Treatment of losses resulting from a personal scam, as opposed to an investment scam. Two examples of personal scams were provided, as follows:
• a grandparent scam that generally involves the fraudster impersonating a grandchild, claiming that they are in trouble and require financial assistance (e.g. they have been in an accident, have been kidnapped or are stranded abroad); and
• a phishing scam where the fraudster impersonates an entity (e.g. a financial institution, a utility company or CRA) and attempts to pressure their victim into providing personal or financial information or assets.
CRA noted that there is no tax relief specific to fraud. In some instances, a capital loss or even a business loss may result from investment scams. However, a loss incurred by a victim of a personal scam would generally not result in a loss from employment, business, property or a business investment loss as there is no income-earning activity related to the loss.
The property that is lost is generally personal funds that would likely be considered to be capital property. The lost cash would normally be personal use property, such that any losses would be deemed to be nil.
ACTION: Be mindful of falling victim to fraudulent scams. There is no tax relief with respect to losses resulting from personal scams.
