Be Wary of Investment Seminars Offering Tax-Saving Strategies

Toronto – With tax season fast approaching, the OSC warns investors to be wary of investment seminars offering tax-saving strategies that sound too good to be true. An investor’s first and best line of defence in these cases is to get a second opinion from an independent and qualified tax expert.

This warning focuses on seminars that may offer investors an opportunity to ‘move their money’, ‘maximize tax flow’ or ‘pay less taxes’. This type of marketing tactic could be used to attract investors to a seminar where they’ll end up learning about a specific investment product or strategy that’s connected to a promised tax break. Unfortunately, tax breaks that sound too good to be true often are. In some cases, investors are audited years later only to find that they could be assessed for additional taxes, interest, or penalties by the Canada Revenue Agency.

In related news, a recent Canada Revenue Agency taxpayer warning urges investors to be aware of the risks associated with participating in certain tax-shelter arrangements. For more information, visit this page: http://www.cra-arc.gc.ca/tax/charities/donors/alert/2-e.html.

Tips to help you protect your money

• Watch out for ads that make extravagant claims about seminar results or promise easy ways to ‘maximize your tax flow’ or ‘pay less taxes’. Remember, if it sounds too good to be true, it probably is.

• Don’t rely on a presenter’s reputation as a ‘financial guru’. Since these seminars tend to push specific investment products or services as the ‘means’ to the promised tax break, it’s critical to investigate the presenter’s background, qualifications, and professional record. Is he/she registered to buy and sell investments? Any person or company selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission so call to check (toll-free 1-877-785-1555). Also check the registration of anyone else in the seminar room who may be involved in pushing a product or service. If you’ve given seminar organizers permission to follow up with you at a later date, ,check to make sure they are registered.

• Find out how the presenter and the organization holding the seminar are compensated. Many of these seminars are free to attend. In some cases, speakers may be paid a fee to push a certain product, and you may find that the investment strategy they’re promoting is closely linked to a specific product the sponsor of the seminar wants you to buy.

• Resist investing right then and there at the seminar. Take time to obtain independent third-party advice from a financial adviser, as well as a legal or tax expert. Find out if the tax-savings strategy they are promoting is really legitimate.

• As with any type of investment opportunity, question anything that guarantees high returns and low risk. If an investment has a high return, you may be taking a large risk with your money.

• Don’t get involved in any investment opportunity unless you fully understand it. Fraud artists are known to develop new product names that are really slight variations of mainstream investments just to convince investors the opportunities are legitimate. Make sure any products you choose match up with your risk tolerance or your investment goals.

Remember to base all investment decisions on the research you have gathered from credible and diverse sources. Contact the Ontario Securities Commission toll free at 1-877-785-1555 for further information. You can learn more about investment topics on-line at www.investorED.ca

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