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Are Wages to Loan as Good as They Sound?

[fa icon="clock-o"] Oct 6, 2017 9:00:00 AM [fa icon="user"] The MacMillan Estate Planning Team

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We know it’s a cliché, but the age-old advice that “anything that sounds too good to be true probably is” really does seem to be good advice most of the time. And it’s definitely true for the newest phishing scheme circling around Canada: wages to loan. Here’s how the scheme works and what you need to know.

What are Wages to Loan Schemes? Generally what happens is that a promoter promises to lease your services to an employer. The employer will pay the promoter what you’ve earned, and the promoter will then give you your wages as a tax-free loan — minus a percentage of your pay as their fee. The problem with this whole scheme is there is never any intention between you and the promoter for your wages-as-a-loan to ever be paid back. Which means your wages aren’t a loan at all, and you need to pay income tax on them.

Who’s the Target? While anyone may be targeted by a promoter, they typically try to recruit new Canadians (who may not understand our tax laws well enough to recognize the scheme), seniors (who may be looking for a little income to subsidize their retirement), and students (who may be looking for a way to free up cash and pay off debt).

Serious Consequences. While promoters are absolutely liable for criminal tax evasion, so are the Canadians who sign up for these schemes. Beyond paying the taxes owing (plus interest), Canadians who are caught attempting to evade taxes may face consequences including penalties, court fines, or even a prison sentence. Fortunately for those Canadians who were involved in these schemes without knowing that they are illegal, the CRA is generally lenient with individuals who come forward before they’re caught. Typically, Canadians who come forward before enforcement action is taken have to pay the taxes they owe (plus interest), but they don’t face criminal charges.

At MacMillan Estate Planning, we work with Canadians to help them avoid excessive taxation. With a personal estate plan, it becomes more simple to pay the taxes you owe and to defer and avoid the taxes you don’t. Our team of estate experts are here to help you create an estate plan and save money.


At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.