Citation: 2011TCC308
Date: 20110620
Docket: 2010-3706(IT)I
BETWEEN:
TOM OLOYA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Docket: 2010-3707(IT)I
AND BETWEEN:
JULIA OLOYA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The Appellants were
reassessed to deny the tax credits that they had claimed in relation to the
charitable donations identified by them in their tax returns for the following
years:
|
Year
|
Appellant
|
Amount
|
|
2005
|
Tom Oloya
|
$25,000
|
|
2005
|
Julia Oloya
|
$16,500
|
|
2006
|
Tom Oloya
|
$26,450
|
|
2006
|
Julia Oloya
|
$14,450
|
[2]
The amounts claimed all
related to receipts issued by International Farm Aid and Relief Mission
(“IFAARM”). This was a charitable organization that was formed by Tom Oloya to
provide assistance to farmers in Uganda and other developing countries. The
organization was formed in 2004 and became a registered charity on April 1,
2005. Tom Oloya also indicated that he became particularly interested in the
work being done by the Northern Uganda War Affected Women Organization, an
organization that, as described by the Appellants in their letter to the Canada
Revenue Agency dated August 20, 2010, was “a group comprising women who had
lost their spouses as a result of the rebel atrocities”. Tom Oloya’s intentions
were clearly honourable and charitable but he lacked the necessary accounting
skills and knowledge of the rules related to charitable organizations to
operate the charity properly and to ensure that it issued proper receipts.
[3]
There were a number of
issues related to the record keeping of IFAARM (including its donation receipts
and its charity information return) and its registration as a registered
charity was revoked on September 5, 2009.
[4]
The amounts claimed for
2005 were reflected in the following receipts issued by IFAARM:
|
Receipt No.
|
Issued to:
|
Amount
|
Date of Donation:
|
|
0114
|
Tom Oloya
|
$25,000
|
December 31, 2005
|
|
0102
|
Julia Oloya
|
$16,500
|
December 31, 2005
|
[5]
These were the only receipts
that were issued by IFAARM for 2005. The amount for Tom Oloya was an estimate
of the value of the services that he had provided to IFAARM.
[6]
The tax credit that an
individual may claim as a result of gifts made by that individual to registered
charities is provided in subsection 118.1(3) of the Income Tax Act (the
“Act”). This subsection provides that the tax credit is based on the
individual’s total gifts. The definition of “total gifts” in subsection
118.1(1) of the Act provides that one of the limiting amounts is the
individual’s total charitable gifts. The definition of “total charitable gifts”
(also in subsection 118.1(1) of the Act) provides that it is based on
the fair market value of the gift (or
gifts).
[7]
In Slobodrian v.
Minister of National Revenue, 2003 FCA 350, [2004] 1 C.T.C. 124, 2003
DTC 5632, Justice Noël, writing on behalf of the Federal Court of Appeal stated
that:
15 It follows that a gift for income
tax purposes must involve the transfer of something known to law as property.
The mere supply of services without compensation involves no property and hence
cannot form the subject matter of a gift. This is to be contrasted with
remunerated services which once performed give rise to rights capable of
ownership and which can in turn form the subject matter of a gift. The simplest
example of this would be the remunerated worker who assigns gratuitously his
right to the remuneration which he has earned. In the present case, it is
common ground that the applicant was to render his services without any form of
compensation.
[8]
Tom Oloya acknowledged
that the receipt for $25,000 issued by IFAARM to him for 2005 was for services
rendered by him without remuneration and at the commencement of the hearing he
stated that he was no longer pursuing his claim for a charitable donation in
relation to the receipt issued for his services. However, he submitted a list
of items for which he had paid in the hope that he would be able to claim a
credit for these. The items included the registration fees paid to form IFAARM,
telephone charges, charges related to the website for IFAARM, stationary, legal
fees and part of the cost of his trip to Uganda
in 2006. The total amount that he paid for the items was $2,639.
[9]
However, neither the
receipt issued for 2005 nor the receipt issued for 2006 to Tom Oloya was for
any of the amounts identified on the Appellant’s list of items. Subsection
118.1(2) of the Act provides, in part, that:
(2) A gift shall not be included in the total charitable gifts, … of
an individual unless the making of the gift is proven by filing with the
Minister
(a) a receipt for the gift that contains prescribed
information;
[10]
Since there was no
receipt for any of the items included in the list submitted by Tom Oloya at the
hearing, no amount can be included in his total charitable gifts for any of
these items. As well, Tom Oloya indicated that he and his wife did expect to be
reimbursed for the amounts that they had spent on behalf of IFAARM and that
these amounts should have been identified as loans. As a result, the amounts
expended on these items would not be gifts in any event.
