In the case of Glooscap Heritage Society v. The Queen, a charity had its charitable status revoked for improperly issuing tax receipts and operating for the benefit of a tax shelter. The Charity filed an objection to the revocation and applied for an order delaying the revocation until their challenge was heard but this objection was ultimately dismissed.  The Court acknowledged that “Glooscap’s activities are socially worthy and important to the community” but the Court noted that “Glooscap’s involvement with the tax shelter is central.”  There is a very important discussion about the issue of reputation.  There is also an interesting recognition by the FCA on the subject of “the regrettable, often abysmal, sometimes unspeakable events surrounding Canada’s history of aboriginal/non-aboriginal relations: Report of the Royal Commission on Aboriginal Peoples: Looking Forward, Looking Backward, vol. 1 (Ottawa: Canada Communication Group Publishing, 1996)”.  In this case the Court noted that Glooscap issued $19,775 in total donations during 2007-2011 that were not related to the tax scheme but issued $116 million in tax receipts related to the scheme.

In the decision, the court stated:

“[4] In order to delay the revocation, Glooscap must satisfy the Court that it has met the normal test for the granting of stays and injunctions: International Charity Association Network v. Minister of National Revenue, 2008 FCA 114 at paragraph 5. Glooscap must show it has an arguable case against the revocation, it will suffer irreparable harm if the revocation is allowed to happen, and the balance of convenience lies in its favour: RJR-MacDonald v. Canada (Attorney General), [1994] 1 S.C.R. 311.

[5] For the reasons set out below, Glooscap has not satisfied this test. Therefore, I shall dismiss Glooscap’s application to delay the revocation of its registration as a charity, with costs.”

The FCA then goes on to talk about the low threshold for the first step of the test, ‘arguable case’, and the Minister conceded and the Court concluded that the charity met this part of the test.

However, to meet the second part of the test, ‘irreparable harm’, there must be evidence that the unavoidable irreparable harm would result unless the stay was granted. In this case, it was accepted that the charity would suffer some reputational harm however most of it was caused by the actions of the charity by being associated with a tax shelter, not the revocation of the charity’s status. The charity knew that they could lose their charitable status if they became involved with a tax shelter yet they still chose to continue with these actions. The Court stated (my highlighting):

“[35] Glooscap has adduced evidence from very well-placed deponents: the executive director of the tourist association with which Glooscap is partnered, a multi-decade councillor with the Millbrook First Nation reserve, and the general manager of the museum. However, much of the evidence of harm given by these deponents consists of sweeping, unparticularized assertions and declarations that difficulties would arise that might result in actual harm.

[36] Without a better understanding of Glooscap’s overall financial situation and fundraising ability, I cannot conclude that a loss of donations would result in any irreparable harm to it or its activities.

[37] Glooscap submits that revocation of its registration as a charity will cause harm to its relationships, particularly with non-aboriginal organizations, and these injuries are not capable of later remediation. However, its evidence goes no higher than to identify “jeopardy” or a risk to those relationships: see paragraphs 11 and 13 of the Mingo Affidavit.

[38] The Court does accept that Glooscap will suffer some reputational harm. However, as explained below, much of the reputational harm, especially in the donor community, will be caused not by the revocation of Glooscap’s registration as a charity, but rather by the reassessment of the donors to the tax shelter.

[39] Ultimately fatal to Glooscap`s application is the requirement that it establish irreparable harm that is unavoidable, i.e., irreparable harm that will be caused by the failure to get a stay, not harm caused by its own conduct in running a clearly-known risk that it actually knew about, could have avoided, but deliberately chose to accept: Dywidag Systems International, supra at paragraphs 14 and 16.”


“[41] In this case, Glooscap knew about the sizeable advantages of registered charitable status: exemption from income tax and the ability to issue receipts for donations received. It was warned at an early stage that it might lose its advantageous charitable status if it associated with this tax shelter. Part of that risk is the very thing that has now materialized – the revocation of its charitable status before it can challenge the revocation in this Court. Warnings about involvement with this tax shelter came from the Canada Revenue Agency (two emails and a meeting), Glooscap’s own lawyer (two letters) and its own auditor. Glooscap’s auditor resigned, at least in part over the issue. There were also warnings that involvement in the tax shelter would require an amendment to Glooscap’s objects and the approval of the Canada Revenue Agency. Yet, knowing of the risks, Glooscap chose to continue its association with the tax shelter, and in fact renewed its association in 2009.

[42] Glooscap submits that it exercised good faith throughout. In support of that submission, among other things, Glooscap points to confirmatory testimony given on cross-examination of a representative of the Canada Revenue Agency. That may be so, but the fact remains that at an early stage Glooscap knew of the risk of the very harm that has eventuated here and it chose to run that risk.

[43] If Glooscap blundered itself into involvement in this tax shelter, oblivious to any real risk, the irreparable harm might not be fairly laid at its feet. Similarly, circumstances such as mistaken advice, mistake as to the facts, trickery, duress or unauthorized conduct by someone wrongly purporting to act for Glooscap might cause a different view to be taken of the matter. But in this case none of these circumstances are present.

As the irreparable harm part of the test was not met the court did not go into detail on the third part “balance of convenience”.  The Court just noted:  “[44] Were it necessary to proceed to this branch of the test, this Court would have found that the balance of convenience lies against the granting of relief to Glooscap.”

The Court noted:

[45] This Court recognizes the high significance and importance of the aboriginal/non-aboriginal partnership in this case between Glooscap and the tourist association, especially when viewed against the regrettable, often abysmal, sometimes unspeakable events surrounding Canada’s history of aboriginal/non-aboriginal relations: Report of the Royal Commission on Aboriginal Peoples: Looking Forward, Looking Backward, vol. 1 (Ottawa: Canada Communication Group Publishing, 1996).

The Court discussed the issue of what is in the “public interest”.  I find this part to be fascinating: 

“[53] The weight to be accorded to that public interest, already significant, is driven upward by the sizeable amounts said to be in issue in this case: $116,999,482 given in receipts to participants in the tax shelter in 2008-2011, in circumstances where valid non-tax shelter donations over the same period totalled only $19,775. It is also driven up by Glooscap’s decision to involve itself in the tax shelter despite the clear warnings it received.

[54] In assessing and weighing the public interest considerations in this case against the considerations offered by Glooscap, I can do no better than to adopt the words of my colleague, Sharlow J.A., in International Charity Association Network, supra at paragraph 12 (2008 FCA 62):
The Minister takes the position, properly in my view, that the public has a legitimate interest in the integrity of the charitable sector. It is reasonable for the Minister to attempt to safeguard that integrity by carefully scrutinizing tax shelter schemes involving charitable donations of property and, where there are reasonable grounds to believe that the property has been overvalued, by taking appropriate corrective action. In the circumstances of this case, the Minister’s factual allegations, while untested, are sufficiently serious to outweigh any advantage [the charity] might derive from an order deferring the revocation of its registration as a charity.”

The Court ultimately decided:

“For the foregoing reasons, I shall dismiss Glooscap’s application to delay the revocation of its registration as a charity. The Minister shall have his costs of the application.”