I missed this article by Vancouver Sun columnist David Baines last summer entitled “Baines: Couple who cheated tax department suffer litany of woes: Chartered accountant Martin Johnson and estranged wife Celia Martin failed to declare fees earned on art donation”. The story talks about some of those involved with a donation to a major Toronto university.
“As reported by CRA, Martin Johnson and his wife, Celia Martin, pleaded guilty in Robson Square Provincial Court to failing to report $1,175,000 in fees they earned for facilitating an art donation to Ryerson University (thereby evading $168,348 in taxes) and failing to remit the $82,250 in GST they collected on account of the transaction.
Now they will not only have to pay the $168,348 in taxes and $82,250 in GST they failed to pay, he will have to pay a $84,174 fine, representing 50 per cent of the tax they evaded, and she will have to pay a $61,687 fine, representing 75 per cent of the GST they failed to remit. That adds up to $396,459.”
Baines notes further:
“According to an agreed statement of facts filed with the court, Johnson is a 51-year-old chartered accountant who specializes in tax shelters.
Celia Martin is 42 years old and was the sole officer and director of C. Martin & Associates Inc. (CMA), an art consulting business which, among other things, facilitated the donation of art for tax purposes.
The pair met in 1999 through their business activities and married in 2002. They have two young children.
Through CMA, the couple helped source a large collection of photographic images for Great Pacific Industries Inc., which is the flagship company of Vancouver billionaire Jim Pattison.
In 2005, Great Pacific donated the collection to Ryerson University in Toronto. There is no indication how much Pattison paid for the collection or the deemed value of the donation, but it is clear that it is significant and — unlike some art donations for tax purposes — entirely legitimate.
According to the Ryerson website, the photographs — some 300,000 of them — were acquired from the Black Star Print Library, which dates back to the Depression era. Black Star supplied images for newly emerging magazines such as Life, Look and the Saturday Evening Post. They include photographs by such legendary photographers as Robert Capa and chronicle the great events, trends, conflicts and celebrities of the 20th century.
The university described the collection as “the largest gift of cultural property to any Canadian university.” (An interesting and commendable aspect of the donation is that Pattison made the donation anonymously: neither he nor Great Pacific was publicly revealed as the donor until the agreed statement of facts was tendered in court).
For facilitating the transaction, Great Pacific paid CMA an agency fee of $1,175,000 plus $82,250 in GST. CMA funnelled the money to two other private companies the couple owned.
That would have been the end of a happy story, except the couple failed to declare the agency fee as income or remit the GST.”
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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.