This case involves an auto worker who invested in an abusive charity gifting tax scheme.  When caught by CRA he went to another group called Fiscal Arbitrators and they suggested he claim a large amount of business losses even though he does not run a business.  What an amazing case!   I guess we can learn don't “invest” in abusive charity gifting tax schemes that promise tax saving greater than the cash you put in.  Also don't claim false business losses.   The case also states some obvious points like you should read your return before filing and penalties can be imposed on you if you are grossly negligent.   

The court notes:

“Around 2006, Lewis offered the Appellant and his wife an opportunity to become involved in a donation programme known as the Universal Health Trust (“UHT”). Lewis explained that this programme provided medical supplies to third world countries. The Appellant understood that by participating in UHT, he would obtain a charitable donation receipt for tax purposes that would enable him to receive a tax refund larger than he would were he to make the same donation to some other charity such as his church. The Appellant stated that he and his wife participated in the UHT donation programme from 2006 to about 2009. They obtained significant tax refunds as a result of this donation programme. To say the least, the UHT donation programme was highly questionable. The CRA reassessed the Appellant and his wife so as to disallow their charitable donations to UHT and also assessed penalties amounting to about $20,000. The Appellant passed these matters on to Lewis to be resolved. Lewis told him that there was someone he was dealing with (who turned out to be scammers known as Fiscal Arbitrators), who could help to resolve the matter.”

“In this return, the Appellant claimed huge net business losses in the amount of $294,195.29. This is false. He never owned or operated any business whatsoever during 2009 and could not have had any business losses whatsoever. The Appellant’s only significant income during the 2009 taxation year was employment income in the amount of $65,029.73. Just above his signature, we see the usual certification stating, “I certify that the information given in this return and in any documents attached is correct, complete, and fully discloses all my income”. The truth is that the Appellant made no effort at all to verify the accuracy and completeness of his return – he never even looked at it. Had he looked at his return, which he did not, he would surely have seen the ominous warning that appears just below his signature that “It is a serious offence to make a false claim”. How could he not have seen this when he signed the return? By not looking at his return, he ignored both his duty to verify the completeness and accuracy of his return and he also ignored the dire warning that it is a serious offence to make a false claim. He agrees that the claimed refund of about $14,000 was large compared to what he usually received.”

The Tax Court concluded:

[60]        It cannot be disputed that the Appellant’s 2009 tax return contained false statements – the Appellant did not carry on a business and he did not incur any business losses whatsoever, let alone losses amounting to more than $294,000. On considering the entirety of the evidence and recent jurisprudence, I come to the conclusion that the Appellant made, participated in, assented to or acquiesced in the making of false statements in his return in circumstances amounting to gross negligence. If he is to be believed, then regardless of who prepared his return, whether it be Chester Lewis or Fiscal Arbitrators, he did nothing to verify the accuracy of the information contained in his tax return. He simply signed his return without reviewing it or without even looking at it. In so doing, he certified that the return was complete and accurate – it was not and in fact it was patently false. He had a duty to exercise care and accuracy in the completion of his return and he failed miserably in this duty, making no effort at all to verify the accuracy and completeness of his return. Had he made even the most minimal effort, he would have quickly and easily discovered the blatantly false information contained in the return. His actions in signing his return without even looking at it are not only negligent but are grossly negligent. In addition, if he signed his return in blank, as he suggests he may have done, then this is even greater recklessness that would also attract the characterisation of “gross negligence”. As such, the Appellant is properly subject to the penalties imposed on him pursuant to subsection 163(2) of the Act.

[61]        For all of the foregoing reasons, this appeal is dismissed. The Respondent is entitled to her costs if she wants them.