Canadian Humanitarian Trust.

Hi Folks,

As per requested - I'm going to explain another Tax saving system.

Facts to keep in mind:
1) Ontario's Highest provincial Tax rating is around the 46.4% Tax level. (I'm using ONT b/c it seems that most readers in this forum are from there)

2) In accordance to the Tax act - you are allowed to donate and claim to a maximum of 75% of your gross annual income to charitable organizations.

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The simplified route for saving money through a tax system is what I will share with you for now

As an example - I'll give you an income of 100,000 in the province of Ontario.

At 100,000 - your maximum charitable donations as specified by the tax act - is at 75% of your gross annual wages. In this case - 75,000.

The system I will offer you is one through the Canadian Humanitarian Trust.

Essentially the architecture works as such.
1) Donor donates cash to Foundation A
2) Upon receipt of this donation - Foundation A presents the donor with a Tax receipt equal to the donation amount.

3) CHT (Canadian Humanitarian Trust) sees this donation and offers the donor the option to become a benefactor of the trust - provided they have shown the following:

a) A history of giving in the past.
b) Have donated a significant amount to Foundation A

4) Upon passing requirements to become a beneficiary - the donor receives a gift of pharmaceuticals from the Canadian Humanitarian Trust. The Donor is then given the choice to either keep these pharmaceuticals - or to donate them to the W.H.O. - World health organization. (you can take a guess that most people elect to donate)

5) The W.H.O. (World Health Organization) presents the donor with a tax receipt of the value of the goods given.

6) The donor then applies these two tax receipts to his/her income tax at the end of the year.

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using the sample numbers - it looks like this:
75,000 max. (it's ok to go over a little - you can use it as a carry over for up to 5 years)

Donate $20,720 to Foundation A - from which you will receive a tax receipt for the dollar value of your donation and the option to become a beneficiary of the Trust.

The Trust will grant you (70 units of WHO essential medicine units) based on your level of donation to Foundation A. Which in turn - you donate to the WHO. (This goes to the United Nations to assist 3rd world countries with medical supplies for deworming, and removing parasites)

The two tax receipts will net you a total of $78,120 in tax credits. In ONT - the provincial rate of tax at the highest percentage is 46.4%.

calculation:
78,120 * 0.464 = $36,247.68 <-- this is roughly your tax return. Not taking into consideration any deductions you use for RRSPs, or other deductions or additions to your income.

Essentially - it's a philantrophic, moral, ethical, and most importantly Legal method of redirecting your tax dollars to a worthy cause - while netting you some tax based incentives in return. I've been doing these systems for 2 years now, and have the backings of folks who have been doing it for over 20 years.

If you have any questions about any of the specifics - let me know and I will show you the section in the Tax act that explains it. If you'd like to participate - drop me a PM and I can have further information sent your way. If I cannot answer the question myself - I'll be sure to forward it to my district manager from whom I will obtain an answer from and relay it to you folks.

NOTE: the example I provided above is a MAXIMUM efficiency based model. By no means are you forced to participate at that level. The minimum amount (depending on date - but this is good until Sept 15th) is $2960. You can perform the same calculations on this number if you wish.

FYI provincial maximum tax rates for anyone that wants to apply this to their own numbers:

BC: 43.7
AB: 41.75
SASK: 44
MAN & ONT: 46.8
NS & PEI: 47.3
NFLD: 48.64

If you don't understand the system - let me know and I will crunch your numbers for you. Drop me a PM and I'll provide you with your own numbers.

If folks are located elsewhere - let me know as well - and I'll see if I can accomodate for you with one of my colleages in another province. (if possible - I can't make promises for everywhere except for BC, AB, MAN, and ONT)

To nip some of the questions in the bud for those that enjoy arguing:
Subsection 118.1(3) this time. The recent amendments to the Income Tax Act say that the charitable gifts had to be held for three years or the tax donation was equal to their ACB not the FMV.

These provisions should have no application in the case where the property, the WHO Essential Medicine Units, are aquired by the trust at an adjusted cost base equal to fair market value and the beneficiary in turn acquires the WHO Essential Medicine Units at the same amount. There is a deemed adjusted cost base in each case (i.e. to transfer to the trust and subsequently the taxpayer) equal to fair market value, under the Act, that ensures that fair market value is the same as the cost within the meaning of proposed subsection 248(35). Accordingly, the rule in subsection 248(37) directed at artificial increases in cost should not have negative consequences.

