Tip 89 - Should you put money into tax shelters?

CCRA has warned potential investors to think twice about putting money into a tax shelter when its expected net return in the first few years is derived mostly from tax refunds.

CCRA will investigate any tax shelter with evidence that:

$image\BULLET.gif$ it has no real business activity,

$image\BULLET.gif$ it has no reasonable expectation of profit,

$image\BULLET.gif$ expenses are unreasonably high,

$image\BULLET.gif$ losses for tax purposes will exceed the amount of the investment that is actually at risk, or

$image\BULLET.gif$ promoters are making unconfirmed verbal assurances about income tax consequences.

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