Your client gets scammed by a referral. Are you responsible?

Your client gets scammed by a referral. Are you responsible?

Your client gets scammed by a referral. Are you responsible? Does your fiduciary responsibility extend as far as your referral partners?

A TV documentary, airing this Saturday, explores that very issue, investigating a tax preparation scheme that left hundreds of Canadians – who paid exorbitant fees for bad advice – in financial peril, with a hefty tab from the taxman.

One such couple is Lori Wright, 46, and her common-law partner Matthew Pare, 38, from Windsor. In 2009, Wright and Pare paid $1,000 each to sign up with personal finance company DSC Lifestyle Service – which promised them "wealth without sacrifice” – on the advice of friends, family and co-workers, who were also clients.

After several meetings, DSC recommended the couple file their taxes with another company, Fiscal Arbitrators, promising huge returns using a tax preparation method, which included claiming business loss deductions.

The couple did as DSC suggested and Pare received a $16,000 refund. Wright’s return was denied. But the CRA was onto them, dolling out $125,000 in gross negligence penalties, saying the pair should have known the tax preparation method was illegal given their filing history. The CRA continued to send bills upwards of $46,000 to Wright as a penalty for attempting to evade taxes. In addition to Pare’s penalty and refund, the CRA was demanding about $79,000. (continued.)


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