Wednesday, January 14, 2009

Questionable Sports Charity Scheme

Little League Baseball Canada is the latest sports organization to have its charitable status revoked because it participated in a tax-shelter program set up by Parklane Financial Group, according to Paul Waldie of the Globe and Mail.

Investors who donate $2400 to a fund that pays royalties to sports organizations could get back $10,000 in tax receipts. For an investor in a 40% income tax bracket, this leads to a $1600 profit.

It’s possible that the people running the sports organizations weren’t aware of the details of the arrangement and how fishy it looks. After all, their focus is on sports rather than finance. But, it’s hard to understand how an individual making a donation and ultimately turning a profit could be unaware that something is wrong.

1 comment:

  1. I heard about schemes like this, and thought how people suspend disbelief when something is too good to be true.

    The complexity of the scheme should set off warning bells. Another current example of complexity masking questionable practices is Bernie Madoff's hedge fund.