The recent decision of Ploughman v. The Queen, 2017 TCC 64 deals with a “third-party civil penalty” against Mr. Ploughman for his involvement in what CRA refers to as “abusive charity gifting tax shelter” but this decision refers to as a “donation program”.  The court dealt with an appeal of the assessment of the third-party civil penalty and rejected Mr. Ploughman's appeal.

The court noted:

The Donation Program was the same charitable donation program in respect of which Julie Guindon, a lawyer in Ottawa, issued a legal opinion on September 19, 2001. The Canada Revenue Agency (the “CRA”) assessed Ms. Guindon under section 163.2of the ITA and her appeal from that assessment was ultimately decided in favour of the Crown by the Supreme Court of Canada.[2]Mr. Ploughman maintained that his connection to the Donation Program was significantly different from,  and substantially less than, that of Ms. Guindon and certain other individuals who could be described as the promoters or developers of the Donation Program. The CRA considered Mr. Ploughman to be one of the promoters or creators of the Donation Program, and assessed him accordingly.  …


[4]            The issue in this Appeal is whether Mr. Ploughman participated in, assented to or acquiesced in the making of, statements by 135 of the participants in the Donation Program that Mr. Ploughman knew, or would reasonably be expected to have known but for circumstances amounting to culpable conduct, were false statements that could be used by or on behalf of those participants for a purpose of the ITA. In part, this requires a determination of whether Mr. Ploughman was merely a canvasser or a marketer for the Donation Program (as he alleges), whether he participated in the creation, or was a promoter, of the Donation Program (as the Crown has assumed), or whether he may have had some other connection to the Donation Program or to the false statements.  …


[90]        In summary, I have made the following findings:

a)   Mr. Ploughman was a creator or promoter of the Donation Program.[140]

b)   Each of the 135 official receipts filed by the Donors with their 2001 income tax returns contained a false statement.

c)   When Mr. Ploughman sent his letter of April 5, 2002 to the Donors, recommending that they submit their official receipts to the CCRA, he participated in the making of, or caused the Donors to make or furnish, or assented to or acquiesced in the making of, the false statements.

d)   When Mr. Ploughman sent his letter of April 5, 2002 to the Donors, he knew, or would reasonably be expected to have known but for circumstances amounting to culpable conduct, that each of the official receipts contained a false statement.

e)   When Mr. Ploughman sent his letter of April 5, 2002 to the Donors, his indifference concerning the non-existence of the Global Trust, the non-existence of the timeshare units, the failure to implement in 2001 (or even in 2002) the other transactional steps on which the Donation Program was based, and his indifference as to whether his recommendation in that letter was well founded, showed an indifference as to whether the ITA was complied with and thus constituted culpable conduct.

f)      Mr. Ploughman’s reliance on the opinion letter of Ms. Guindon and the verbal assurances of Mr. Kerr did not satisfy the statutory criteria of subsection 163.2(6) of the ITA, and in any event, was not done in good faith.

[91]        For the reasons set out above, this Appeal is dismissed, with costs in favour of the Respondent, to be calculated in accordance with Tariff B of Schedule II to the Tax Court of Canada Rules (General Procedure).

A few points of my own include:

1) The assessment of third-party civil penalties was in July 10, 2007.  This appeal was dealt with almost ten years later.  I wonder if it is going to be appealed to delay it further.     

2) Many Canadians don't understand why anyone would abuse charities. For those Canadian who don't understand the mindset of certain people and how they come to do things that are problematic it may be worthwhile to read this case as it goes into tremendous detail as to how one of these abusive charity gifting tax schemes was hatched.  

3) One of my favourite paragraphs is “[7] Due to a slowdown in the tourism business in the wake of the 911 catastrophe, and the resultant reticence on the part of investors to invest in tourist-based properties at that time, in the fall of 2001 TDL realized that it faced a funding shortfall. Mr. Goudie testified that, in the face of this realization, Mr. Ploughman suggested that TDL could raise additional funds by promoting a charitable donation program (defined above as the “Donation Program”) based on the creation or acquisition of a timeshare property and the donation of vacation ownership weeks to registered charities. Mr. Goudie indicated that Mr. Ploughman had knowledge and experience pertaining to the implementation of charitable donation programs.”  I guess some people really do think that the Canadian charity system is the solution to all the world's problems!

You can read the full decision at Ploughman v. The Queen, 2017 TCC 64 (CanLII)