#FinancialFridays: Tax schemes and Tax scams
It is Fraud Prevention Month in Canada, and after speaking with Mary Jane Murray on a taping for “Over Coffee” on Rogers TV, I realized I have been scammed more times than I realized. I am going to take March to teach myself ways to identify and protect myself from common scams and share what I learn with you.
It is important to get information from trusted sources. The Competition Bureau of Canada is a trusted source.
Wow! While I was doing research for this post, I found statistics. In 2023, the Canadian Anti-fraud Centre
- processed 63,434 reports to them about potential fraud events
- found that 41,988 people were defrauded
- found that $560 Million ($560,000,000!) had been lost to fraud.
(Remember, these were those who reported it. Many people who are victims of fraud don’t report it so the actual number could be much higher.)
Because it is Income Tax season, let’s focus on tax schemes and tax scams:
Tax Schemes
Tax schemes are plans or arrangements that promise to reduce the taxes you owe, either through large deductions or through offering tax-free income. “Promoters” are people or corporations that promote and sell tax schemes that try to break or bend the rules of Canadian tax laws. They deliberately make false statements to help their clients cheat the tax system (with the client being unaware or aware) and get a financial benefit themselves. Tax Schemes
- are positioned as financial products or business opportunities
- advertise (internet, social media, newspapers, fliers sent to households)
- have a sales pitch (free info session, paid seminar, webinars)
- promise tax savings, which often include large returns on small investments
- claim a portion of the anticipated tax return as the promoter’s fee
- seem “too good to be true.”
Promoters of tax schemes are often polished and professional. They work really hard to make the schemes look legitimate. They can be charming, have professional-looking presentations, and may claim the scheme is approved by the CRA. They may also discourage you from seeking a second opinion and discourage you from speaking with the CRA.
If a tax preparer offers you unusually large refunds, this can mean they use questionable practices. Most tax preparers provide excellent service to file your taxes, but there are dishonest ones who file false or fraudulent tax returns. If you suspect anything suspicious, get a second opinion.
Visit this link for more information about tax schemes.
https://www.canada.ca/en/revenue-agency/campaigns/tax-schemes.html
Tax Fraud and Scams
Some scams pretend to be from a legitimate government, federal and provincial, ministry or agency. Scammers know that when people are expecting money from the government, they may be more vulnerable to scams. These are times like income tax season (March and April each year), at the regular times of the year when people are expecting their GST/HST or Canada Carbon Rebate (January, April, July, October), when Canada Child Benefit and Guaranteed Income Supplement (GIS) eligibility and amounts change (July each year), and when one-time benefit and rebates are announced by the government (like the $200 per person the Government of Ontario sent this January and February).
Scams that pretend to be from the government are trying to get access to your personal and financial information.
Scammers may pretend to be from the following departments:
- Service Canada: These scams would be related to Social Insurance Numbers (SIN), Employment Insurance, and passports.
- Canada Revenue Agency: These scams would be related to taxes and benefits
- Immigration, Refugees, Citizenship Canada: These scams target newcomers
- Canada Border Services Agency: These scams are related to mail packages and couriers.
Visit this link for more information about what to do if you are targeted by scammers for each of these instances.
https://www.canada.ca/en/revenue-agency/campaigns/fraud-scams.html
Protect yourself!
Beware if someone, by email, text, letter, or phone, does any of the following things:
- Demands immediate payment
- Uses threatening language
- Sends you a link and asks you to click it
- Asks for personal or financial information
- Requests payment by cryptocurrency or gift cards.
If you have doubts, listen to them. Take a minute to ask yourself why you are being contacted. Ask questions. Hang up a call to the phone number for the Ministry or Department that you find on a legitimate government website. The Government will never penalize you for calling them directly because you are suspicious the call you received may have been fraudulent.