The structure is a

tax free rollover on the distribution from a Personal Trust to a Beneficiary under the Trust. And a donation of capital interest of the Beneficiary in the Trust to a Registered Charity, the value of which is determined by the ACB to the Trust of the Trust property, which becomes the ACB to the Beneficiary. The amendments to section 248 require the amount of any receipt for a gift in kind made within three years of acquiring the property which is the subject of the gift to be equal to the ACB of said property to the donor. The ACB of property distributed from a Trust is equal to the FMV of that property entering the Trust.

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Further facts:
The creators of this system have donated 100 million dollars worth of Pharmaceuticals to the United Nations last year, and have helped 13 countries.

Why this route? Simple.
Most of the medicines are used to help remove parasites - or deworming.
For all of the food drives that people do, if the medical issues aren't handled first, who do you suppose eats the food?

- the worm! It's important to help rid these people of the parasites as well as giving them food to eat. Without doing both - efforts are wasted.

Again if you're interested in helping out, drop me a PM.

So, nothing from grant or jovi on this one yet...
Anyone want to take a crack at it?

Originally Posted by Merlocke

So, nothing from grant or jovi on this one yet...
Anyone want to take a crack at it?

Yeah...to anyone considering it - make sure you spend the bucks *now* on getting good advice from a professional tax lawyer ... (whether this shelter works or not is besides the point - anyone embarking on any such plan should always (imho) get good professional advice from people who deal with CCRA for a living!...)...could save you alot of heartache later in life especially if you need to defend yourself to CCRA ... (having a professional lawyer/accountant there is a definate + if things go sour...)

No comment on CHT itself etc as I'm not a professional taxation expert...! (but I do wonder why, if it is so easy to setup and so much money can be saved, why more people don't use it?)

Also, what's the impact of the AMT (Alternate Minimum Tax) on these shelters (is there any impact?)...would seem that if one is avoiding such a hefty amount of tax, AMT might come into play??...again I'm no tax expert... just asking as I go along here..!

Originally Posted by Merlocke

So, nothing from grant or jovi on this one yet...
Anyone want to take a crack at it?

Sure, i'll try translate this down to a level my intellect can understand:

1- you donate $20,000 to charity 'a'
2- organization 'b' gives you $58,000 worth of drugs for free
3- you donate the $58,000 worth of drugs to charity 'c'
4- you get tax receipts for $20,000 + $58,000 = $78,000
5- the receipts reduce your taxes payable by $36,000
6- you rake in $16,000 profit ($36,000 - $20,000)

is that right?

1- you give $20,000 to phoney charity 'a'
2- "someone" gives you $58,000 worth of drugs for free - so of course they are not worth anywhere near $58,000 (ps $58K is probably enough to deworm all of sub-saharan Africa since they are probably canine deworming pills)
3- you donate the worthless drugs to a real recipient, but probably someone else issues the phoney tax receipts - you get tax receipts for $20,000 + $58,000 = $78,000
5- the receipts reduce your calculated taxes payable by $36,000
6- you rake in $16,000 profit ($36,000 - $20,000) temporarily until CCRA comes knocking on your door
7- CCRA look up your arse hole for worms. If they find none, or if they find some, they ding you for $36,000 and you have already lost $20,000 so total loss is $56,000 plus maybe some penalties.

am I far out?

Edit: I did a search on Canadian Humanitarian Trust and came up with no hits. Since I see pgcanred lurking in this forum perhaps you can point me to some legitimate information on this wonderful charitable organization?

GOOGLED
Your search - "Canadian Humanitarian Trust" - did not match any documents.

Can you give us any links.

Comeone pgcanred, you've had at least ten minutes to respond....

Currently Active Users Viewing this Thread: 4 (4 members and 0 guests)
Cough*, Asun, pgcanred

Originally Posted by Cough

1- you give $20,000 to phoney charity 'a'
2- "someone" gives you $58,000 worth of drugs for free - so of course they are not worth anywhere near $58,000 (ps $58K is probably enough to deworm all of sub-saharan Africa since they are probably canine deworming pills)
3- you donate the worthless drugs to a real recipient, but probably someone else issues the phoney tax receipts - you get tax receipts for $20,000 + $58,000 = $78,000
5- the receipts reduce your calculated taxes payable by $36,000
6- you rake in $16,000 profit ($36,000 - $20,000) temporarily until CCRA comes knocking on your door
7- CCRA look up your arse hole for worms. If they find none, or if they find some, they ding you for $36,000 and you have already lost $20,000 so total loss is $56,000 plus maybe some penalties.

am I far out?

