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From: kim@watsup.waterloo.edu (T. Kim Nguyen)
Newsgroups: ont.general,can.general
Subject: Re: The Taxman Cometh for NSERC Award Recipients
Summary: summary of suggestions received
Message-ID: <KIM.89Aug29130944@watsup.waterloo.edu>
Date: 29 Aug 89 17:09:44 GMT
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	<1989Aug24.111357.26686@jarvis.csri.toronto.edu>
	<6258@watdcsu.waterloo.edu> <11298@watcgl.waterloo.edu>
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In-reply-to: ksbooth@watcgl.waterloo.edu's message of 28 Aug 89 23:38:53 GMT

MEGA DISCLAIMER:  I am NOT a tax expert, so see an accountant or a
lawyer or Revenue Canada for more reliable (!) info.  The tax
deductions mentioned below may/may not still exist.

In no particular order, here are some ideas you might try pursuing to
reduce your taxable income (recall that you can't use an RRSP to do
that, since it is not considered to be earned income).

	- Don't forget to use the standard $500 scholarship deduction,
	  if your award is >= $500

	- Check out the Ontario home ownership savings plan, if you
	  intend to buy a house in Ontario.  The $$ you place in it
	  will not be taxed until (I believe) you use it to buy the
	  house. 

	- If you have young relatives, look into registered
	  scholarship funds as another tax shelter (these are intended
	  to help you put $$$ aside to pay for someone's education).

	- Having your own company allows you to make use of MANY
	  deductions, such as (part of) rent, car costs, phone,
	  stationery, etc. which can be considered valid buisness
	  expenses.  If you do any consulting work, make sure to have
	  the hirer pay your company (instead of you directly).
	  Self-employed persons get better deductions (larger eligible
	  amounts for RRSP contributions).  Computers and other
	  "high-tech" assets depreciate tremendously, so you can use
	  those to great advantage in cutting your taxable income
	  down.  Advertising for your company is also completely
	  deductable.  Day care costs are also valid business
	  expenses for the self-employed. 

	- See an accountant for more deductions possible.

	- If you are a grad student, you might be able to make use of
	  the "research expenses" deductions; you could deduct all
	  sorts of things related to your research, such as (possibly)
	  modems, books, and office supplies.  

	- Stock ownership in Canadian corporations get you tax credits
	  which offset dividend taxation.  Share reinvestment plans
	  will allow you to obtain more shares in a company every
	  quarter.  When you decide to sell your stocks, they count as
	  capital gains, hence nontaxable until you reach $100k
	  profit.

	- Losses on rental properties  can be written off against
	  other income.  This might be a good reason to go out and buy
	  a place (building/condo) for yourself... and if it is your
	  principal residence, any profit you make on selling it will
	  be considered nontaxable (up to $100k).

	- Gifts to universities:  you donate $$$ to the university to
	  buy a computer (the donation is tax deductable).  The
	  university lends you the computer, and a couple of years
	  later it sells it to you at its depreciated value.  Two
	  birds with one stone.

Many thanks to those who sent in these great tips!  Good luck to all
of you, and may these ideas reduce your tax burden.

Not intended as promotional or anything, but a book I purchased,
called How to Beat the Taxman All Year Round by Brian Costello, seems
to have very good advice (not limited to grad students only).  Of
course, there'd be nothing better than paying a few $$$ and talking to
an expert on the matter (accountant).
--
T. Kim Nguyen 				  kim@watsup.waterloo.{edu|cdn}
					        kim@watsup.uwaterloo.ca
			    {uunet|utzoo|utai|decvax}watmath!watsup!kim
Systems Design Engineering  --  University of Waterloo, Ontario, Canada