Tax Court of Canada


Income Tax

Administration and enforcement

Taxpayer acquiescing or assenting to making of false statements and reassessed accordingly

Taxpayer had connection to 2001 charitable donation program created to raise funds for hotel development program. Program worked by promoting charitable donation on creation and acquisition of timeshare property, and donation of vacation ownership weeks to registered charities. Program was charitable program in respect of which JG, lawyer working for project, issued legal opinion September 2001. Canada Revenue Agency (CRA) assessed JG under s. 163.2 of Income Tax Act, and appeal from assessment was decided in favour of Crown. Taxpayer maintained his connection to donation program was significantly different and less than that of JG and others who could be described as promoters of program. Issue arose as to whether taxpayer participated in, assented to or acquiesced in making of statements by 135 of participants in program that taxpayer knew, or would be expected to have known were false statements. CRA considered taxpayer to be promoter and assessed him accordingly. Taxpayer appealed. Appeal dismissed. Each of 135 receipts filed by donors with tax returns contained false statement. When taxpayer sent April 2002 letter to donors recommending they submit official receipts to CRA, he participated in making of or assented to or acquiesced in making of false statements. Sending letter to donors in indifference to non-existence of global trust, and failure to implement transactional steps on which program was based, showed indifference to Act and constituted culpable conduct. Taxpayer’s reliance on lawyer’s opinion letter and verbal assurances was not in good faith. Fact that in his letter to K taxpayer stated “I briefed you” suggested he was involved in program. Taxpayer’s obtaining appraisal of timeshare units was not consistent with his assertion that he had nothing to do in planning or preparation of program. Language and tone of August 12 letter suggested taxpayer was more than simply canvasser in respect of donation program. Even though many of issues in respect of 2001 donation program were unresolved, taxpayer was already looking forward to new charitable program for 2002; this implied taxpayer’s involvement in 2001 was greater than he acknowledged. Although when he sent letter to donors taxpayer did not realize he mislead them, he knew there were serious problems with transactions underlying program, and failure to consider whether transactions could have been implemented in 2002, with retroactive effect, showed indifference as to whether Act was complied with.

Ploughman v. R. (2017), 2017 CarswellNat 1819, 2017 TCC 64, Don R. Sommerfeldt J. (T.C.C. [General Procedure]).

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