Warning: Watch out for tax schemes involving multilevel marketing businesses!
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The Canada Revenue Agency (CRA) is always on the lookout for tax schemes and opportunities to warn Canadians about them. Has someone encouraged you to deduct expenses and claim business losses to offset taxable income? If so, this might be related to a tax scheme involving multilevel marketing (MLM).
Tax schemes are plans or arrangements that go against the Income Tax Act. Tax schemes may be advertised by promoters, who can be tax representatives and tax preparers who encourage taxpayers to participate. Promoters recruit taxpayers by promising to reduce their taxes. Such schemes may promise large tax deductions or tax-free income.
Multilevel marketing is the practice of selling goods or services on behalf of a business. In a multilevel marketing business, participants are encouraged to sell products to family and friends, and recruit other people to do the same. Participants receive a commission on their sales as well as the sales of any participants they recruit.
Content retrieved from: https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2023/warning-watch-out–tax-schemes-involving-multilevel-marketing-businesses.html.
