Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams
In this recent press release from CRA they noted that “Promoters and other third?party representatives are penalized when they make false statements involving schemes that are against the law. Currently, there are 71 audits involving promoters. Recent examples include a scheme involving RRSPs, for which the promoter was assessed a penalty of $1.8 million, and a tax shelter gifting arrangement case where the Canada Revenue Agency (CRA) proposed two penalties of $24 million against the promoters involved.”
News release Minister Ashfield assures Canadians that shady tax preparers and promoters will be penalized
Ottawa, Ontario, March 16, 2010… With Fraud Prevention Month well underway, the Honourable Keith Ashfield, Minister of National Revenue, Minister of the Atlantic Canada Opportunities Agency and Minister for the Atlantic Gateway, is reminding Canadians that the minority of tax preparers and promoters who try to make money at the expense of Canadian taxpayers are not getting away with it.
“Canadians should know that honest tax preparers and promoters are an important part of the tax system, and that the vast majority are professionals who fully respect tax laws. But there are some who engage in fraudulent activity,” said Minister Ashfield. “Our government is committed to protecting taxpayers; we want Canadians to be educated about different types of fraudulent activity and know that unscrupulous third parties who victimize law?abiding citizens can be severely penalized under the law.”
Tax preparers provide tax-related services, including the preparation of tax returns on behalf of taxpayers, while promoters are planners of tax arrangements sometimes holding information seminars on specific tax schemes enticing taxpayers to participate.
Promoters and other third?party representatives are penalized when they make false statements involving schemes that are against the law. Currently, there are 71 audits involving promoters. Recent examples include a scheme involving RRSPs, for which the promoter was assessed a penalty of $1.8 million, and a tax shelter gifting arrangement case where the Canada Revenue Agency (CRA) proposed two penalties of $24 million against the promoters involved.
Tax preparers can be penalized when they knowingly make false statements on their clients’ tax returns, such as including false deductions or not including all of their clients’ income. Since 2000, 19 tax preparers have been assessed nearly $1.7 million in third-party penalties. Audits of 15 tax preparers are currently underway.
Since third-party penalty legislation was introduced in June 2000, close to 100 third?party penalty audits are either in progress or have been completed. In addition to undergoing civil penalties, some are facing criminal prosecution. In situations where third parties have been involved in tax shelter gifting arrangement schemes, the CRA has revoked the registration of 33 participating charities.
To find out more about Fraud Prevention Month and how you can protect yourself from fraudulent activities, please visit our Web site at http://www.cra.gc.ca. For more information specifically on third?party penalties, see Information Circular IC 01-1, Third-Party Civil Penalties.
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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.