The Hamilton law firm Scarfone Hawkins has just filed another charity class action lawsuit. The case is Terry Emms vs. Christian Economic Assistance Foundation and Ontario Alliance of Christian School Societies. The case essentially deals with the Christian Economic Assistance Foundation (CEAF) School Support Program (SSP). CEAF was a registered charity that was recently revoked by CRA. A large number of Christian schools had apparently participated in the program.
The statement of claim alleges “Generally, the SSP operates so as to characterize what are truly and properly tuition payments for students to attend Ontario Christian schools, as grants in order to generate charitable donation tax receipts and concomitant tax credits.”
Apparently CRA has been disallowing these claims for donation tax credit. The statement of claim alleges “CRA characterized the SSP as a tax scheme to artificially maximize charitable donation receipts received by parents for private school tuition fees by improperly characterizing tuition payments by parents as grants. “Donations” made to the SSP do not meet the legal definition of a gift.”
The statement of claim alleges “All participants in the SSP had a direct and specific understanding that they would receive a charitable donation tax receipt that would be recognized by CRA for tax credit purposes. It was an express, or in the alternative, an implied, term of the contract that all participants would receive a charitable donation tax receipt that would be recognized by CRA.”
None of the allegations in the statement of claim have been proven in court. It will be interesting to see further details as the case progresses.
Here is a copy of the Statement of Claim issued August 29, 2013 by Terry Emms against CEAF and OACSS
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.