Thursday, December 15, 2005

Canadian Humanitarian Trust

I was introduced to this scheme to save huge amounts of tax money by a friend back a few days ago.  When I first heard about it I thought man sounds like a sweet deal (basically too good to be true type of thing).  As I have done a bit of research I have to say my logical feeling of it being too good to be true has been confirmed by the tax laws I have look into (despite people who will dispute otherwise it till they are red in the face).  The scheme is that you give this "non-profit" organization (Canadian Humanitarian Trust) a donation and you get a tax receipt for it.  That part is simple enough. They then buy humanitarian aid drugs for people in Africa at very cheep prices.   This also sounds very good.  The scheme part comes in when they donate these drugs to Africa they re-evaluate the price of the gift to many times more than what was originally paid and you get another tax receipt for this new amount that is many times more than the original monetary gift.  Here is an example.  Give $1,000 to CHT they take their "unspecified" cut then buy some medical drugs.  These drugs are donated to Africa at a stated value of $5,000(or more).  So you get a total of $6,000 worth of donation receipts for the cost of $1,000.  Donations receive a credit of around 50% so you get $3,000 dollars in taxes back.  So overall you come ahead with $2,000 in your pocket. If you give more such as $10,000 receive $30,000 in taxes back, you get the idea.  However in December 2003 the Canadian Government implemented new tax laws to stop people from doing this.   allowable charitable donation amount will be limited to the taxpayer's cost of the property.  I'm no tax lawyer, but this along with a few other laws that I read about concerning knowingly deceiving the taxation system were serious offences.  I am sure some people will most likely get away with this if they do not get audited, but is it worth the risk.  Many people I have read about justified joining this very shady deal because they want to help people in Africa by getting them the much needed drugs (CHT has played this angle very well). I say give your donation to a well known organization that gives all the money toward this cause (so they may buys drugs that are needed, not just that have the greatest markup) and that does not take their own "unspecified cuts" such as CHT does. 

23 comments:

Joshua said...

Haha. Very interesting. Hadn't heard of that scheme before.

Jon said...

It's out there and has supposetly worked before the new tax laws. There are a number of forums that talk more extensively about it.

The Barretts said...

I have also been told about this idea and like you, thought it was too good to be true. I agree, if you truly want to give to help, then give to a reputable organization. Giving is about the heart...not about what we get back.

Anonymous said...

... just because you got a refund this year doesn't mean CRA won't knock on your door in the future. This is not the first scheme of its kind. Have you segregated all your refund profits so they are available in the future to meet such a contingency?

CHT has been marketed to the average guy ... some have actually borrowed to donate to CHT because they don't have available cash(even greater risk exposure in the case of an audit).

Will CRA continue to ignore this revenue leak when someone drops a few mil ... won't that attract some attention.

Obviously your actual dollar donation is not at risk rather it's the additional credits.

Finally, if you are ever pegged by CRA as being in the business of tax avoidance ... I think you can look forward to many audits.

Anonymous said...

You donate the money to a charity, the charity purchases the Drugs not CHT, the drugs are then deposited into a trust (in your name) the trust then donates the drugs to another charity the second charity is required by law to give a receipt they look at the "fair market value" of the drugs it this case the price the Ontario gov. pays for the drugs and they issue a receipt of a little less that that. I doubt that the gov will mess around with the trust laws as they are busy with other stuff and they all take advantage of the trust laws. I looked into it and consulted a tax lawyer in the lawyers oppinion it was legal. CCRA may not like it and their "opinion" may be that it is not legal but there opinion carries no more weight than yours in court it's the judges opinion that counts! so if it ever goes to court the judge will rule not CCRA!

Anonymous said...

I hope this is not a scam. I wish I had known the laws were changed in 2003 - I would not have contributed in 2004 and I'm now being audited. BOTTOM LINE: It IS too good to be true.

Anonymous said...

