Malo - Tax Court finds an oral tax shelter

The taxpayer's purchases over three years of 750 tree seedlings at a Costa Rican tree plantation were found to be a "tax shelter" on the basis of a statement made to the taxpayer in his home by his brother-in-law (who was trying to promote the project) that the taxpayer's expenditures would be fully deductible business expenses.  This statement likely was incorrect as the tree seedlings were inventory which would not be sold until they matured.

If this case is correct, it illustrates that for purposes of the tax shelter definition an informal oral statement can be the equivalent of a tax savings projection appearing in an offering memorandum or marketing brochure.

Scott Armstrong.  Summaries of Malo v. The Queen, 2012 TCC 75 (Informal Procedure) under s. 237.1 - tax shelter, s. 3(a) - general, and s. 248(1) - inventory.