Crime Prevention Donating to Charities

Every year, Canadians donate generously to registered charities across the country. Your donations allow charities to do important work in our communities. However, there are times when you should be cautious about making a donation.

Donation Schemes

False Charities

Bogus charities often use names that are very close to the names of legitimate and respected charities. The end of the year is the peak season for charity appeals. It also is the peak season for bogus charity appeals.

Warning signs:

High pressure or threatening telemarketers who want you to contribute immediately.

Someone calls and thanks you for a pledge you don't remember making.

Copycat names or names that might be misleading or deceiving.

Tax Shelters

People are sometimes approached to donate to charity through tax shelter arrangements. Before you decide to donate in this way, you should be aware of the risks associated with participating in certain tax shelter donation arrangements, including:

Gifting trust arrangements

Leveraged cash donations

Buy-low, donate-high arrangements

Promoters of such shelters must obtain a tax shelter number from the Canada Revenue Agency (CRA). The CRA uses the tax shelter number to identify the tax shelter and its investors, but offers no guarantee that taxpayers will receive the proposed tax benefits.

Visit CRA's Web site for more information on tax shelters and how you can protect yourself.

Illegal Tax Filing

If you hear about a tax preparer offering larger refunds than other preparers, don't be fooled! While most preparers provide excellent service to tax filers, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients.

Remember that even if someone else prepares your tax return, you're the one responsible for all the information on the return.

Use a reputable tax preparer

Avoid tax return preparers who offer to file false tax claims. This could include false charitable donations, false child care expense claims, fictitious business expenses or phony business losses.

Never sign a blank tax form.

Obtain a copy of your tax return for your records.

Visit the CRA's website for more information on illegal tax filing.

Protect Yourself Against Charity Frauds

To protect yourself from fraud, follow these tips before you donate.

Learn and confirm

Before donating, confirm that the charity is registered with the Canada Revenue Agency (CRA). Consult the CRA Charities Listings or call 1-800-267-2384.
Confirm that you will receive an official donation receipt if you want to claim a tax credit.
Ask the charity what activities your donations will support.
Make sure you know who you are donating to. Sometimes fraudulent charities use names that are similar to well-known and respected charities.
Call the charity's head office or visit their website to learn more about its finances and fundraising activities. Ask for its annual report.
Beware of schemes that promise you tax savings greater than your cost, thus allowing you to “profit” from donating to a registered charity. For complete details, see the donor alert section.
Ask yourself: Am I satisfied that my donation will support the work of a legitimate charity?
At the beginning of each year, decide which charities you can afford to donate to. Send your checks directly to their head office, and feel good about giving. When approached for contributions, you can say that you have already given and leave it at that. Perhaps you will consider their appeal next year when you decide on the charities you can afford to give to.

TAKEACTION

If you receive a telephone call, ask for the information to be sent to you in writing. Ask how much of your gift will be used directly for the charity. Ask how much will go toward administrative costs. Legitimate charities have no problem giving you this information.
Remember, on an incoming call a person could be misrepresenting a legitimate charity.
Never give out your personal or financial information out over the phone, or at the door.
Make cheques payable to the charity, not an individual, or make sure that your online payments are secure. Mail the cheque directly to the charity.
Refuse to donate if there are signs of fraud, such as inappropriate pressure to give immediately or being offered a receipt for more than you actually donate.
Report fraud to the Winnipeg Police Service at 986-6222 and PhoneBusters, the Canadian Anti-Fraud Call Centre, at 1-888-495-8501
If a tax preparer is offering you fraudulent tax preparation services, or if you want to report a tax cheater, you can do so anonymously by contacting the Canada Revenue Agency's Enforcement Division at your nearest tax services office.

Learn, confirm, and take action. Be an informed donor.

For more information on the Canada Revenue Agency and registered charities, visit http://www.cra-arc.gc.ca/tx/chrts/menu-eng.html , and for donor information including donor alerts, please visit http://www.cra-arc.gc.ca/tx/chrts/menu-eng.html .