Miller v. The Queen, 2019 TCC 204 - the Tax Court of Canada sure can be slow

October 25, 2019 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law

There was a recent Tax Court of Canada ("TCC") case Miller v. The Queen, 2019 TCC 204. It is not an important or exciting case - it deals with a charity tax scheme.  A person buys some multimedia courseware for $7000 then claims that the fair market value is $42,000.   We have seen lots of those types of cases and CRA has been successful in court over denying the deductions.   What is most interesting to me is that the "donation" was in late 2003 and we are now in late 2019.  It has taken this case about 15 years to be heard by the TCC. 

The Senate Committee on the Charitable Sector put out a report entitled "A Roadmap to a Stronger Charitable Sector".  The report recently called for a far bigger role for the Tax Court of Canada in recommendation 23

Recommendation 23 (p. 77) That the Government of Canada propose amendments to the Income Tax Act to provide that all appeals from decisions of the Charities Directorate of the Canada Revenue Agency proceed to the Tax Court of Canada for a hearing de novo, following consideration by the Canada Revenue Agency’s Tax and Charities Appeals Directorate; and a right to appeal to the Tax Court of Canada for cases where the Canada Revenue Agency’s Tax and Charities Appeals Directorate (the Directorate) has not rendered a decision on an appeal by an organization that has had its application for registered charity status refused, or an existing charity that has had its registration revoked, within six months of it having been referred to the Directorate. 

Did the Senate Committee know that it could take 15 years for a case to be heard in the TCC?   There may be some advantages to having a case heard in the TCC, but the idea of moving matters that are now heard by the Federal Court of Appeal to the TCC I have generally viewed as primarily a delay tactic.  At the moment if CRA proposes to revoke a really bad charity (we have lots of examples on our website) often the proposal to revoke is 2-5 years after CRA is first aware of the problems through complaints and audits.  Then the bad charity makes an internal appeal within CRA which adds another 1-2 years.  So many bad charities take 7-10 years to be revoked after CRA is aware of the problem.  If the Senate's recommendation is accepted then instead of the speedy hearing at the Federal Court of Appeal we may be looking at an additional 15-year wait at the Tax Court of Canada.  Therefore it will then take CRA about 20-25 years to revoke a bad charity.   Great for charity scammers and those that deliberately abuse charities but probably not great for the overall reputation of the charity sector.   Again I wonder if the Senate is aware of the huge backlog of cases in the Tax Court of Canada.  Presumably one of the deponents pushing for this change made them aware of it.      

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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.

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