The Canada Revenue Agency today issued a notice reminding investors that the proposed legislative changes to limit the tax benefits of charitable donations made under tax shelters, are effective throughout the 2004 tax year.

“Potential investors should be aware of the risks associated with participating in certain tax shelter donation arrangements, including gifting trust arrangements, leveraged cash donations, and buy-low, donate-high arrangements,” it cautions.

All tax shelter promoters are required by law to report all sales of their arrangements to the CRA, the agency notes. “The CRA will challenge any arrangement that does not comply with the Income Tax Act and will audit the tax returns of investors with respect to their participation in such an arrangement,” it warns. “The CRA recommends that anyone considering participating in tax shelter donation arrangements obtain independent legal and tax advice.”