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ARTICLE · 08 JUNE 2021

Reminder Regarding Tax Shelters And Gifting Arrangements

Miller Thomson
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On May 5th 2021, the Canada Revenue Agency (the « CRA ») circulated a warning for Canadian taxpayers, reminding them to exercise caution when participating in gifting arrangement schemes.

CanadaTax
Maxime Chabot
Maxime Chabot
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On May 5th 2021, the Canada Revenue Agency (the « CRA »)  circulated a warning for Canadian taxpayers, reminding them to exercise caution when participating in gifting arrangement schemes. The timing of this communication could mean that the tax authorities have seen a rise in the number of tax shelters being promoted to Canadian taxpayers. It could also simply serve as a general reminder of their existence.

Nonetheless, it is useful to briefly review the nature of the tax shelter regime, the characteristics of a tax shelter, and the consequences arising once one gets involved in such arrangement.

Tax shelters regime

Charitable giving has always been encouraged and tax planners have developed a number of structures to create tax minimization investments for taxpayers. Parliament has passed legislation that regulates some of these structures, which are referred to in the Income Tax Act  (Canada) (the "ITA") as tax shelters.

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