subject: Charitable Donations Trigger Tax Audits, Across Canada! [print this page] You may have heard in the news in recent years that the Canada Revenue Agency has been cracking down on bogus charitable donations. Those taxpayers that are suspected of having made one of these donations could be subject to an audit. If the donation ends up being disallowed, the tax returns will likely be re-assessed and then interest and penalties will be applied to any balance that the CRA determines that the taxpayer owes.
How do you know if you have claimed a bogus charitable donation? The most common example of a bogus charitable donation is when an investor receives a tax receipt for an amount that exceeds the investors actual donation. An example would be if an investor made a $1,000 donation but received a charitable tax receipt for $10,000.
Paul Waldie of the Globe and Mail recently reported that the Canada Revenue Agency has targeted 170,000 Canadians who have claimed approximately 5 billion dollars in bogus charitable donations. Since 2003 the CRA has assessed more than 140,000 tax payers and plans to re-assess another 30,000 in the coming months. The audit is one of the largest in the agencys history and the CRA has hired a small army of auditors to track thousands of contributions.
David Duff, manager of the Tax Shelter Audit Section at the CRA reportedly stated that Weve been pretty blunt in saying we will audit you. Were methodically going through them.
If you have made donations to a charity and received a receipt far larger than the amount of your donation, or worse, received a charitable donation receipt when you made no donation at all, dont wait until you get caught. You can make voluntary disclosure under the voluntary disclosure program and avoid the penalties that you will have to pay if the CRA catches on to you first.
If a CRA auditor has already contacted you, this is serious. It is important that you do not proceed unrepresented. We represent taxpayers all the time that are in this situation. We get in between the taxpayer and the CRA and have the audits conducted at our office. If it is determined that you owe money to the CRA we also have a tax advocacy team that are trained negotiators with a mandate to obtain repayment terms you can live with.
For more information about bogus charitable donations, tax audit and tax amnesty visit www.markfeldstein.ca.
by: Mark Feldstein, CA, Mark Feldstein and Associates
