Canadian Investors need to be wary of a possible tax evasion or avoidance scheme, warned The Royal Canadian Mounted Police (RCMP) GTA Financial Crime Unit on Monday.
The fraud is like a “tax charity” where for each dollar donated to an alleged charity a tax deduction receipt is provided at a multiplied rate of return. The RCMP said these scams are designed to create business losses that are then used to reduce an investor’s personal income tax.
The pooled funds are supposedly invested in struggling companies, which sign over their business losses to be split between the investors at a multiplied rate. The tax scam offers a ratio of return of five or six for every dollar invested.
The RCMP said they have received reports of people investing in this financial product under the title of “joint venture.” The product is sold through “road shows,” electronic media or through “unscrupulous investment advisors.”
So far the RCMP has received numerous calls from people across Canada who have invested in such scams, said Sgt. Richard Rollings, a spokesperson for the RCMP. There have even been some cases of investment advisors who, having failed to do proper due diligence, believe these tax schemes to be legitimate and advise clients to invest.
“The first thing to think about is, if it seems to good to be true it probably is,” said Rollings. “And you should always be cautious when investing in these types of things, seek professional help.”