Aggressive tax strategy
- Thread starter OrganicFan
- Start date
Talked to somebody who used them. One of the strategies goes something like this. You pay them say $5000 and purchase some units in the company. You will be made some kind of a partner. The company has accumulated losses which was purchased from elsewhere. They will then transfer $20000 worth of losses to you and use those losses to file taxes and reduce the taxes paid by about $10,000. All numbers are approximate.Edifice said:Sounds like a B&S to me, lol.
They seem to be working around in a gray area. Google did not turn up much info about them either.
It may work, but the problem I see is, in case Revenue Canada tightens the screws, not only these deductions will be disallowed, but also I am not going to get back the money I paid to this company in the first place to purchase the losses.
The problem with many of these schemes is that the companies that you invest in never really intend on making a profit. So you get the tax write-off for the investment loss and everybody is happy. Except Revenue Canada is clamping down on companies that don't have a reasonable expectation of profit.
I got burned by this scenerio and Rev.Can disallowed the tax write off and charged me with penalties and interest rates going back 5 years.
That hurt.
I got burned by this scenerio and Rev.Can disallowed the tax write off and charged me with penalties and interest rates going back 5 years.
That hurt.
Sham
These types of shelters have been very successfully challenged in the US for many, many years. They were around in the 50s to 80s and have resurfaced in another form in the late 1990s (offshore partnerships) My experience has been about 70%-80% lose on audit and many others are not economically sound and eventually go bankrupt.
Investment tax credit partnerships/shelters for the most part fail. With back taxes, penalties, interest, etc, investors usually lose about $1.50-$3.00 for every dollar invested.
I no reason to believe Canada is any different than the US in this regard. I believe this one to be a sham. Tread with extreme caution.
MM
These types of shelters have been very successfully challenged in the US for many, many years. They were around in the 50s to 80s and have resurfaced in another form in the late 1990s (offshore partnerships) My experience has been about 70%-80% lose on audit and many others are not economically sound and eventually go bankrupt.
Investment tax credit partnerships/shelters for the most part fail. With back taxes, penalties, interest, etc, investors usually lose about $1.50-$3.00 for every dollar invested.
I no reason to believe Canada is any different than the US in this regard. I believe this one to be a sham. Tread with extreme caution.
MM
I have been in the accounting and financial services for over thirty years. These guys turn up every so often and push their wares. Do not believe anything that is claimed. The returns promised cannot be attained, you cannot deregister your RRSP without penalty and so on and so forth.
The purchasers of their products also become the favourite targets of CCRA and they will make your life miserable, hassle-filled and aggravating for months on end.
The purchasers of their products also become the favourite targets of CCRA and they will make your life miserable, hassle-filled and aggravating for months on end.
Thanks
Thanks guys for the input. I treated this like a $60 incall and said no to that already.
Thanks monotone for the info on the fund. Is there any catch?
Thanks guys for the input. I treated this like a $60 incall and said no to that already.
Thanks monotone for the info on the fund. Is there any catch?
Correction
No, I have a total equity of $5000, and have spent $1500. (or equity of $8500 and spent $5000). You're right in general, no need to count money twice.
monotone said:
No, I have a total equity of $5000, and have spent $1500. (or equity of $8500 and spent $5000). You're right in general, no need to count money twice.
