Tax court of Canada | Tax | Income tax | Tax credits
Taxpayer’s brother was co-founder of charitable organization GI. Taxpayer paid $30,000 US, equivalent to $46,667 Cdn, to organization in exchange for charitable donation receipt. Taxpayer gave amount in two payments, funded by loan from taxpayer’s father-in-law. Several months later, deposit was made into same account that amounts were paid out of. Taxpayer claimed tax credit deductions for charitable donation over four years. Minister of National Revenue disallowed deduction on basis that amount did not constitute gift within meaning of s. 118.1 of Income Tax Act. Taxpayer appealed. Appeal dismissed. Taxpayer’s evidence was implausible and improbable, given unusually large amount, fact that taxpayer did not claim any charitable donation tax credit for previous 12 years, fact that amount paid was 75 per cent of family’s net income, taxpayer’s lack of financial wherewithal and implausibility that he would borrow to donate, taxpayer’s lack of due diligence in failing to independently inquire into organization’s activities and financial statements, failure to follow up on what organization did with amount, and inability to explain deposit made into account. Taxpayer gave amount to organization with intent and expectation of receiving tax credit and anticipated return of amount. Taxpayer did not prove that he paid amount with donative intent, so amount did not constitute gift. Taxpayer was not entitled to tax credit deductions.
Goheen v. The Queen (2018), 2018 CarswellNat 1276, 2018 TCC 62, K. Lyons J. (T.C.C. [General Procedure]).