It’s the season for thinking about gifts and stores are busy with people completing their shopping. One present you won’t find in a mall however, are tax shelters presented as gifting schemes.
This is a case where if it seems to be too good to be true, it probably is! Charities that purport to offer donation receipts valued higher than the value donated are not legitimate and cannot be used to claim a tax credit.
The Canada Revenue Agency continues to vigorously investigate gifting tax shelter schemes and will not asses a tax return that includes this type of claim until after the tax shelter has been audited. Audits can take up to two years. Proactive tax payers can remove the claim from their return in order to have their tax return assessed without waiting for the shelter audit to be complete.
Gifting tax shelters present financial risks. Individuals wishing to pursue this type of investment should research the opportunity, solicit independent financial advice and understand that an identification number is not proof of legitimacy.
There are 80,000 charities registered with the Canada Revenue Agency. Don’t let the disreputable tax receipt practices of a few organizations influence your decision to give generously this holiday season.