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Don't get caught in a gifting tax shelter scheme

(NC) Have you ever been offered a charitable donation receipt for an amount higher than the value of what you donated? If so, this could be a gifting tax shelter scheme, and you should keep the following in mind.

• The Canada Revenue Agency (CRA) issues tax shelter identification numbers to track gifting tax shelters and their participants. A gifting tax shelter identification number is used for administrative purposes only, and does not mean you are entitled to any of the benefits being promoted in relation to the gifting tax shelter.

• Gifting tax shelter schemes could put you at financial risk, including having any related tax refund you may claim on your income tax and benefit return disallowed. Interest and penalties may also apply. The CRA has issued many warnings about getting involved in gifting tax shelter schemes. The CRA plans to audit all such gifting tax shelter schemes. Every audit completed to date has resulted in a reassessment of tax, plus interest.

• If you participate in a gifting tax shelter scheme, the CRA will not assess your tax return or send your refund until after it has audited the related gifting tax shelter, which can take up to two years. The CRA will then assess your return based on the results of the audit.

• Starting with the 2013 taxation year, if your gifting tax shelter amounts are in dispute, you are now required by law to pay 50 per cent of the taxes in dispute.

• It is important to remember, if the gifting tax shelter offer sounds too good to be true, it probably is.

Think twice before participating in a gifting tax shelter scheme. Learn more at www.cra.gc.ca/taxshelters or www.cra.gc.ca/alert.

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