[11]
It appears that the receipt
issued to Julia Oloya for 2005 was for the following (which were not identified
on the receipt):
|
Item:
|
Amount:
|
|
Services rendered (without remuneration):
|
$12,400
|
|
Computer, desk, chairs, phone and
printer:
|
$1,100
|
|
Use of room in the house:
|
$3,000
|
|
Total:
|
$16,500
|
[12]
As noted above, the
provision of services does not result in a gift of property and therefore the
amount for services cannot be included as total charitable gifts for the
purposes of the Act. Tom Oloya had also acknowledged at the beginning of
the hearing that Julia Oloya was no longer pursuing any claim in relation to
the amount related to the services that she had provided.
[13]
Counsel for the
Respondent did not contest the amounts identified for the computer, desk,
chairs, phone and printer. However, the issue related to this part of the claim
is that there is no indication on the receipt that was issued that it was
issued for these items. As noted above, subsection 118.1(2) of the Act
provides that an individual must file a receipt that contains prescribed
information in order to claim a credit for a charitable donation. The
prescribed information is set out in section 3501 of the Income Tax
Regulations. Subsection 3501(1) of the Income Tax Regulations
provides in part that:
3501. (1) Every official receipt issued by a registered organization
shall contain a statement that it is an official receipt for income tax
purposes and shall show clearly in such a manner that it cannot readily be
altered,
…
(e.1) where the donation is a gift of property other than
cash
(i) the day on which the donation was received,
(ii) a brief description of the property, and
(iii) the name and address of the appraiser of the
property if an appraisal is done;
[14]
There is nothing on the
receipt to indicate that the receipt was issued for any property other than
cash. There is simply the one amount of $16,500 which is identified as the
“amount donated”. There is also only one “date of donation” which was stated to
be December 31, 2005, even though the amount included services, the items
referred to above and the amount for rent. Tom Oloya indicated that the items
were given to IFAARM during the summer of 2005. The receipt issued to Julia
Oloya did not contain the prescribed information and therefore she is not
entitled to claim a credit in relation to the transfer of the computer and
other items to IFAARM.
[15]
The amount for rent was
for the use of a room in their house. Tom Oloya described this claim in the
schedule that he submitted as follows:
Room to be used as office space for IFAARM work to be rented at
$250.00 per month, use of internet facility and utilities included. There was
no money paid, and rent to be considered as donation to IFAARM.
[16]
It is not clear whether
the Appellants charged IFAARM rent or were simply making a claim for the
equivalent amount that would have been charged for rent. Since the Appellants
would have been required to include the rental amount in their income on an
accrual basis
and since they did not include this rental amount in their income, it seems to
me that they did not charge rent. If they would have charged rent (and included
the rent in their income), then the rental amount receivable would have been
property that could have been donated to the charity. However, such property
would have to be identified in the receipt.
[17]
Since presumably the
Appellants simply claimed an amount equivalent to rent, one question would be
whether any property was given by the Appellants to IFAARM. The definition of
property, as noted by the Federal Court of Appeal, in Slobodrian, above,
is set out in subsection 248(1) of the Act. This subsection provides
that:
“property” means property of any kind whatever whether real or
personal or corporeal or incorporeal and, without restricting the generality of
the foregoing, includes
(a) a right of any kind whatever, a share or a chose in
action,
(b) unless a contrary intention is evident, money,
(c) a timber resource property, and
(d) the work in progress of a business that is a profession;
[18]
Even if the granting
of the right to use the room in the house resulted in a transfer of property to
IFAARM, since the receipt did not identify this property Julia Oloya cannot
include this amount as part of her total charitable gifts for 2005.
[19]
The receipts for 2006 were
issued in relation to an alleged transfer of certain land in Uganda by the Appellants to IFAARM. Tom Oloya’s father held
this land and promised the Appellants at their wedding that he would transfer
it to them. However, the land was in the part of Uganda
where a war was being fought and Tom Oloya’s father did not execute any
documents to convey his interest in this land to the Appellants. The Appellants
did arrange to have the land transferred to the Northern Uganda War Affected
Women Organization. Although the Appellants discussed, between themselves,
their intention to transfer this land to IFAARM, there is nothing to indicate
that this land was actually transferred to IFAARM. Therefore there is nothing,
other than the statement of Tom Oloya’s father, and the stated intentions of
the Appellants, to show that the land was transferred from Tom Oloya’s
father to the Appellants or by the Appellants to IFAARM.
