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Collecting airmiles for a profit!

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I just received an email from Cameron about an article he wrote on Airmiles over at eHow.com. The article is all about how you can collect airmiles for a profit! It's a pretty interesting read and actually references my site (thanks Cameron).

Here is a little snippet from the article.

"If you look carefully and arrange your life the correct way you can actually turn a profit from shopping using the AIR MILES Reward Program in Canada. AIR MILES are redeemable for many travel, merchandise and gift certificate rewards. Depending on how you use the rewards points they are worth between 10 cents and 15 cents each for gift certificates, more or less on items that are harder to price like flights and merchandise.

Sure, follow the advice to always carry your AIR MILES card and shop at AIR MILES sponsors, but if you want to take it to the next level, here is exactly how.

Your goal is to earn a combination of AIR MILES Reward Miles and Tax Deductible Donation Receipts that together have a value above what you spent."

Read the rest of the article here

Note: At the end of step 6 it says to use your non-discounted receipt to get your tax receipt. As Charles from Vancouver mentioned this is actually not legal. However, I do condone giving the food to charities though!

Comments

Okay, let me just start out by saying that part of this plan is ILLEGAL. You are buying items at a discount and then using a different receipt to establish that you paid more than you actually did for the purposes of a tax deduction. There is a word for this and it’s called tax fraud.

Moreover, if the charity you donate to is implicated in your tax fraud scheme because they took you at your word when you presented a receipt for a full-price purchase, you are risking their legal status. Is that truly generous of you?

Hey Charles, Interesting point. I didn’t even notice this part of the guide when I was reading it.

I have put a little excerpt in my post saying to NOT do that part of the guide.

The guide does have some merit’s in the fact that you CAN collect airmiles CHEAPLY and if you REALLY want the airmiles DONATE THEM TO CHARITY!

I respectfully disagree with Charles. The charity needs to establish a reasonable fair market value for the goods for receipting. It matters not what your cost is.

For example, say you donate a painting worth a $1 million but you bought it years ago from $1,000. Your receipt is issued correctly for $1 million. Or you donate your used clothing and get a receipt for far less then your cost.

Market value for new goods is what product sells for in the store. The price at Walmart might be different than the price at Safeway, and the price next week might be higher or lower than the price today. The point is to use a reasonable fair market price.

If you don’t want to do a donation, just eat all your food while enjoying your airmiles 🙂

Cameron, I don’t think your art example is quite comparable. You aren’t buying these food items as an investment to keep for years, but rather for the express purpose of donating them to charity.

But there are comparable art examples – I believe there have been cases in Canada where aspiring tax-evaders would purchase artwork at a low cost and then within a short time donate it to charity, netting a tax receipt much larger than what they paid. There have also been tax evasion schemes involving donations of software. In all these cases the CRA has been very unforgiving.

Even if you have proof that you “could have” bought those cans of corn for $3 apiece rather than the 75c you actually spent, you may run afoul of the General Anti-Avoidance Rule.

We are not necessarily talking about marking the item up for donation. It is possible to do this where the only part of the “sale” is the bonus airmiles. The system works because you are getting free airmiles as a shopping reward and getting a tax receipt for the value donated. No one pays tax on air miles (or the resulting rewards) received from their shopping.

Cameron, now you’re changing your tune… you specifically stated in your article to save a copy of a receipt without the discount so that you can get a tax receipt at the marked-up value. This is the bit I object to.

I see you did edit the article. I cross-posted to Financial Webring Forum where I have the original version quoted and there is a bit of a discussion going on:
http://www.financialwebring.net/forum/viewtopic.php?t=111011

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