A tax shelter is defined in the Income Tax Act as any property for which a promoter represents that an investor can claim deductions or receive benefits which equal or exceed the amount invested within four years of its purchase. One attractive feature of tax shelters is that they provide you with deductions without requiring cash contributions on your part because assets are being purchased with borrowed funds.
Tax shelters provide one of the following deductions.
This is the deduction of the capital cost of equipment or a building over a period that may be shorter than its estimated useful life. Scientific Research and Development Deductions Direct investors in scientific research programs and partnerships may deduct current or capital expenditures on qualified research undertaken in the year in Canada, except for most expenditures on building acquisitions and rental payments for buildings acquired after 1987. To qualify for these deductions, for federal tax purposes you must be actively involved in the business that can benefit from the research. Provided by The Jacks Institute.