Charity Scams US and CANADA
I have a chance to participate in a charity promotion that
promises me a tax deduction of four dollars for every dollar I contribute.
Is this legal
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david ingram
replies:
This is the first email i have answered since Nov 25th.
I
have been against these from the start and issued many warnings. People
who had contributed / invested were horrified when I ridiculed the BANYAN
Foundation on Fred Snyder's program a year ago. At least a dozen of my
clients invested anyway and have all lost their money. Sometimes pretty
paper and an offbeat legal opinion (which still says "consult your OWN tax
advisor") will make someone put in thousands rather than use their
common sense.
The CRA has managed to turn down just about all
of them so far and it is only the new ones that they haven't dealt with yet that
are still out there.
DO NOT TOUCH IT WITH A TEN FOOT POLE (or an eight
foot German either).
The following is a recent CRA publication which
explain the CRA position. The IRS situation is much the same. Stay away
from them.
Media > Alert > 2008
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Warning: Canada Revenue Agency has denied over $2.5 billion in tax shelter
gifting arrangement donations
Despite numerous warnings and audit actions by the Canada Revenue Agency
(CRA), some taxpayers are still participating in tax shelter gifting
schemes.
Statistics and facts
- The CRA plans to audit all tax shelter gifting arrangements.
- For audits completed to date, over 65,000 taxpayers who participated in
these schemes have been reassessed, or are in the process of being reassessed.
- In most cases the CRA has denied the “gift” completely.
- Well over $2.5 billion in claimed donations are being denied.
- In 2008, Canadian courts have continued to confirm the CRA’s position with
respect to these schemes.
Tax shelter identification numbers
The CRA reminds taxpayers that tax shelter numbers are used for
identification purposes only. A tax shelter with an
identification number does not guarantee that taxpayers are entitled to receive
Did you participate in 2007? Not been contacted by the CRA
yet?
If you participated in a tax shelter gifting arrangement in 2007 and claimed
your “donation” on your tax return, the claim may have been accepted as filed.
This does not mean that the CRA agrees with your donation claim. Keep your books
and records in case the CRA reviews your return.
The CRA generally has three years from the date of assessment to audit and
reassess taxpayers. These audits can take over a year to complete. The fact that
investors in these tax shelters have not been contacted and/or reassessed should
not be interpreted as the CRA’s acceptance of their claim.
Penalties will be considered, especially where an investor was audited and
reassessed for previously participating in a gifting scheme.
Current promotions
Tax shelter gifting schemes continue to be marketed and claim to be different
from those for which the CRA has previously issued warnings. However, completed
audits have shown that, in many cases, there was effectively no gift being made
and, as a result, the donation was reduced to zero. Taxpayers should avoid all
schemes that promise donation receipts for three to four times the cash
payment.
Packages promoting these schemes sometimes include letters of commendation
about the particular charity, which can give the impression of endorsing the
scheme itself. These letters should not be interpreted as providing any
assurance that these schemes do what they claim to be doing, or that the
promised tax benefits are in accordance with the Income Tax Act.
Still thinking of investing? Get professional, independent
advice
If you are still thinking about participating in a tax shelter gifting
arrangement, it is very important that you get independent legal and tax advice.
Independent advice means advice from a tax professional that is not connected to
the arrangement or the promoter. If property is involved, you should also get
independent advice on its true value. Packages from promoters will often claim
to have legal or tax opinions from a law firm. You may find that these opinions
contain very general comments and do not provide unconditional support for the
scheme. Ask to see them, and have them reviewed by an independent
Come to us before we come to you.
If you choose to correct your tax affairs before we begin any audit action or
investigation, you may be able to avoid penalties or prosecution. To find out
how to request an adjustment to your tax return, go to www.cra.gc.c/voluntarydisclosures.
Previous tax alerts
For more information on previous tax alerts, go to www.cra.gc.ca/alert
on the CRA Web site.
