Tax shelter

The CRA considers a tax shelter to include an investment that can be reasonably expected, based on any statement, representation or promotional literature, to provide federal tax credits, or a combination of federal tax credits and losses or deductible amounts that are equal to or over a buyer's net cost in any of the first four years.

The total of the federal tax credits and losses or other deductible amounts would be equal to, or greater than, the cost of your share of the investment after deducting the prescribed benefits.

The cost of your interest in the property has to be reduced by the prescribed benefits you or a person with whom you do not deal at arm's length will receive or benefit from. Prescribed benefits include provincial or territorial tax credits, revenue guarantees, contingent liabilities, limited recourse debt and rights of exchange or conversion.

To claim deductions or losses from tax shelter investments, attach to your income tax and benefit return the T5003 slip, Statement of Tax Shelter Information, and the T5013 slip, Statement of Partnership Income, if applicable. Also attach a completed Form T5004, Claim for Tax Shelter Loss or Deduction. Make sure your form identifies your tax shelter identification number.

If this is the first year you are making a claim for your tax shelter, include a copy of Form T5003 with your income tax return. If the tax shelter is a partnership, include a T5013 slip with your return.

You only have to complete Form T776 if you have a rental operation and you are reporting rental income or a rental loss.

Forms and publications

• Guide T4036, Rental Income
• Form T776, Statement of Real Estate Rentals
• Information Circular IC89-4, Tax Shelter Reporting