CRA WARNS ABOUT RRSP WITHDRAWAL SCHEMES

The Canada Revenue Agency is warning about an increasing number of questionable Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) tax-free withdrawals schemes being promoted over the internet, newspaper advertisements and promotional meetings all of which will result in expensive reassessment, penalties and interest. Many Canadians have lost their entire retirement savings to unscrupulous promoters from participating in these arrangements, in some cases the promoter has walked away with all the funds and cannot be found.

The CRA has recently reassessed over 3,100 taxpayers who participated in schemes which resulted in additional taxable income of approximately $144 million. Another 1,800 taxpayers with $84 million in RRIF and RRSP investments are currently being audited. Here's what to avoid:

• Withdrawals of funds without paying tax. Promoters of these plans often promise to return part of the taxpayer's investment by offshore bank accounts, loan-back arrangements, or offshore debit or credit cards;
• Immediate access to assets in "locked-in" RRIFs or RRSPs;
• Unrealistic returns on investments
• Income tax deductions of three or more times the amount invested in an RRSP.

CRA is warning taxpayers to seek independent advice from a tax professional who is not connected to the scheme or the promoter