Taxpayer’s cash contribution had to be seen as participation fee or investment

Tax – Income tax – Tax credits

Taxpayer participated in donation program, through which he entered into agreements and contributed amount in cash while requesting gift of educational courseware licenses that was valued at approximately five times amount of cash contribution. Minister reassessed taxpayer under Income Tax Act, denying claimed charitable donation credits for cash gift of $5,000 and $25,056 gift in kind. Taxpayer appealed. Appeal dismissed. Taxpayer could not explain where his gift-in-kind originated, how licenses were valued, or why his participation was necessary . Taxpayer had no evidence to provide to court beyond his assertion that his intention in making donation was to help Canadian children and adults, and so had not led prima facie evidence to show that assessment was incorrect. Minister’s position that gift was not made by taxpayer was accepted, since taxpayer did not have donative intent since he expected to receive benefit from his participation in program. It was fatal to taxpayer’s appeal that he did not show that either his cash gift or his claimed gift-in-kind reached any charity. Program as promoted, by which participants would receive back educational licenses worth 5 times his cash gift, defied common sense. By any objective standard, taxpayer was enriched as result of his participation both by receiving ownership of licenses and by getting tax receipts intended to result in him receiving tax credits exceeding his cash contribution. Taxpayer’s cash contribution had to be seen as participation fee or investment as it was impossible not to conclude that taxpayer intended to enrich himself by participating. Principle of judicial comity supported conclusion, given that similar conclusion regarding donative intent was reached in lead case involving same program.

Tudora v. The Queen (2020), 2020 CarswellNat 220, 2020 TCC 11, Ronald MacPhee J. (T.C.C. [Informal Procedure]).

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