CRA Still Pursuing Donation Scammers

July 10/18

A recent court ruling has upheld a decision that required a tax preparer to spend 30 months in jail for preparing a return that included a fraudulent donation. In the past CRA’s typical response to determining that a donation claimed by a taxpayer is fraudulent has been to charge interest and penalties to the taxpayer. In some cases the tax preparer has also been assessed a civil penalty.  Criminal charges against the tax preparer are a fairly new development, indicating that CRA is still very interested in stamping out donation fraud.

The donation frauds of the past have involved items such as AIDS medicine. What the promoter of the fraud has said is that you can buy these medicines at cost and then when you donate the medicine to an area that needs it, such as a developing country, then you get the donation receipt for the market value. Time and again the courts have held that this is not allowable. Taxpayers who have made these claims have had to pay gross negligence penalties, which can amount to an additional 50% tax. So let me remind you that if someone offers you a $5,000 donation receipt for a $1,000 donation, you should decline this offer!

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