How my wife’s obsession with Nick Nacks could send our kids to college:

My wife is the biggest fan of yard sales and flea markets. If she didn’t (occasionally) put her foot down, she’d spend every Saturday and Sunday rummaging through other people’s unwanted household items in search of some gem. So how can my spouse’s obsession with finding that (very occasional) gem equate to a tax refund/tax rebate for the whole family? Simple really, by taking advantage of the tax rewards that the Canadian government has put in place to encourage charitable giving, you can pay less in tax. So how does it work?

• Let’s say you go to a garage sale and find a piece of jewelry that you know is worth $2,000 and any jewelry store would confirm that price.

• The owner is selling the jewelry for the exorbitant price of $500. What do you do for a living? Buy it of course, it’s a bargain.

• For the tax benefits of the donation it is necessary not to donate the item for 3 years and 1 day. When you donate the item, the charity will give you a donation receipt for the amount at which the item has been fairly valued.

• You then attach the receipt to your tax return and receive about 50% of the item’s value as a tax credit.

• The importance of waiting 3 years and 1 day is the fact that after 3 years the CRA should look at the amount that is valued and not the amount you paid. This is how you make your tax savings.

Isn’t it amazing that 1 day represents 4 times more money for you? This is a very basic version of a tax haven, which is a legal form of tax avoidance. Illegally withholding tax money is called tax evasion or tax fraud and it’s a whole different ball game.

So the next time you have to get out of bed on a Sunday morning for a garage sale, view it as an essential speculative component of your integrated financial planning (if you can think in terms of planning before coffee, you’re at one step over me!)

Although this principle would work as it is based on Income Tax law, which is governed by the Income Tax Law, it is worth considering participating in a registered tax shelter scheme which has benefits such as large defense funds. legal if the CRA tries to contest your claim.