IFA Tax Shelter Test
In plain terms, the CRA treats an arrangement as a tax shelter when it is reasonable to conclude — from the illustration or verbal representations — that the tax deductions (C) shown over the first four years equal or exceed the plan’s net cost (A − B).
- A = the property acquired for the purpose of earning income
- B = any limited-recourse loan amounts related to A
Answer each question below based on what is reasonable to conclude from the representations. The tool stops as soon as a tax shelter is identified.
Is there a loan or credit facility involved in the arrangement?
Enter the loan amount in Year 1 ($):
Please enter a valid number.
Will there be a bona fide written agreement, executed at inception, to repay this amount within 10 years or less?
Is the loan illustrated as being invested for income-earning purposes?
Are there any tax deductions illustrated in year one of the plan?
Enter the gross tax deductions represented in Year 1 ($):
Please enter a valid number.
Diagnostic Stopped
Diagnostic Results
Disclaimer: Armstrong Financial Services Inc. provides independent mathematical policy modeling and financial analysis only. This diagnostic is an educational tool and does not constitute legal or tax advice. Consult independent legal and tax counsel before relying on any conclusions.