Oh, oh. Better run down to the newsstand and find a copy.bootsie wrote:Norbert, I read an article in the latest issue of Money Sense magazine that included quotes from you. Good stuff!
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For those who don't want to re-read the whole thread to get the context, here's what happened: My wife and I are in a financial "club" that advised us to participate in a charitable donation program that enabled us to reduce our income taxes to effectively zero. We made a cash donation of $11,200, for which we received receipts. Then, we were granted membership into a trust and received "units" of the trust. We gifted those units to a charity and received subsequent tax receipts for an additional $30,000. We were told that this was not a scam, because the charity actually received that $30,000 in cash, not shares or land or art with an inflated appraisal value - cash. We claimed $41,200 in charitable donations on our income tax return last year, which basically reduced our taxable income to 0, and I received all my pre-deducted income tax back as my refund.Shifty wrote:I'm an accountant, so I'll only comment on the charity scheme. The CRA is VERY aware of these types of thing, every year there a handful more of them, ever more creative and colourful, and I've never seen even one pass scrutiny or a court showdown with the CRA. The end result is always the same, the players (you) have their deduction denied, and have to not only pay the back taxes, but also some hard penalties. It matters not that you won't be alone.
A tentative congratulations but don't celebrate yet. This was for the 2006 tax year, right, with a notice of assessment just issued? CRA has almost until the end of 2011 to reassess you.kombat wrote:Yesterday, I finally got a letter from them, returning my documentation, and with a note stating that based upon their review, no repayment is necessary and no further review is required. My case is basically closed, and the refund stands.
This is a huge relief for my wife and I. Now that we've been through it once and know it is legal, the thought of participating again did cross my mind. However, even though it may be legal, it is indeed still quite morally ambiguous and shady, in my opinion. My wife and I have decided not to try this again, and to simply pay our taxes and avoid the hassle and scrutiny of the CRA in the future.
I thought people might be interested in the outcome, as there was a great deal of absolute statements ("you WILL have to pay it all back, with interest, and penalties") in this thread that turned out to be incorrect.
http://www.sdintlgroup.net/properties-info.php?id=54S&D wrote:This project was SOLD OUT to individual land owners who purchased from S & D in a five month time frame. As of March 2007, Spruce Creek Estates was then SOLD to another developer. Each land owner made a significant return of approximately 27% per year in a five year time frame for this project.
Of course there are another couple dozen projects still on the go - some of which are getting quite stale since I assume today's goals are the same as they ever were: "maximize the land's value in 3 to 5 years". The current economy being what it is S&D probably has around 20x500=10,000 investors that are unlikely come out ahead. Unfortunately it looks like you are going to be one of them - but doesn't mean you made a mistake, just that you took a big risk and this time it didn't pan out.S&D wrote:This project was SOLD to another developer in May 2007 with each land owner making a excellent return of approximately 30% per year in a five year time frame for this project.
I disagree that it's either "fair" or "light." For one thing, we donated $11,200 of actual cold hard cash from our pockets. We were told this money went to the charities we selected - registered Canadian charities with legitimate tax numbers and everything. Yet CRA disallowed even this deduction. So we're still out the $11,200 that is presumeably helping youth athletic groups, yet we have not been given credit for this donation.agraham wrote:That seems more than fair. Your penalty is actually quite light: repay the money the public purse lost due to this scheme and pay some interest akin to what a credit card whould have charged you over the same period.
We were told the charities actually did receive our money. If we were lied to, then why are we being punished so severely?agraham wrote: Since there's no way any legitimate charity got any money to actually do good works with
Don't worry, we didn't get a nickel of "your" tax money. It was merely a a refund of our own income taxes. We didn't receive back any more than had already been deducted from our paycheques all year.agraham wrote: I wouldn't wanted to have seen my tax money going to people who used this "loophole".
We're invested in the "Royal Links Point" project. According to their website, they're still projecting a 3 - 5 year turnaround. Well, it's been 3 years as of this month, and I haven't received any updates at all in over a year. Even when I did receive updates, it was only after I contacted them and prodded them for information (another reason I'm displeased with the whole venture and won't be investing again).agraham wrote: As for the land banking thing I think people may have been too hard on you. Even tho it was a slightly risky and obviously sales-driven venture, if S&D is be believed, some people have done very well during the RE boom by investing in S&D
Heh, thanks, I guess. Other members here have been helpful in giving me suggestions about how to follow up on these investments, as well as providing me with on-the-ground information from Edmonton itself, so I wanted to keep them informed on how these things are progressing for me.agraham wrote: kombat, I have to say you have amazing fortitude. Even when many people were down on your investment, you didn't get your hackles up - you stayed objective - and you've continued to post about how it's gone to educate others.
