Return of deposit was not new basis of reassessment

Tax | Income tax | Tax credits

Taxpayer gave amount to charitable organization GI in exchange for charitable donation receipt. Taxpayer directed that gift be placed in endowment fund that could not be used for ten years. Several months later, deposit was made into same account that amounts were paid out of. Minister disallowed deductions for charitable donation on basis that amount did not constitute gift within meaning of s. 118.1 of Income Tax Act. Tax Court judge dismissed taxpayer’s appeal. Judge found taxpayer’s evidence to be implausible and improbable, given unusually large amount that was 75 per cent of family's net income, taxpayer's previous lack of donations, taxpayer’s lack of financial wherewithal, taxpayer’s lack of due diligence in inquiring into organization’s activities and what it did with amount, and inability to explain deposit. Judge found that taxpayer gave amount to organization with intent and expectation of receiving tax credit and anticipated return of amount. Judge held that taxpayer did not pay amount with donative intent, so it did not constitute gift. Taxpayer appealed. Appeal dismissed. Factual findings regarding taxpayer’s credibility supported judge’s dismissal of appeal. Return of deposit was not new basis of reassessment but was additional evidence in support of Minister’s theory of no donative intent, so Minister did not need to plead it as alternative basis. Minister did not have burden to prove that deposit was consideration flowing back to taxpayer from organization. It would be incorrect to shift burden to Minister as facts underlying transaction were within taxpayer’s knowledge.

Goheen v. Canada (2019), 2019 CarswellNat 1715, 2019 FCA 104, Stratas J.A., Donald J. Rennie J.A., and Laskin J.A. (F.C.A.); affirmed (2018), 2018 CarswellNat 1276, 2018 CarswellNat 7347, 2018 TCC 62, 2018 CCI 62, K. Lyons J. (T.C.C. [General Procedure]).

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