Tax Tip: Gifting Tax Shelter

CRA has commented on settlement offers granted to certain taxpayers who have filed Objections with respect to denied charitable contributions made through gifting tax shelters.

The settlement offers note that if the terms are accepted:

  • the Objection would be resolved, and the return would be reassessed; and,
  • acceptance would conclude the dispute process.

If the offer is refused:

  • CRA will take further action on the taxpayer’s Objection without advance notice;
  • CRA will maintain its position that the taxpayer is not entitled to the donation tax credit in question; and,
  • in most cases, the next step would be to pursue the matter before the Tax Court of Canada.

CRA has noted that they are continuing to issue these letters and may contact the taxpayer in writing in the coming months to resolve some of these Objections.

It appears that CRA may allow the cash portion of the claim if it is at least 20% of the total donation amount for which the tax credit was claimed.

Action Item: If you are involved in a gifting tax shelter, inform us as there may be a settlement option available.