TORONTO - George Harri­son couldn't match CIBC when it came to tax planning.

The late Beatle, who skewered Britain's heavy 1960s taxation with, "There's one for you, 19 for me, 'cause I'm the taxman," would have been impressed by the Canadian bank's minuscule income tax bill in 2001.

By earning most of its $1.69­billion profit in low-tax jurisdic­tions in the Caribbean, CIBC paid just $51 million in income tax -- leaving many observers amazed.

Most taxpayers can only dream of such a scenario, but there are ways to ensure we pay only our fair share - and noth­ing more - without stashing money in the Cayman Islands.

"I encourage people to do their own tax return because it gives them a greater sense of control. That's important, no matter what age you are," says Kurt Rosentreter, financial author, chartered accountant and tax specialist at Berkshire Securities in Toronto.

"At the same time, I encourage them to get a qualified tax spe­cialist to review it."

It takes smart planning to minimize the tax you must pay, Rosentreter says.

"Tax planning is the act of seeking out someone who is competent in understanding the Income Tax Act, who can relate that to your personal situation and - in talking to you about how you live your life - can come up with strategies, deduc­tions and credits that can save you money."

So, while April 30 is the filing deadline, Rosentreter considers Dec. 31 the key date for 2002. "You should have a meeting with a tax planner by mid ­December at the latest," he says.

Here are some of Rosentreter's tips to reduce the tax bite:

Pay attention to your tax bracket:

"If you're making $32,000 a year and you know there's a big jump in the tax bracket at around $30,000, it's quite smart to take a $2,000 deduction."

Plan RRSP deductions:

If you're permitted to con­tribute, say, $6,000 into a regis­tered retirement savings plan in one year, consider doing so but spreading the deduction over two or three years. "The reason you do that is if you have an up­

and-down income stream in the next couple of years," Rosen­treter says.

"For example, if you're making $25,000 this year but next year you're making $33,000, you may want to defer taking the full deduction so you get a deduc­tion against higher-taxed income next year."

Combine charitable claims: Spouses should combine their claims to maximize the credit. There is a bigger tax credit if the claim on one form exceeds $200. Donations can move between spouses and can be carried over to later years.

Use stock-market losses to recover tax paid on past cap­ital gains:

"If you have a capital loss in 2001, you can effectively carry it back all the way to 1998 - three years - and if you had gains in 1998, 1999 or 2000 you can go back and recoup the tax you paid at that time. Just fill out a Tl Adjust, it's one page."

"You can basically go and get that high-taxed income back. Not only that, but the govern­ment will pay you interest on the money they've owed you since back then."

Rosentreter notes that the tax

inclusion rate on capital gains changed three times last year: from 75 per cent to 66 per cent, then to 50 per cent. Capital loss­es can be carried forward "for­ever" if there are no gains in the past three years.

Track the adjusted cost of investments to avoid double taxation:

"Probably the worst offenders are mutual funds where people do a terrible job of tracking their purchase price."

"The government gives you credit for the fact that you're paying tax on the distributions all along, and if you're reinvest­ing them, you've got to add that to the original purchase price. It's just messy accounting."

The T3 slip carries the annual declaration on reinvested distri­butions.

Rosentreter adds a warning about one common misconcep­tion. Money paid for a tax return's preparation is not deductible.

"The reality is, it's not allowed," he says. "Under the Income Tax Act, the only time you can write off an expense is when it's incurred to earn income."

Canadian Press