You were told that you contributed to a charity but you probably never did. A scam artist took your money and the charity never saw anything of it. Why should the government give you a tax credit for transferring money to a scam artist?kombat wrote: I can understand why the "in-kind" donation was disallowed, but that $11,200 came out of our actual bank account and went to a registered charity with a valid charity number. If we were mislead or lied to, I don't see how disallowing this contribution, and then charging us 3 years of back-interest on the refund could be considered at all "fair."
If the charity was real then you deserve the deduction. If it wasn't then you don't. If the money was stolen by a fake charity then no donation was made. That has nothing to do with taxpayers like me. If someone stole $11,200 from you, you need to take it up with them as a civil matter.kombat wrote: We were told this money went to the charities we selected - registered Canadian charities with legitimate tax numbers and everything. I can understand why the "in-kind" donation was disallowed, but that $11,200 came out of our actual bank account and went to a registered charity with a valid charity number. If we were mislead or lied to, I don't see how disallowing this contribution, and then charging us 3 years of back-interest on the refund could be considered at all "fair."
Let's be honest - did you donate money because you feel strongly about youth sports? I wouldn't call your punishment especially severe. I went a few years without paying my taxes and when I finally filed I was assessed penalties and interest and I payed them without complaint because fair is fair. I kept money that other people were putting in the public kitty because I wanted a motorcycle. Money has an opportunity cost.kombat wrote:We were told the charities actually did receive our money. If we were lied to, then why are we being punished so severely?agraham wrote: Since there's no way any legitimate charity got any money to actually do good works with
When one person pays less taxes all the other people pay more. Plain and simple: you took my money.kombat wrote:Don't worry, we didn't get a nickel of "your" tax money. It was merely a a refund of our own income taxes. We didn't receive back any more than had already been deducted from our paycheques all year.agraham wrote: I wouldn't wanted to have seen my tax money going to people who used this "loophole".
I wouldn't go as far as to say it was a "scam artist." It was Parklane Financial, based in Toronto, Ontario. The money was invested through Trafalgar Trading Group in Bermuda with Ed Furtak. It was a convoluted scheme to take advantage of a legal tax loophole. I wouldn't call it an outright "scam." A portion of the money did in fact make it to the charities.Germack wrote: You were told that you contributed to a charity but you probably never did. A scam artist took your money and the charity never saw anything of it.
I can understand why we would not be permitted to claim a tax deduction for a donation that turned out not to be legitimate (if that is indeed the case - note that it is still before the courts and has not yet been officially decided. The CRA doesn't get to make tax law). However, it's the interest they've assessed us that I'm a little bitter about, and that seems a little excessive. It seems akin to kicking us while we're down. Not only did we receive no benefit at all for participating in the program, but we're still out the $11,200 cash that we contributed (again - to a legal charity with a valid charity registration number), and we have to pay $3,000 in interest that accrued while the CRA dragged its heels in reassessing us.Germack wrote:Why should the government give you a tax credit for transferring money to a scam artist?
kombat wrote:
I wouldn't go as far as to say it was a "scam artist." It was Parklane Financial, based in Toronto, Ontario. The money was invested through Trafalgar Trading Group in Bermuda with Ed Furtak. It was a convoluted scheme to take advantage of a legal tax loophole. I wouldn't call it an outright "scam." A portion of the money did in fact make it to the charities.
OK, but you knew you were supposed to be paying taxes on that.agraham wrote:I went a few years without paying my taxes and when I finally filed I was assessed penalties and interest and I payed them without complaint because fair is fair.
Actually, it definitely did exist. However, the Conservative government recently passed legislation closing the loophole, several years after we participated in the program. But they made the legislation retroactive. There's currently a case before the courts to decide whether or not it's legal to go back in time and retroactively disallow loopholes that were legal at the time.Germack wrote:They told you that you took advantage of a legal tax loophole, but this loophole never existed.
I think this is a valuable summary of your experience. If it only costs you $20k tuition for you to come away with this critical lesson, I think you are probably doing better than most, certainly better than a lot of people I know.kombat wrote:...the only way to protect yourself is to become a distrustful cynic.
