Joern (“John”) Scholz is a former CPA who unfortunately caused havoc for his clients, and their tax matters, before his CPA membership was revoked. John was convicted of convincing a large number of taxpayers to participate in complicated RRSP maneuvers after having persuaded them that everything was legal under the Income Tax Act (ITA).
According to the reported facts, in part John convinced his clients to open up a self-directed RRSP plan with a Trust company. These self-directed RRSPs would then buy shares from John’s companies. Normally either Red Hill Capital or Northland Capital. John would then take 15% of the purchase price of the shares as his fee and would return the remainder of the funds to the client directly. John told the clients that the money they received was tax-free.
What John did was expose his clients to RRSP Advantage tax assessments. This assessment is a tax of 100% of the amount removed from an RRSP. The reason it is so high is because the CRA takes RRSPs very seriously. An advantage situation is where money is removed from an RRSP, and no taxes are paid on the withdrawn funds.
Many of John’s clients have either received these assessments, or are in the process of being audited and will be issued assessments.
John did not report the income he made from these fees, and he was eventually convicted of tax evasion.
However, the real victims are the taxpayers who participated in his plan. All are now being taxed at a rate of 100% of the amount removed, and they are being charged with harsh penalties and interest.
Fortunately, there are arguments available to defend against RRSP advantage tax situations. We understand the law and have come up with many avenues to argue that the assessments are either invalid or should be lowered.
If you have received an RRSP advantage tax assessment, and you need help, contact us today for a free consultation.
SpenceDrake Tax Law – Tax Lawyers
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