The Canada Revenue Agency (CRA) is warning Canadians about getting involved in tax schemes. Promoters, including some representatives, tax preparers and investment professionals, are encouraging their clients to participate in “straddle” schemes to reduce the amount of income tax they owe.
What are tax schemes?
Tax schemes are plans and arrangements that recruit participants by promising to reduce the taxes they owe.
What is a straddle scheme?
A straddle scheme often involves the trading of foreign currency and the purchase of “forward contracts”. A forward contract is a contractual agreement to buy or sell an asset, for example, foreign currency, at a future date for a predetermined price.
Be careful before becoming involved in a straddle investment
The CRA is committed to protecting taxpayers and strongly suggests that taxpayers seek advice from an independent tax professional before participating in any aggressive or high-risk activity. Independent advice should be from a tax professional who is not connected to the scheme or promoter.
Your actions may have serious consequences
Organizers and facilitators of tax schemes, as well as those who participate may face serious consequences, including penalties, court fines, and even jail time. Remember: It’s your responsibility to keep proof to support any claim you make.
What can you do?
The CRA encourages all Canadians to seek an independent second opinion from a reputable tax professional on important tax matters.
The above is for informational purposes only.