Canadian Tax Shelter Scams

We get many calls from people who participated in tax shelters. Their story is usually goes like this:

I bought into a tax shelter 4 or 5 years ago. I contributed for one or more years. I put $10,000 into a charitable donation and got a tax-deductible receipt for $100,000. The receipt was used on my tax return giving me a nice refund or reduction in tax owing. The CRA reassessed my tax return 4 years later and disallows the claim. The CRA wants me to pay penalties, interest and tax. I have been scammed. The promoters who sold me the tax scheme want more money to challenge the CRA on the tax scheme that they said was deductible.

It takes about 10 years for these files to go though tax court. During the wait time the debt continues to accumulate interest. The Canada Revenue Agency wins virtually all of these in court. Usually the legal fees that participants pay go to defend the promoters of the scheme.

Don’t listen to anybody who tells you that a tax scheme has been “approved” by the Canada Revenue Agency. If the Canada Revenue Agency has issued a tax shelter number its just an indication that the CRA wants to track it and has yet to make a decision.

If you have purchased one of these schemes or something similar and have not been contacted by the CRA, please give us a call as we can help you save money. If you are just thinking about buying into this type of tax shelter, beware. We have seen lawyers, doctors, chartered accountants and other professionals be caught in this type of tax scam. Remember if it appears to too good to true, it probably is.

The CRA has more information on tax shelters.