An RRSP scheme is usually a type of investment promotion offering a “tax-free” withdrawal to access directly or indirectly your RRSP funds. Some observed examples of RRSP schemes have included:
withdrawal of funds from an RRSP or a registered retirement income fund (RRIF) without paying tax (promoters often promise to return part of the taxpayer’s investment using offshore debit or credit cards, offshore bank accounts, or loan-back arrangements);
immediate access to assets in “locked-in” RRSPs or RRIFs;
income tax receipts providing deductions of three or more times the amount contributed to an RRSP; and
unrealistic returns on investments.
Typically, promoters of these questionable schemes direct the owner of a self-directed RRSP or RRIF to purchase a particular investment through a specific trustee. The particular investment could be shares in a company, units of participation in a co-operative, a mortgage, or other types of investments.
What is the CRA doing about the RRSP schemes?
The CRA has undertaken a significant initiative to increase audits at several levels.
First, the CRA has increased its compliance monitoring activities by focusing on the RRSPs held by trustees.
Second, the CRA has conducted audits of investments acquired by RRSPs to ensure they were bona fide investments and they were qualified investments for RRSP purposes. Where an investment by an RRSP was determined to be part of an RRSP scheme, we have taken appropriate reassessment action.
In addition, the CRA has engaged in the following activities in our ongoing efforts to stamp out abusive RRSP schemes:
enlisted the active participation of trustees to help target these schemes;
targeted RRSP promoters with various enforcement and compliance actions; and
posted tax alerts on this website to warn the public of such arrangements.
(quote from CRA Website)