Investors reminded to exercise caution concerning donations

CRA Taxpayer Alert: Potential investors reminded to exercise caution with respect to certain donation arrangements

The Canada Revenue Agency has released a taxpayer alert reminding investors "that the proposed legislative changes announced by the Department of Finance on December 5, 2003, to limit the tax benefits of charitable donations made under tax shelter and other arrangements, are in effect."

Given that investors may see an increasing number of advertisements for tax shelter donation arrangements as the calendar year end approaches, potential investors should take caution.

"Investors should be aware of the risks associated with participating in certain tax shelter donation arrangements, including gifting trust arrangements, leveraged cash donations, and buy-low, donate-high arrangements. The CRA previously alerted investors about these risks in November 2003 and again in November 2004, advising investors to take a number of precautions to protect their interests."

For the full Taxpayer Alert, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/alerts/2005/a051122-e.html