First of all, Kombat, I deeply appreciate your candour in sharing your experiences about this charity issue and the land banking venture. You have provided quite a detailed picture of what you were promised, what your feelings and views were at the time, the subsequent events (or, in the case of the land bank thus far, non-event) and your current feelings and views.kombat wrote:OK, but you knew you were supposed to be paying taxes on that.agraham wrote:I went a few years without paying my taxes and when I finally filed I was assessed penalties and interest and I payed them without complaint because fair is fair.
What's happening here to me is akin to investing money in an RRSP with TD Waterhouse for several years and taking the tax deduction, then finding out TDW wasn't actually allowed to operate RRSP shelters, so the CRA demands you repay all your refunds plus interest. Is it fair that you pay thousands in interest because TDW lied to you and you believed what you were told?
Ding dong! That rings a bell. It's a small worldNemo2 wrote:This guy?kombat wrote:Trafalgar Trading Group in Bermuda with Ed Furtak.
(I visited Conexys' Tronno offices about a decade ago re some unified e-mail software they were developing. Good thing things didn't go any further than that.)Mr. Furtak is a principal in Trafalgar Securities and was president of now-defunct Conexys, an internet communications provider. Mr. Furtak and Trafalgar were censured and fined in 2003 by the Ontario Securities Commission for improper selling of Conexys shares.
3 months of expenses are $24,000? That's pretty high, isn't it? Sounds like you could cut back your lavish lifestyle and build up your net worth a lot faster. Oh well... it's your money to blow however you want.kombat wrote: My current plan is to build that emergency fund up to a solid 3 months of expenses ($24,000, building at a rate of $2250/month).
Even $5000/mo sounds pretty high, although I suppose mortgage payments might take up a chunk of that, so perhaps it's reasonable.kombat wrote:I actually just had this conversation with a friend of mine tonight. Our monthly budget is $8,000, but that includes about $3,000 worth of "savings" each month (retirement, car fund, travel fund, emergency fund). My friend argued that in an "emergency" (such as double unemployment), we would suspend those savings, and thus wouldn't need such a big emergency fund. There's a case to be made for that, for sure.
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$8,180 Net Income
$2,041 Mortgage
$ 319 Property tax
$2,150 RRSP contribution
$ 100 TFSA contribution
$ 100 Emergency fund savings
$ 300 Car replacement savings
$ 450 Travel savings
$ 260 Rogers bill (cable, home and cell phones, internet, long distance)
$ 75 Electricity bill
$ 30 Water/sewer bill
$ 165 Natural gas bill
$ 127 Home insurance
$ 123 Life insurance
$ 93 Car insurance
$ 70 Long term disability insurance
$ 250 Miscellaneous household expenses
$ 530 Groceries
$ 800 Personal spending cash ($400 each)
$ 200 Car repairs and maintenance
$ 255 Gas and bus passes
$ 150 Gifts
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$8,588
WWNet-Worth Obsession
By RON LIEBER
Joey Kincer is the kind of guy who likes to keep records. Kincer is a 32-year-old Web developer who lives in San Juan Capistrano, southeast of Los Angeles, and among the things he tracks on his personal home page at kinless.com are his collection of action figures based on the Mega Man video games (“Not for sale,” the site warns sternly), the piano awards he received as a child (“My mom kept track of them all,” he says) and a photo gallery of female celebrity crushes that he refers to as his Dream Team.
His highest achievement in record gathering, however, is contained in a Quicken file, where he has tracked his personal finances for 16 years, ever since he was in 11th grade. On a recent Wednesday evening, Kincer punched a few buttons on a keyboard and projected his entire financial history onto a giant screen hanging from the ceiling of his bedroom for me to see. There was the $3.38 he spent on chips and dip on March 16, 1996. A birthday card for a friend a few weeks later cost $3.18. Deposits arrived in small amounts every couple of weeks thanks to a job playing piano at church.
This trove of data came in handy a few years ago when Kincer happened upon a Web site called NetworthIQ, which allows people to record their net worths and display the ups and downs for anyone to view. Most people who share their data do so anonymously, but Kincer posts a link to his personal Web site, where he uses his real name. Kincer especially liked that the site allowed him to compare himself with others. It appealed to the Mega Man player in him. “NetworthIQ is kind of a game,” he said. “Can I get ahead of everyone? Can I be up there with the big shots?”
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