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   XPost: can.taxes, can.general, ott.general   
   From: peaashcha@hotmail.com   
      
   "Alan Baggett"  wrote in message   
   news:18b6bc34-ae6a-4714-b185-2cbd7e2e9c8f@g39g2000pri.googlegroups.com...   
   Canadian Tax Test Results :CRA SOTW   
      
   Failing grade on the Canadian Tax Test   
      
   Average taxpayer scored only three out of 10 when asked about common   
   personal taxation rules, but the company that conducted the survey   
   says that is because of the complex changes made to the system   
   recently   
      
   SARAH DOUGHERTY, Freelance   
      
   When it comes to knowing about tax rules that could save them money,   
   Canadians aren't making the grade.   
      
   That's the conclusion of the Great Canadian Tax Test, a recent survey   
   commissioned by mutual fund company Mackenzie Financial. The average   
   Canadian got only three of 10 answers right on the survey of common   
   personal taxation rules.   
      
   But the failing grade doesn't mean Canadians aren't knowledgeable,   
   said Mackenzie spokesperson Sandy Cardy. Rather, the results signal   
   just how difficult it is to keep up with a changing and complicated   
   tax code.   
      
   "Even a genius can't keep up with the number of changes," says   
   Mackenzie Financial's Sandy Cardy.   
      
   “I think Canadians are becoming increasingly sophisticated and tax   
   savvy, but they can't keep up with the changes," said Cardy, senior   
   vice-president of tax and estate planning for Mackenzie. "The results   
   show even a genius can't keep up with the number of changes and the   
   complexity."   
      
   This was the second tax test conducted by Mackenzie, whose core   
   business is mutual fund management. The company also offers wealth   
   management services.   
      
   Mackenzie runs the tax test as part of the education it provides for   
   both independent financial advisers and those that sell its products,   
   according to Cardy.   
      
   On the last test two years ago, the average Canadian turned in a   
   better performance, correctly answering six out of 10 true-or-false   
   questions.   
      
   Cardy chalked up the score slippage in the test done this fall to the   
   introduction of a number of tax changes in 2007. These include the   
   right to contribute to an RRSP up to age 71 instead of 69 and the   
   abolition of an annual contribution limit for RESPs.   
      
      
   Other questions on the test dealt with income splitting, the carry   
   back of net capital losses, gifts of publicly listed stock, tax   
   credits for children involved in qualified physical activities and   
   capital gains on non-registered investments.   
      
   Cardy declined to speculate why there were regional variations in the   
   scores - Quebecers scored the lowest, Manitobans and Saskatchewan   
   residents the highest - other than pointing out one of the questions   
   dealt with a rule not applicable in Quebec. (The other rules in the   
   test apply across the country.)   
      
   Cardy thinks it's more difficult than ever for individuals to do their   
   own tax planning. "A few decades ago, it was easier to go it alone and   
   maximize your credits and deductions," she said.   
      
   In recent years, governments have responded to lobby groups by   
   adopting a slew of new rules, according to Cardy. Seniors, for   
   example, are benefiting from new income splitting provisions. Income   
   splitting allows one partner in a couple to allocate income to the   
   other partner to reduce taxes.   
      
   Canadians are pretty knowledgeable about RRSPs, said Cardy, but tend   
   to miss out on credits and deductions, income splitting possibilities   
   and education planning strategies.   
      
   Plain old procrastination accounts for part of Canadians' failure to   
   be more proactive about tax planning, Cardy said. Information overload   
   is also part of the problem; between the Internet, self-help books and   
   business news on television, taxpayers are swamped with advice.   
      
   Personal finance Average taxpayer scored only three out of 10 when   
   asked about common personal taxation rules, but the company that   
   conducted the survey says that is because of the complex changes made   
   to the system recently   
      
   Cardy's bit of advice is to hire a financial adviser, who can act as a   
   quarterback, bringing in other experts (for example, insurance   
   specialists and estate lawyers) as needed.   
      
   Patricia Lovett-Reid agrees complexity is one reason Canadians neglect   
   tax planning. She also thinks lack of time is a big factor. Lovett-   
   Reid is a senior vice-president with financial services firm TD   
   Waterhouse Canada Inc., a business television host and certified   
   financial planner.   
      
   "Tax planning is about doing a lot of little things right," Lovett-   
   Reid said in a phone interview from her Toronto office.   
      
   “When people are looking to put more money in their pocket, they think   
   about spending less," she said. "Tax planning falls to the bottom of   
   the list."   
      
   When Lovett-Reid hits the road to talk about tax planning and   
   investment strategies, she sums up the priorities with a series of   
   tips. Here is her list:   
      
   - Split income with family members.   
   - Maximize contributions to your RRSP and any RESPs for a child's   
   education.   
   - Borrow to invest.   
   - Where possible, buy and hold investments to defer taxes.   
   - Invest in a home instead of making someone else rich by renting.   
   - Use dividend-paying investments, which are tax advantaged.   
   - Maximize tax deductions and employee benefits. The latter might   
   include preferential mortgage rates and reimbursement for travel and   
   meals.   
   - If you can earn self-employment income, it opens up doors to lots of   
   deductions.   
      
   Aside from working with a financial planner, Lovett-Reid recommends a   
   book published annually by the tax and advisory firm KPMG called Tax   
   Planning for You and Your Family, which is available in book stores.   
      
   Canadians might not see the immediate, tangible benefits of hiring a   
   professional to help with tax planning, but the investment pays off in   
   spades, Cardy said. "If they were to take advantage of all (the   
   rules), it would have a dramatic influence on their future net worth."   
      
   © The Gazette (Montreal) 2007   
      
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   You can't split income with family members unless they're 18 or older or the   
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