The Tax Court of Canada recently released a decision where they dismissed the appeals of former spouses relating to reassessments under the Income Tax Act with respect to their alleged charitable donations made in 2003, 2004 and 2005.
The Minister of National Revenue had previously denied the charitable tax credits claimed by the taxpayers as the charitable donation arrangement involved products being acquired by the taxpayers' company which would then be donated at a considerably higher value to the charity. The Tax Court of Canada dismissed the taxpayer appeals and determined that the taxpayer penalties were correctly assessed.
This is a very Canadian charity tax scheme because "In her 2003 tax return, Vincenzina sought to include as charitable donations, $4,100,000 based on the fair market value of hockey sticks donated to All Saints Greek Orthodox Church and $3,800,025 based on the fair market value of medical supplies, again donated to the All Saints Greek Orthodox Church." Only in Canada! It also provides some of the back story to how a small Greek-Orthodox church in Toronto, the All Saints Greek Orthodox Church, ended up issuing hundreds of millions of dollars in inappropriate receipts as discussed in Kevin Donovan's 2007 article "Charity tax dodge entangles parish".
Here is the full decision.
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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.