Related news releases:
The
Canada Revenue Agency revokes the charitable status of the Pinnacle
Foundation (November 17, 2008)
The
Canada Revenue Agency revokes the charitable status of the Choson Kallah Fund of
Toronto (November 3, 2008)
The
Canada Revenue Agency revokes the charitable status of The Banyan Tree
Foundation (October 20, 2008)
The
Canada Revenue Agency revokes the registered status of the Canadian Amateur
Football Association (September 3, 2008)
The
Canada Revenue Agency revokes the charitable status of International Charity
Association Network (August 11, 2008)
CRA
revokes charitable status of the Francis Jude Wilson Foundation (March 5,
2008)
This document is also available for download in PDF
format.
To get notification by email when news releases, fact sheets, tax tips, and
tax alerts are added to our Web site, subscribe to our electronic
mailing list. You can also subscribe to the Media room RSS
feed.
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Most
Sundays, I am a guest on Feed Snyder's Show as follows: (an hour and a
half from now this Sunday as an example if you wish to follow up on this.
Another guest today will be Brenna Ricci from DesJardins Funds to talk about
their new HELIOS fund which is a good rival (in slightly different situations)
for the Manulife INCOME PLUS Fund. Tune in to CKNW at 980 on the dial if
in Vancouver and www.cknw.com on the net.
Every Thursday at 12 noon and 7 PM, Fred
Snyder of Dundee Wealth Management
presents free
Financial Seminars for his clients, potential clients and anyone who phones and
asks to attend.
THERE is NO CHARGE! (I used to charge
up to $999.00 for essentially the same thing)
AND - NO ONE'S ARM IS
TWISTED TO BUY SOMETHING.
They are presented at the Dundee Boardroom
(holds about 30 people max)
1764 West 7th
Vancouver, BC
phone (604) 731-8900 - ask for Freda to register for free.
These are genuine educational seminars dealing with everything
from how to buy a house to making your mortgage tax deductible to buying an RRSP
to alternatives to RRSP accounts to estate planning. So what started as 13
separate seminars has now evolved into 23 separate topics.
IT IS NOT
UNUSUAL FOR PEOPLE TO COME TO ALL OF THEM.
ONE LADY CAME TO 53 separate
seminars and her husband came to about 20 with her.
If you have a
financial consultant, bring them. People have brought their bankers and
life insurance agents with them.
Take your spouse, your best friend,
your son, your daughter, your mother or your worst enemy But do phone
604-731-8900
Fred Snyder
also is the host of ITS YOUR MONEY every Sunday
evening We have taken calls from around the world. In one
case, a lady phoned from Florida, got her answer and then asked if I was the
David ingram she knew in Regina back in 1959. Small world as they say.
IT'S YOUR MONEY appears LIVE on CKNW from
6 PM to 7 PM as a phone in show to answer your questions. Call (604)
280-9898 or 1-877-399-9898 or *9898 on your cell to get your question on the
air. I am the
Callers to the show are awarded a free written financial plan
for the future - be prepared to spend a couple of hours on this.
As an aside, I do not do them any more but used to charge up
to $3,000 for essentially the same thing in the days before the wonderful
computer programs available today to assist.
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david ingram's US / Canada Services
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Calls welcomed from 10 AM to 9 PM 7 days a week
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pert US Canada Canadian American
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David Ingram gives expert income
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Canadians from New York to California to Mexico family,
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country investments are all handled with competence &
authority.
IRS Circular 230
Disclosure: To ensure
compliance with requirements imposed by the IRS, please be advised that any U.S.
tax advice contained in this communication (including any attachments) is not
intended or written to be used or relied upon, and cannot be used or relied
upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code,
or (ii) promoting, marketing or recommending to another party any transaction or
matter addressed herein.
Disclaimer: This question has been
answered without detailed information or consultation and is to be regarded only
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construed as advice in any particular circumstances. No contract exists between
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denied. All readers should obtain formal advice from a competent and
appropriately qualified legal practitioner or tax specialist
for expert help, assistance, preparation,
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