Just remember that although you are being "audited" means that first you received your Notice of Assessment which means CRA has assessed your return and retains the rights to review your file anytime over the next 7 years. Even if you never participated in CHT or similar you can still be "Re-Assessed" which means a CRA auditor may contact you and request additional clarification. So, the extra mileage, extra meals you deducted will also come into scrutiny. I also consulted a tax lawyer independent of CHT and they also concluded that their logic is truthful and correct. Remember, a lawyers opinion is simply that. CRA auditors can disallow these deductions however you as a taxpayer can request additional clarification and until the Tax Court of Canada decides otherwise the deduction stands. Also remember there are many copy cat programs out there and CHT is not one of them. Some of you may recall a newspaper article in the Toronto Star in September. They spoke very negatively about these types of charitable contributions and although they used the CHT logo amongst others in the article, NOT ONCE did they mention CHT, why? The author did not have any factual information to back up claims that CHT does not do what they are supposed to. Every year I receive a large refund and I know its helps charities. Why do I also know this? I have a family member who works with the Clinton Foundation and the drugs are delivered and really are distributed. On a positive note, the refunds I receive go towards good things for my family such as my children's education fund. I can only hope when they turn 18 that they can appreciate what was done. When my children are in University and all paid for, you can all remember how the purported scam made my children successful. Alas I will continue to wait for the re-assessment and worry every day until it happens, not. Also, many of you say things like "They said" who is they? Be true to yourself and do the right thing. Remember, if everyone knew everything about the tax system then everyone would be doing it, but count yourself as the educated few who are using your knowledge for the greater good.

Fred said...

I contributed 3,200 to the CHT program in 2004 and after being audited this year am told by the CRA that I owe them $6,500, which includes $1,200 in interest.

I donate similar amounts to charity each year and acted in good faith with the CHT donation.

I think I will pay and file a Notice of Objection at the same time. The question is, will the CRA consider it on my specific merits or are they required to treat everyone exactly the same, which would mean that CHT would fight for me - the people who started this mess in the first place.

Daigo said...

Let's see now - jam the CRA out of legitimate tax revenue by receiving an unearned credit. What could possibly go wrong with that?

CRA does not allow people to profit from donations.

Reputable tax accountants will not even process these receipts.

Who do you think is paying for this? It's not free money - it conmes from honest tax payers.

If you attempt to use this scheme you are stealing from honest tax payers - there is no other way to define it.

The Canadian Humanitarian trust isn't even listed in CRA's list of registered charities.

Get off the pipe folks; you're nuts if you thinks you can get away with this much longer. I hope you get fined $100 for every $1 of attempted "donation" receipt.

CLS said...

What most people don't realize is that the government makes laws not the CRA. The law says you can benefit from a charitable donation. Of course the CRA is going to hate a law like that and try to find a way around it and try to scare and intimidate people from donating to legitimate charities. There are bogus schemes out there but CHT has been around for five years. The law says in order to be a Charitable organization 80% of donations have to go to charity - only 20% can go to overhead. Considering the millions CHT has collect in the past five years if they were not abiding by these guidelines the government would have shut them down - this has nothing to do with the CRA.

Just because you get a notice of assessment doesn't mean you owe that money. The CRA just hopes to get that money from you. Your best bet is always to pay the assessment and then file a notice of objection. The people who work for CRA and receive your income tax return and enter it into the computer probably know less about taxes than the average person on the street. They have a quota of taxes they are supposed to reasses - doesn't make it right. I don't know how many times I've had to expain things to someone who works the front line of CRA. After you win your case the CRA has to pay back your money with interest. Funny thing, when you don't pay your taxes the CRA charges you 4% over prime interest. When they are wrong and they have to pay you back they only pay 2% over prime. The CRA made a profit of half a billion dollars last year just on interest alone. Nice to know how you can get shafted. Also, if you are a company and are delinquent in paying your CRA remittances they charge 20% interest - talk about usury! This is a branch of the government that is supposidely serving us.

