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TAXFlash News from IncomeTaxCanada.net
:: Onslaught of tax shelters and creative tax-saving schemes is no accident at this time of year
:: The end of the calendar year always brings an onslaught of tax shelters and other creative tax-saving schemes. The timing of this marketing blitzkrieg is no accident since many taxpayers turn their minds to tax reduction at this time of year. Equally predictable is CCRA issuing a press release warning taxpayers about the perils of ill-conceived tax plans. Clearly CCRA would rather stop taxpayers from diving in head first than having to deal with the issue further on down the road. In recent years, the focus of CCRA’s annual press release has been tax shelters and there may still be such a release forthcoming. This year, however, the first CCRA warning shot is targeted at art-donation schemes or “art flipping”. While acknowledging the legitimacy of donating works of art to registered charities, the press release warns that “taxpayers should be aware of the risks associated with certain art-donation schemes--often referred to as "art flipping"--which have the effect of cheating the government out of taxes that should be paid”. Any rest assured, tax collectors don’t particularly like being cheated. Art-donation schemes generally work as follows: A promoter provides a taxpayer the chance to purchase a work of art at a relatively low price. Now if you’re like me, once I get beyond Rembrandt, I can’t distinguish the difference from valuable artwork and junk. The artistic side of my brain has atrophied through a complete lack of use since the day I was born. Art and the value of art is simply not my balliwick. But have no fear, be it collector’s piece or trash, the promoter who sold the investor the stuff in the first place will also have made arrangements to donate the same piece of art to a Canadian registered charity. Indeed this part of the process is often so smooth that the investor will more than likely never set eyes on his or her newly purchased work of art. In my case, that’d be a good thing. In between the original purchase of the artwork and its subsequent donation, an appraisal is completed that concludes, lo and behold, the “investment” is worth more, perhaps substantially more, than its original cost. Imagine that turning a profit on a first foray into the subjective world of art investing not bad for a neophyte investor!
CCRA provides advice on Artwork and Charity
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Free Tax Advice Article Submitted to Income Tax Canada.net exclusively by Jim Maroney
CA Canadian Chartered Accountant with Brown, Andrews & Maroney in Maple Ridge, BC, Canada
Official details about this and other topics on income taxes can be found in English & Francais at www.ccra-adrc.gc.ca
Canada Revenue Agency (CRA) / l'Agence du revenu du Canada (ARC) offers bilingual information on its website for
NetFile, deductions (benefits - credits), interpretation bulletins, income tax forms (returns) and tax tables (brackets).
Income tax information offered by www.IncomeTaxCanada.net is done so without endorsement by Canada Revenue Agency (CRA) - l'Agence du Revenu du Canada (ARC) (formerly Canada Customs and Revenue Agency - l'Agence des Douanes et du Revenu du Canada CCRA-ADRC and formerly Revenue Canada Revenu du Canada) or any Canadian government agency. The free advice is of a general nature for Canadian taxpayers seeking legal ways to reduce their personal and small business income taxes payable to the federal and provincial (or territorial) governments in Alberta, British Columbia, Manitoba, New Brunswick Newfoundland-Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan or Yukon. Specific taxation situations vary from taxpayer to taxpayer, province to province, territory to territory. The free tax advice here is only a general guide. Canadians should always seek individual guidance on accounting rules and tax laws from knowledgeable accountants and lawyers. To prepare your income tax return online and NetFile your Canadian income taxes electronically in English or Francais, please visit www.ufile.ca or www.impotexpert.ca websites. Additional information on financial products and services for Canadians can be found at www.CanadianCreditCenter.com.