RRSP fraud
You’re told that you can withdraw money from your RRSPA locked-in retirement account (LIRA), pension plan or other registered fund may also be used. right now without paying income tax. To do this, you’ll need to transfer the funds to an investment that will earn you a huge return. You’re told that this investment is also RRSP-eligible, which is why you won’t pay any income tax.
The fraudsters are so confident about this investment that they’ll offer to give you a cash advance against future returns. For instance, if you invest $50,000, they could give you a $25,000 cash advance. They explain that you’re not risking anything and tell you: “In any case, if you had taken the money out of your RRSP, you would have had to pay half of it as income tax.”
What are you risking with this investment?
The investment at the “huge” rate of return never happens. Instead, your money may end up being invested in a company that’s worthless or belongs to the fraudsters. You will therefore lose your $50,000. What’s more, contrary to what you were told, the investment is not RRSP-eligible.
You could receive a notice from Canada Revenue Agency stating that you withdrew amounts from your RRSP and did not pay the applicable income tax. You may have to pay the applicable income tax. Paying the income tax may mean losing the $25,000 so generously advanced by the fraudsters (which is actually your own money).
Be careful
Some fraudsters ask you to sign powers of attorney supposedly so you can benefit from seemingly attractive offers. Actually, they use the powers of attorney to clean out your accounts.
End of the warningThis fraud has many variations
For example, some fraudsters will tell you that, in order to withdraw money from your RRSP without paying income tax, you will have to first transfer your RRSP to an “on-line broker” (discount broker).
To give their scheme a veneer of credibility, the fraudsters will let you select the broker. They will then ask you for your passwords so they can access your accounts, telling you that they will manage them on your behalf. The fraudsters will then use this information to empty your accounts the first chance they get.
There are ways for you to avoid this type of fraud
- Amounts withdrawn from your RRSP, LIRAA Locked-In Retirement Account (LIRA) is generally used for investing money coming from a Supplemental Pension Plan (SPP). The income generated by the investments in a LIRA is not taxable as long as it remains in the LIRA. To move money out of a LIRA, it must either be transferred to a Life Income Fund (LIF) or used to buy a life annuity from an insurance company. or pension fundA pension fund is a fund that pays retirement benefits. It includes contributions and income generated by these contributions. are taxable.
- Take steps to confirm the identity of the person you are speaking with. For example, call the person back at the number listed in our register (not the number they gave you).
- Beware. Scammers are very good at giving you confidence. If a relative's friend makes you an offer that is too good to be true ... it probably isn't. Tell yourself that this parent may be the victim of the fraud himself.
