I frequently receive e-mails from people, or relatives of people, who have been involved in an abusive charity gifting tax shelter. I thought I would share one of those e-mails and also my response. Abusive charity tax shelters - it is more than a legal issue (they don’t work), it is more than an ethical issue (they are highly unethical), there is a huge emotional toll associated with these schemes and the 10 or so year process of worry and uncertainty. I received the permission of the person to reproduce the e-mail exchange.
I read your blog on “Canadian Charity Donation Tax Shelters Make No Financial Sense - or any other sense”
My father participated in this Charitable donation and is at risk of losing a lot of his hard earned money. He is in his late 60’s and does not cheat the government. He is a good man, but incredibly naive. He speaks little english and invested in a donation because his accountant was preparing his tax return and encouraged him to do it. He thought he was investing in a Government Run program because he was investing in “registered” government charities and it was marketed that way. Why these so called charities would be registered in the first place if they were fraudulent is disappointing.
Your article assumes that the average Canadian reads the newspaper everyday or goes on the CRA website to get status updates on CRA Issues. My dad can’t even turn on a computer and trusted his tax accountant to do his return.
My father isn’t rich by no means and stands to lose a lot from this. It has taken me months to try to explain to him the implications of his investment and he still doesn’t quite understand how in Canada this could happen.
People like my father have a lot to lose with this.
Do you know of any good tax lawyers that can help my father out? You seem to know a lot on the subject matter and I emailed to see if you had any recommendation on good tax lawyers that can help him.
Thank you for your e-mail. I am sorry to hear about your father’s involvement with an abusive charity gifting tax shelter and the pain it has caused you and your family. There are over 175,000 people who invested various types of schemes - although some have said that everyone is greedy who put down a $1000 and magically got a $5000 receipt - I think that it is more complicated than that in some cases. It is particularly disconcerting when professional advisors such as accountants are involved in introducing or encouraging their client’s to be involved with such schemes. I agree that many Canadians are not plugged in to the internet and unfortunately all I can do is write some pieces that will be read by those who are on the internet and choose to take the time to read it – which is perhaps a small number of people. Hopefully some of my articles will be read before people “invest” in these schemes and suffer similarly to your father. Unfortunately, the billions in dollars of foregone tax revenue have meant that many other law abiding Canadian citizens have had to pay an unfair share of the tax burden.
Our firm does not represent people involved with tax avoidance schemes. I don’t know the particulars of the scheme that your father was involved but if it is like some of the schemes that I have seen which are essentially tax evasion you may wish to consider reporting the accountant who introduced and encouraged your father be involved with the scheme to the accountant’s regulatory body. For example if he is a Chartered Accountant you could report him to the Institute of Chartered Accountants of Ontario Attention: Tatiana Rabinovitch Associate Director, Standards Enforcement or by fax at 416-962-5538. If he or she is a CGA in Ontario then this link may be helpful http://www.cga-ontario.org/Public/Protecting_the_Public/Complaints_and_Discipline/Formal_Complaint_Procedure.aspx
Sorry I cannot be of more help,
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.