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Because even when you win, you lose!

This isn't a real topic... I just wanted to celebrate the fact that we have finally had our CRA-imposed freeze on tax refunds lifted after 3 years of trying to deal with an administrative snafu for one of hubby's old companies.

They had been threatening to charge us taxes on a deemed income of $250,000 for 2005 and 2006, despite the fact that we'd told them that the company ran out of money in 2004.

Now they've sent us a cheque for $32K, including about $2,500 for interest. No letter or any indication of why they are now satisfied...

What a relief. I knew it was stressful, but not how stressful until it was resolved.

Sheesh.

Now we can start feeling motivated to contribute to RRSPs again!
 

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It is amazing how many people choose to mess with the CRA by participating in tax charity shelters and other questionable tax shelters. I mean CRA says in bold print on its website not to participate in these things and people still do. What they don't realize is that it makes no financial sense for average Joes to tangle with the CRA. Like you say, even in the off-chance that you win, it will turn out to be a Pyrrhic victory.
 

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we have an old saying that when one choses to go to a court (could even be CRA), the winner still loses and the loser is dead.

it does not sound as good in english as it does in the native language.
 

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It is amazing how many people choose to mess with the CRA by participating in tax charity shelters and other questionable tax shelters. I mean CRA says in bold print on its website not to participate in these things and people still do. What they don't realize is that it makes no financial sense for average Joes to tangle with the CRA. Like you say, even in the off-chance that you win, it will turn out to be a Pyrrhic victory.
Hmmm. I'm a bit surprised by this opinion. I thought that it was completely acceptable to donate and then claim credits for charitable contributions as long as the charity appeared on CRA's website list of approved registered charities. Haven't we discussed doing this in other threads before? Sorry if I've misunderstood your post.
 

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I think CC is referring to donating and then the charity issues an inflated tax receipt, along with a letter from some accountant that says this is a legit scheme.

A bunch of guys at work bought into this and bragged about how they dont pay tax. They were all re assessed by CRA and are paying back $$$$$$$.
 

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I think CC is referring to donating and then the charity issues an inflated tax receipt, along with a letter from some accountant that says this is a legit scheme.

A bunch of guys at work bought into this and bragged about how they dont pay tax. They were all re assessed by CRA and are paying back $$$$$$$.
Yes, that's what I'm referring to. Not the donations we give to the Cancer Society or United Way. Some people choose to participate in mind-numbingly complex charity schemes where you essentially make a "donation" for $1,000 and receive a receipt for $5,000.
 

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Yeah, I had a co-worker do that, got asked for receipts for the charitable donation #, as certain numbers were deemed ok, and others not. They asked for repayment, of what he would have owed on earned income, disallowing the receipts, he appealed, and that's where it stands now.
 

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I too have a coworker who participated in a similar scheme. Basically, purchase and donate generic brand AIDS drugs to third world countries, and claim the tax credit for the price of brand name AIDS drugs. Last I checked, he still had his money.
 

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The promoters of these schemes cloud the issue by telling people it is legal to donate and claim a deduction.

CRA has no problems with donating. Everybody wins. The question is the value of your donation.

If "something" is worth a grand at just about everywhere you shop but you happen to luck out and buy "something" at a garage sale, or estate sale for 500 bucks then you donate it and claim fair market value of a grand.

But if everyone and their dog is paying 500 bucks for "something", be it art, school supplies, software, drugs then the market value is 500 bucks.

Seems simple to me. Run away from these schemes.

However I also hold CRA accountable for these schemes.

WHen I first came across a global learning systems tax scheme, I phoned CRA. They told me that were aware of the company but would not comment due to privacy laws, etc. They suggested contacting a tax professional.

I guess CRA are not tax pros? SHame on them.
 

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They don't want to give an opinion for it requires indepth review of the scheme, research, analysis, etc. to properly give one. They aren't at liberty to do a cursory review should you later come back and say they gave you the go-ahead.

A thorough is the job of your tax lawyer/accountant, the CRA isn't in the business in reviewing schemes at the will of the taxpayer (short of an ATR).

I think the message is simple: proceed at your own peril.
 

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I disagree. CRA has an obligation to the taxpayer. You have a question they should have an answer.
Sure they can't comment on a specific case per say, BUT they should be able to tell you that a similar scheme WILL result in a re assessment.

In depth analysis? I dont think so. ALL of these schemes are identical . The only differences are what is being donated.

CRA should be able to explain that it is legal to donate to registered charities and that artificially inflating tax receipts will result in re assessment.

CRA is always vague in what they tell you. They dont know the answers to your questions or they transfer you to many other employees that also do not know the answers. In other words they are incompetent in their jobs, and there employment should be terminated accordingly.

