CSBs. While these bonds don't pay interest until maturity, taxpayers are required, at a minimum, to report interest income on these bonds ev-
, ery three years. As an alternative, taxpayer^ can elect to report the interest on an annual basis. .7 -
As a result of the 1989 federal budget, this flexibility will no longer be available for; investments acquired after 1989. CSBs purchased in 1989 will still
^t>e-eligible for this three-
year accrual rule. On a lighter note, one might wonder whether the government introduced this rule to increase sales, of CSBs this year.
Tax
lessens
This change will remove the tax advantage available from purchasing "C"-type bonds. Investors who acquire these types of CSBs in 1990 and subsequent years will find
themselves paying tax on the interest income annually, well in advance of the receipt of the cash. Also bear in mind that for 1988 and subsequent years, all interest income is tafxable as a result of the removal of the $1,000 invest-ment-incoitie deduction.
If CSBs are purchased through a payroll deduction plan, in effect, the CSB owner/employiee is bbrrow-ing_fiinds.:tp acquire the CSBs and repaying (he loan through payroll deductions. The interest portion of the loan repayment may be deducted as a carrying charge.
Taxpayers who wish to make an RRSP contiibution but do not have the funds to do so can transfer CSBs to their RRSP in lieu of a cash
contribution. The yajueof, bonds transferred must adhere to the existing RRSP contribution limits arid the ^^ther xules^that affect
■ RRSPs.
CSBs have long been a favorite investment of the . Canadian "taxpayer. However, just like all investments, it's important that one understands how they work before jumping
■ in. ■
* * *
Aki Chencinski is a tax partner :and Laurie Stark-man is a tax manager in the Toronto chartered accounting firm, Bimbaum, Prenick, Stekel & Co., and are members of the Professional Advisory Committee of the United Jewish Welfare Fund, Endowment Fund.
ARNOLD SEGAL
^. ■ Presidvnt, / k3 ^ I ^ ^ \j kJ M ■ |
tm
mm
Once again, it's time for Canada Savings-Bonds and this year the sales period is from October 19 to November 1. Buy your new bonds wherever you bank or invest starting October 19. You may dat# your-payment November 1,. the day the new bonds Start earning interest.
SAFE AND SECURE. .-^^^
. Canada Savings Bonds are fully guaranteed by the \ Government of Canada. They never fall in value. ^
CASHABLE ANYTIME. f -"^
, Canada Shavings Bonds can be cashed at any time. . Your money is always available when you need it. .
INTEREST RATE ANNpUNCED^^M . The interest rate and purchase limit foi' the new series will be announced in midOctober. Details will be available wherever Canada Savings BqixIs .ace-sold,
DONTBELATE! Remember, November 1
anada