[20]
Since the land is in
Uganda, it is a question of the law of Uganda
whether Tom Oloya’s father transferred an interest in real property to the
Appellants when he stated, at their wedding, that he would do so. Foreign law
is a question of fact. Justice Rothstein in Backman v. The
Queen, 178
D.L.R. (4th) 126, [1999] F.C.J. No. 1327, stated
as follows:
38 Where
foreign law is relevant to a case, it is a question of fact which must be
specifically pleaded and proved to the satisfaction of the Court. Professor
J.-G. Castel has summarized the effect of the failure of a party to establish
foreign law as a fact before the Court:
If foreign law is not pleaded and proved or is insufficiently proved, it
is assumed to be the same as the lex fori. This seems to include statutes as
well as the law established by judicial decision.
39 Professor
Castel acknowledges that some Canadian courts have been reluctant to apply the
presumption that the law of the foreign jurisdiction is the same as that of the
forum, where the law of the forum is a statute. However in Fernandez v.
Mercury Bell (The), Marceau J.A. held that the salient
distinction is not whether the law of the forum is statutory or common law:
What has appeared constant to me, however, in reading the cases, is the
reluctance of the judges to dispose of litigation involving foreign people and
foreign law on the basis of provisions of our legislation peculiar to local
situations or linked to local conditions or establishing regulatory
requirements. Such reluctance recognizes a distinction between substantive
provisions of a general character and others of a localized or regulatory
character; this distinction, a distinction, formally endorsed I think by
Cartwright J. in the two passages I have just quoted, is wholly rational which
is more than can be said of a simple division between common law and statute
law. …
In a separate
concurring opinion, Hugessen J.A. observed that even at the time when the
preponderance of English law was judge-made, it was doubtful that it would have
been argued that a statute of general application should not come within the
rule of presumption:
My second observation relates to the suggestion, in some of the
authorities, that the application of the lex fori is limited to the common law
as settled by judicial decisions and excludes all statutory provisions. Here
again I think the expressions of the rule have been coloured by the historical
context and go back to a time when the great body of English law was
judge-made; statutes were creatures of exception, outside the general body of
the law. Even at that time, however, I doubt that it would seriously have been
argued that a statute of general application such as, for example, the Bills of
Exchange Act should be overlooked, so as to oblige the court to search in the
obscurities of history to determine the state of the law prior to its
enactment. The proper expression of the rule, as it seems to me, is that the
court will apply only those parts of the lex fori which form part of the general
law of the country.
40 I
think that legislation with respect to partnerships is such an example of
statutory law of general application. There is nothing intrinsically local or
particular with respect to partnerships, and there is considerable uniformity
in this area of law across jurisdictions.
[21]
There was no evidence
with respect to how an interest in land in Uganda
could be transferred. Tom Oloya stated that in Uganda,
a person holds a 99 year lease for land and at the end of the 99 years the person
must apply for another 99 year lease. In the letter from the lawyers
representing the Northern Uganda War Affected Women Organization, there is a
reference to the registration of the land which suggests that there is some
requirement for a document in writing.
[22]
Section 1 of the Statute
of Frauds (Ontario)
R.S.O. 1990, CHAPTER
S.19, provides that:
1. (1)
Every estate or interest of freehold and every uncertain interest of, in, to or
out of any messuages, lands, tenements or hereditaments shall be made or
created by a writing signed by the parties making or creating the same, or
their agents thereunto lawfully authorized in writing, and, if not so made or
created, has the force and effect of an estate at will only, and shall not be
deemed or taken to have any other or greater force or effect.
[23]
Therefore the laws of Ontario would require a written document to transfer an
interest in land. It seems to me that a presumption can be made that the laws
of Uganda would also require that an interest in
land can only be transferred by a document (which would be in writing) signed
by the transferor. Since there was no such document conveying an interest in
the land from Tom Oloya’s father to the Appellants, no interest in this land
was conveyed to them. Therefore they did not have an interest in the lands and
could not make a gift of the lands to the charity. There was also no such
document conveying an interest in the land to IFAARM. Therefore there was no
conveyance of an interest in the land from the Appellants to IFAARM and the
Appellants did not make any gift of the land to IFAARM.
[24]
The receipts that were
issued by IFAARM for 2006 were also deficient as the receipts did not identify
the property that the Appellants had claimed was transferred to IFAARM.
[25]
As a result the
Appellants’ appeals in relation to the reassessments that denied the Appellants’
claims for tax credits for charitable donations for 2005 and 2006 are
dismissed, without costs.
Signed at Halifax,
Nova Scotia, this 20th day of June, 2011.
“Wyman W. Webb”
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