We have previously blogged about the decision of the Tax Court of Canada in David, R. et al. v. the Queen (TCC) (here and here). In this decision, the court allowed the appeals of the respondents relating to tax credits that had been previously disallowed by the Minister of National Revenue for gifts the respondents had made to CanAfrica International (CanAfrica), a registered charity, in 2006 (each of the respondents was issued an inflated tax receipt by CanAfrica).
In the recent decision of Canada v. Castro, 2015 FCA 225, the Minister appealed the decision in David v. The Queen by asserting that the Tax Court erred in law by finding that "....the respondents made gifts within the meaning of section 118.1 of the Act in circumstances where they sought to enrich themselves through cash payments made to their tax preparer in exchange for inflated tax receipts. Alternatively, the Minister claims that if the Judge did not err in finding that the respondents made gifts to CanAfrica, she did err in law by failing to apply subsections 248(30) and (32) of the Act. She also erred in law by failing to determine whether the respondents’ receipts met the requirements of subsection 118.1(2) of the Act and subparagraph 3501(1)(h)(i) of the Regulations."
The appeal by the Minister was allowed on the sole ground that the absence of the correct cash amount of the donation on the charitable receipts failed to meet the requirements of subsection 118.1(2) of the Act and subparagraph 3501(1)(h)(i) of the Regulations. Therefore, the claims by the respondents to a tax credit were found to be invalid.
You can access the full decision here.
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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.