Tax Court of Canada


Income tax

Tax credits

Payment made with investment intent not gift

Taxpayer attended presentations by O corporation on offshore banking and investing, and by GI organization on its charitable work in developing countries. Taxpayer signed up for investment account with O corporation and made investments. Taxpayer gave $153,230 to organization as bank draft in amount of $100,000 US. Taxpayer claimed charitable donation tax credit for $153,230. Minister of National Revenue disallowed tax credit deduction on basis that donation did not constitute gift within meaning of s. 118.1 of Income Tax Act because taxpayer gave amount with investment intent, not donative intent. Minister asserted that taxpayer entered into arrangements with organization and O corporation that would provide him with return on amount given to organization. Taxpayer appealed. Appeal dismissed. Adverse inference was drawn against taxpayer for failing to call principals of organization and corporation. Unusually large amount given, taxpayer’s lack of donation history, and his lack of understanding and inquiry of what organization did, made it improbable that this was gift with donative intent. Taxpayer gave amount to organization with intent of receiving receipt and with investment intent such that he anticipated financial return. Amount was paid to organization as component of interconnected arrangement between taxpayer, organization and corporation. Taxpayer had investment intent when he paid amount to organization, so it was not gift within meaning of s. 118.1 of Act and he was not entitled to deduction.

Jensen v. The Queen (2018), 2018 CarswellNat 1153, 2018 TCC 60, K. Lyons J. (T.C.C. [General Procedure]).

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