Just because the CRA wants the CHT to be illegal doesn't make it so. The reason the CHT has a legal fund is to counteract all the CRA's false accusations. So if they reassess your donations, pay the assessment, file a notice of objection and contact the CHT so they fight for you.

Anonymous said...

You just don't get it, do you?

If you "donate" one dollar, which results in a "refund" of five dollars, where in the heck do you think the other four dollars come from?

Honest taxpayers, that's where!

I have no issue with the fact that our tax dollars could be better spent and better managed. I have serious issue with you contributing to the problem by stealing some of what I pay in!

Anonymous said...

Ummmmm no... and apologize if this page is a billion years old - I just came across it now...

the 4 dollars comes from the dollars I paid in taxes as deducted from my paycheck. In a simple and global perspective, I pay every 2 weeks to CCRA off my paycheck:I donate to a charity and apply to become a member of the trust, If successful, I receive pharmaceuticals (sp?) which I donate to charity and they provide a receipt for. These receipte reduce my taxable income so I receive back funds that I paid in. You cannot "make money" from CRA in the way you are thinking. You simply reduce your taxes payable by donating to charity. the courts will decide if the appropriate valuations are in use, but to illustrate using perhaps a corralary (sp?). Today I can buy Bell Canada stock and perhaps it skyrockets tomorrow. I can give that to stock to a charity and under laws in plce today, it doesn't need to claim a capital gain and neither do I... The charity receiving needs to give me a receipt for the value of what I gave them - and that is clearly not the purchase price - I could easily deduct more from my payable taxes than what I bout the stock for. This isn't very different except that the value of the pharmaceuticals, the "capital gain" is created by shifting the market in which they are sold... like buying pinapples in Hawaii and selling them in Maine - they are worth more in Maine... more than the purchase price... that's the way economics work.

Also - the above all mix 2 types of the program, one prior to 2003 and the one I am discussing post 2003... just an FYI

Anonymous said...

World Health Initiative/Canadian Humantarian Program Fund......
-so why wait and see if CHT actually wins - one
ahould go after the individual who first got them involved in this apparently legal scam and in some cases the individual who got so many of us involved at my end of the country was in fact a registered tax man who prepares taxes for individuals and who should be the one accountable - we all trusted this person
-it has affected many people here who donated into this trust program
2008 - April

steamin said...

i did yrs 03 and 04...brutal...what was descibed once as charitable donation is now deemed a 'sham' by the CRA...would love to sure those wh missrepresented the program to me...wonder where i would start?

Dorothy said...

I also fell for the CHT donation program, it was an elaborate seminar, showing that we were saving lives by donating these drugs. Today, unable to reach CHT or our locally trusted source, Gordon Foote.

Anonymous said...

So sorry the participants in the CHT donation tax shelter are so bitter from being raked through the coals by CRA. Just so ya know, the case is in court and the discoveries of the administers and 11 participants is now complete. The courts have already struck down 2 or the points on which CRA is challenging the program. One of them is that "you can't profit from a gift". The courts have said that if someone gave something and someone received it, it is a gift...PERIOD! Now, we will see if the Ontario Pharmaceutical guide for the valuation of the medicine donated to the poor kids with Schistosomiasis, will hold up. Everyone should know by summer 2012...fingers crossed. Those of you who paid would be receiving a refund...maybe with interest :)

Anonymous said...

I was audited, and paid back, last I heard from CHT was they hired a lawyer to fight on my behalf.. I have yet to be invited to they're "elaborate" seminars with Stephen Rosen crying with tears in his eyes for the "great" works he's done. Now I am left wondering is are those tears of Oh you guys are such big suckers, or he's honestly sincere about helping those in need.

Trent Shefsky said...

I donated in 2004 and I expect the Supreme Court of Canada to side with us Donators.

Posted Aug 2012

Anonymous said...

Hello,

My mother was involved with the CHT fora few years. She passed away last May and I'm trying to get her finances in order. It seems she owes 25-30K but I don't really know what is going on and for me that's a big chunk of cash. Does anyone have any contact information for CHT?

