Fraud Scenario – Donation tax shelter scheme

Mary and William are married and have three kids. They are both working professionals but with the rising costs of kids, bills, and mortgage, they find themselves having trouble making ends meet.

One day, Mary and William receive an invitation in the mail to a seminar that promises hefty tax breaks. During the seminar, a representative from a charity explains to the group that if they donate immediately they will receive tax receipts for four times the amount they donate. Mary and William figure this is a win-win; they will be donating to a deserving charity and will get a hefty tax break. They decide to each donate $500 because the tax break will help them with their financial troubles.

After filing their tax claim for the donation, Mary and William receive a notice that the Canada Revenue Agency will be holding their assessment while they review the case. It turns out that Mary and William were tricked into a gifting tax shelter, and ended up losing the money that they paid without a tax break. They are embarrassed and upset.

Does this scenario sound familiar? This couple is not alone. In recent years, approximately 2,500 individuals a year participated in gifting tax shelter arrangements. To date, over 190,000 Canadian taxpayers who donated to one of these tax shelter schemes have been reassessed. Nearly $6.3 billion in donation claims have been denied.

When donating, remember:

Remember if it sounds too good to be true, it probably is.

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