Secure your savings: BBB urges consumers to be wary of RRSP tax fraud

  
     
February 25, 2014

February 25, 2014 – CALGARY, ALBERTA –With the March 3rd RRSP deadline right around the corner, scammers are crafting schemes to swindle you out of your retirement savings. BBB is urging Calgary residents to pay heed to suspicious investment offers to avoid being scammed out of their Registered Retirement Savings Plan funds.

According to Canada Revenue Agency, more than 3,100 taxpayers fell victim to RRSP schemes resulted in additional taxable income of approximately $144 million to date.

The Financial Consumer Agency of Canada explains some of the most popular RRSP scams:

Tax-free withdraws.

  • Consumers are promised a $10,000 cash return for a $20,000 investment (from their RRSPs) in an “RRSP–eligible company”.
  • Once you hand over your earnings, the company will more than likely close its doors leaving you empty-handed.

Exempt securities scam

  • Exempt securities are not illegal if they are sold by companies that are permitted to sell them.
  • you may be approached by an unsolicited offer to invest in an exclusive deal if you sign some paperwork, which usually involves you lying about how much money you make. Exempt securities are dicey as you run the risk of losing your entire investment.
  • Being required to lie about your investment is a red flag of an illegal transaction and you are more than likely getting scammed.

Offshore investment

  • Fraudsters promise investors a high return from an off-shore investment while avoiding taxes.
  • If you hand over your money to a stranger in a foreign country, you may never see it again and you run the risk of owing the government money in back taxes, interest and penalties.

President and CEO of BBB Serving Southern Alberta and East Kootenay, Sandra Crozier-McKee, says it is crucial for consumers to research RRSP investment deals. “Depending on your financial circumstances, it can be tempting to enter into an investment that promises a high return” she says.  “With tax season upon us, scammers are targeting hasty, careless investors in hopes of easily scamming them out of their hard-earned savings. Start your investment journey with trust and check with BBB before making a financial commitment.”

BBB offers these tips when choosing the right financial investor:

  • Know the difference between an investment adviser and a financial planner: Financial planners work with you to develop a tailored financial plan to suit your needs including savings, insurance, taxes, retirement, estate planning and investments.  Investment advisors may only be able to give you a narrow range of guidance for specific investments. Be sure to determine what your financial needs are before hiring a professional.
  • Ask for credentials: Ask your financial professional if they are affiliated with the Financial Planning Standards Council of Canada, as they are the primary authority for financial professionals in Canada. They enforce and uphold the standards of financial planning through Certified Financial Planner certification.  
  • Know which questions to ask: Here are some of the questions you should always ask when hiring any financial professional: What experience do you have, especially with people in my circumstances?  What credentials do you have? What products and services do you offer?  How are you paid for your services? What is your usual hourly rate, flat fee, or commission? 
  • Arrange a meeting in person: Be sure to meet potential advisers face-to-face to make sure they clearly understand your needs and financial goals. Make sure to check-in regularly with your financial professional to ensure your needs are being met and goals are on track.

For more information visit bbb.org


 

Media Contact:

Leah Brownridge
Marketing Communications Coordinator
Email: leah@calgary.bbb.org
Phone: (403) 531-8793

About BBB:

For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2015, people turned to BBB more than 172 million times for BBB Business Reviews on more than 5.3 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. There are local,independent BBBs across the United States, Canada and Mexico, including BBB Serving Southern Alberta and East Kootenay, which was founded in 1954 and garners more than one million instances of service annually. 


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