I've also called the claims section of CRA to see if I can just have this thing zeroed out and call it finished. Probably going to need a lawyer though.

Any information would help.

Anonymous said...

written on Jan. 15 2014.
This is a very old blog about CHT but its better than nothing as there doesn't seem to be any recent blogs or commentary about the recent offer by CRA to CHT 2004-2008 participants and the disgustingly passive approach by the promoter WHI/Stephen Rosen.
Despite all the arrogant words of wisdom and bravado by Stephen as he travelled coast to coast that the program was strong, "we treat CRA as our partner", we are fully committed and funded for the fight against CRA's reassessments - seems like they now have more to hide and have seemingly taken the cowardly "you better take the offer" attitude. Any donors reading this - PLEASE REMEMBER, things are not as they seem….I remember being on a conference call with stephen and many other donors and he was confident in their legal team, their financial strength and the facts of the program. Now their running for cover - thanks Stephen and the other puppet masters in the background for screwing us - you're no better than Banyan Tree, COIP/MIssion Life/RLG, and UBG - donors thought you guys might be different than the David Singh's, Bob Thiessen"s, Shy Kurtz's of the shelter world but it looks like you don't have any more integrity than those guys. Thanks for worrying about yourself - did you blow all that money on diamond rings and fast women - you seemed to love to brag about that at the sales events - my husband always said you were a boar.

Lucie said...

Sounds like it's time to bring CHT, Stephen Rosen to court.

Anonymous said...

Posted May 2014...

Well I see there is a recent update on here from Jan, so I figured I would post too. I participated in the program from 05-07, my wife in 06 and 07. We followed every direction from CHT legal team with the notice of objections, letters and follow ups. In the fall of 2013 we received an offer from CRA to allow our original donation to be processed and any subsequent interest from that amount waived. And refunds we received back because of the overvaluation of the donations still had to be repaid with interest. This came to about $46,000 total for my wife and I for all the years we participated. We had a choice, repay the amount, or continue to try and fight the good fight and accrue interest at 6% interest. We repaid the amount. Luckily I invested every penny we received just in case this occurred. As it stood I had about $43,000 available, so I was only out of pocket about 3k.

Now the CRA is reviewing a claim I put in for interest relief. As it took nearly 8 years for the CRA to come to a conclusion, there is apparently a precedent set that they will waive half or a portion of the Interest. This should give us back 5-8k, but there is a 15 month waiting period for these cases to be reviewed.

So a note to all, this may have been a scam or a good idea that just didn't work out. Regardless, if you or a friend participated, do yourself a favour, pay it back and move on with your lives. I can't tell you the sense of relief we have of not having this hanging over us anymore. And who knows, maybe next year we will get some of our interest back and we can take the kids to Disneyland.

Randy said...

I too was taken in by the scam perpetrated by Stephen Rosen and CHT over a 3 year period. My whole life, I have been a believer in 'if it sounds too good to be true.....but after attending 3 dinners sponsored by CHT, I deviated from my beliefs. I listened to Rosen, tax lawyers/accountants that this was a legit program. I thought what was wrong with saving some of my hard earned tax dollars while helping millions of people, especially children, receive essential medicines and devices.

I take full responsibility for participating in this scam and the lessons learned. However, it irks me that some people probably got very rich on the backs of Canadian taxpayers.

I think this would be a good case for a class action suit against Stephen Rosen, my direct promoter, CHT tax lawyers/accounting firms enrol de in promoting this program.

If you believe CRA's assertions that the receipting charity kept 1/4 of 1% of the money flowing through it and the fair market value of the drugs was 1-3% of the stated value! where did all the money go? CRA states approximately 36,000 donations were made through the program. My best guess is that, conservatively, 15-20 million was donated by participants.

Unfortunately, I don't have the resources or knowledge on how to initiate such a lawsuit. I would be interested in hearing from other participants.