You're cynicism is a discredit to you Cough.

The medicines are all listed on the World Health Organization's essential medicines list. The CHT organization has arranged to buy the medicines at just above the cost of manufacture, yet the fair market value is the retail price of these medicines.

You are helping real people with real needs, and you are controlling your own tax bill. If you do not want to participate that is fine. Check into it. Get the info and then make a decision.

Originally Posted by Cough

1- you give $20,000 to phoney charity 'a'
2- "someone" gives you $58,000 worth of drugs for free - so of course they are not worth anywhere near $58,000 (ps $58K is probably enough to deworm all of sub-saharan Africa since they are probably canine deworming pills)
3- you donate the worthless drugs to a real recipient, but probably someone else issues the phoney tax receipts - you get tax receipts for $20,000 + $58,000 = $78,000
5- the receipts reduce your calculated taxes payable by $36,000
6- you rake in $16,000 profit ($36,000 - $20,000) temporarily until CCRA comes knocking on your door
7- CCRA look up your arse hole for worms. If they find none, or if they find some, they ding you for $36,000 and you have already lost $20,000 so total loss is $56,000 plus maybe some penalties.

am I far out?

Edit: I did a search on Canadian Humanitarian Trust and came up with no hits. Since I see pgcanred lurking in this forum perhaps you can point me to some legitimate information on this wonderful charitable organization?

That's pretty good.

Except for #7

You really shouldn't have gotten that $36,000 tax break in the first place, so as long as you don't spend it, you won't be out that. You'll have definitely lost the $20,000. And you'll also be out the penalty that CCRA charges you, a one time lump sum and interest on the amount owing, I believe. And I guess the costs of paying for an accountant every year after since you've flagged yourself for an audit next year by the CCRA.

Oh yeah, also the cost for deworming pills.

Originally Posted by pgcanred

You're cynicism is a discredit to you Cough.

The medicines are all listed on the World Health Organization's essential medicines list. The CHT organization has arranged to buy the medicines at just above the cost of manufacture, yet the fair market value is the retail price of these medicines.

You are helping real people with real needs, and you are controlling your own tax bill. If you do not want to participate that is fine. Check into it. Get the info and then make a decision.

Actually I am proud of my healthy cynicism. I take very little at face value, especially when I have an uneasy feeling..........

You have said in this thread and in the other "tax avoidance" thread to "check it out". I repeat my request for you or Merlocke to please provide me with any links to CHT website or to WHO endorsement of CHT.

I am surprised that WHO cannot buy at discounted prices and instead have to pay full retail. Maybe they need RFD?

Based on everything I have read to date, I HAVE made my decision - I will not participate in such a marginal venture. I have kept out of this post until now, but have posted now to warn other "less cynical" folks on RFD who might be tempted to take a flier.

Originally Posted by Cough

Actually I am proud of my healthy cynicism. I take very little at face value, especially when I have an uneasy feeling..........

Nobody is asking you to take anything at face value. But I see you are judging the program based on face value.

Originally Posted by Cough

You have said in this thread and in the other "tax avoidance" thread to "check it out". I repeat my request for you or Merlocke to please provide me with any links to CHT website or to WHO endorsement of CHT.

No such website exists. After the announcement last December 5th regarding gifts in kind that stopped the program last year. The CHT is taking a much lower profile.

Originally Posted by Cough

I am surprised that WHO cannot buy at discounted prices and instead have to pay full retail. Maybe they need RFD?

In Canadian tax law it is irrelevant what the WHO can buy the medicines for.

Originally Posted by Cough

Based on everything I have read to date, I HAVE made my decision - I will not participate in such a marginal venture. I have kept out of this post until now, but have posted now to warn other "less cynical" folks on RFD who might be tempted to take a flier.

Fine. But you have made your decision without making a full investigation. I hope others do themselves a favour and look into the program more fully.

Who values this medicine as $58k??
Anything to back the value up?

CRA will immediately question this amount and probably disallow it right off the bat.

And what are the fees payable for this scam?

So when you guys find obscure, soon-to-be-plugged loopholes to get out of paying your fair share of tax, to whom does the burden get shiften?

Originally Posted by Jovi

Who values this medicine as $58k??
Anything to back the value up?

CRA will immediately question this amount and probably disallow it right off the bat.

And what are the fees payable for this scam?

I don't have the information package yet so I cannot say. The people at CHT were involved in a similar program last year so they have been through this before. There are no fees.