It is very simple. You ask if RSPs are legal. Yes they are. They should know the answer. Have a more complicated question?? They should have the answer.
If you were the first and only person to be in a situation that they have not come across then fine. But these donate schemes have been around a long time.

The only other occupation that you can not know anything and keep your job is the weather man.
 

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There's a big difference, IMO, between someone answering the phone on CRA's call-in line and official CRA policy. Just because someone answering an info line doesn't know the answer, this does not mean that "CRA does not know the answer" (by the way, you can always request that someone higher-up or with more specialized knowledge return your call, and they will).

CRA has been very explicit and forthcoming in addressing the "buy low, donate high" charitable donations schemes. I already linked to an information circular which announces their intention to audit EVERY one of these schemes. If you look, you will also find a tremendous additional amount of information on their web site on this topic.

In particular, CRA issued a new definition of the term "fair market value" in 2003 in response to these schemes: "deemed fair market value." Here's the circular which provides basic info:

http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/rcpts/dtrmnfmv-eng.html

and here is a more detailed explanation (not from CRA) on the topic of determining FMV for charitable donations:

http://www.charityvillage.com/cv/learn/PDFs/fairmarketvalue.pdf
 

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How long can the CRA come after you for? I think it's for the rest of your life so maybe if you're old or you know that you're dying, or you some how have nothing to lose then you'll have an upper hand.

I wouldn't mess with them, their power, vagueness and ignorance make for a good 1-2-3 combo.

I remember one time they sent me a assessment for foreign income that I earned for $20,000+. However, someone called me the mail even came to me to ask if I paid yet. I'm like.. what are you talking about? By the time the letter came in the mail, I owed more than $100+ in interest between the time the letter was printed and the time it arrived.

Anyway, I didn't owe them that much money after providing evidence of paying foreign tax. I think I ended up owing less than $5,000. That's what happens when you go and work for a company that has a marginal tax rate less than Canada. That's most countries!
 

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I was audited once an we agreed to a reassessment of two years. So the prior five years were left alone. I had already stopped making the claim.
 

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There's a big difference, IMO, between someone answering the phone on CRA's call-in line and official CRA policy. Just because someone answering an info line doesn't know the answer, this does not mean that "CRA does not know the answer" (by the way, you can always request that someone higher-up or with more specialized knowledge return your call, and they will).

CRA has been very explicit and forthcoming in addressing the "buy low, donate high" charitable donations schemes. I already linked to an information circular which announces their intention to audit EVERY one of these schemes. If you look, you will also find a tremendous additional amount of information on their web site on this topic.

In particular, CRA issued a new definition of the term "fair market value" in 2003 in response to these schemes: "deemed fair market value." Here's the circular which provides basic info:

http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/rcpts/dtrmnfmv-eng.html

and here is a more detailed explanation (not from CRA) on the topic of determining FMV for charitable donations:

http://www.charityvillage.com/cv/learn/PDFs/fairmarketvalue.pdf
Agreed, but try to get the correct information.

I wrote to CRA out lining a classic Smith Manouevre. I wasnt asking for an advanced tax ruling, but a tax opinion.

It took just over one year to get my response, which didnt really give me my answer. It was written in legal goobly **** that requires 2 masters degrees in gobbly ****.

Much of CRA's language includes words like "should, may, might, could, possibly", etc.

AT the end of the day I wasnt confident in deducting compound interest on an investment loan. Simple interest yes.
 

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How long can the CRA come after you for? I think it's for the rest of your life so maybe if you're old or you know that you're dying, or you some how have nothing to lose then you'll have an upper hand.

I wouldn't mess with them, their power, vagueness and ignorance make for a good 1-2-3 combo.

I remember one time they sent me a assessment for foreign income that I earned for $20,000+. However, someone called me the mail even came to me to ask if I paid yet. I'm like.. what are you talking about? By the time the letter came in the mail, I owed more than $100+ in interest between the time the letter was printed and the time it arrived.

Anyway, I didn't owe them that much money after providing evidence of paying foreign tax. I think I ended up owing less than $5,000. That's what happens when you go and work for a company that has a marginal tax rate less than Canada. That's most countries!
I think generally it is something like 6-7 years or so.

But if they really want you for something they can go back as far as they like.

Recently I read about the Montreal mafia familly whos patriarch was being taken to tax court on matters that happened back in the early to mid 80's, so it looks like they can go back as far as 25 years.

I wont mention the name cause I dont wanna get whacked!
 

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If it is a criminal offense (or a suspected criminal offense), there is no limit on how far back they can go. They can also audit your friends and family if they suspect criminal tax evasion.
 
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