Berg - Tax Court allows leveraged donation participant to receive credit for his cash outlay

Bocock J. found that, although the documents generated for the taxpayer's leveraged charitable donations were a flagrant attempt to deceive the CRA (the taxpayer was never at risk for the purported leveraged portion), the cash component of the taxpayer's "donation" was nevertheless a valid charitable gift.  On reviewing the authorities, he concluded that the receipt of a collateral benefit in the form of a tax credit will not in itself nullify donative intent.

Maréchaux, 2010 FCA 287, was "easily distinguishable" because the transaction documents in Berg were "pretenses and thereby not legally effective documents."  This suggests that the effective purchase of "fake" documents, which if successful in fooling CRA will generate a large charitable credit, nonetheless represents a gift for which the taxpayer expects no return.

Scott Armstrong.  Summary of Berg v. The Queen, 2012 TCC 406 under s. 118.1 - Total Charitable Gifts.