Date:
20010319
Docket:
2000-1230-IT-I,
2000-1231-IT-I
BETWEEN:
MARIE-HÉLÈNE ABBOUD,
FAYEZ
ABBOUD,
Appellants,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Tardif,
J.T.C.C.
[1]
The parties agreed to proceed on common evidence.
[2]
The appeals relate to the 1989 and 1990 taxation years for the
appellant Fayez Abboud and to the 1991 taxation year for the
appellant
Marie-Hélène Abboud.
[3]
The issue in both cases is whether the appellants are entitled to
the credits they have claimed for charitable donations. The
donations in question were $12,000 in 1989 and 1990 for Fayez
Abboud and $3,000 in 1991 for Marie-Hélène
Abboud.
[4]
To justify the assessments and penalties, the respondent alleged
the following in the Reply to the Notice of Appeal ("the
Reply") in Fayez Abboud's appeal
(2000-1231(IT)I):
[TRANSLATION]
(a)
when he filed his tax returns for the 1989 and 1990 taxation
years, the appellant claimed in each case a charitable donations
credit in respect of $12,000 that he says he donated to the
Ordre Antonien libanais des Maronites during each of those
taxation years;
(b)
the appellant did not in any way whatsoever donate an amount of
$12,000 to the Ordre Antonien libanais des Maronites in either
the 1989 or the 1990 taxation years;
(c)
the appellant did not submit to the Minister valid receipts
containing the prescribed information for the alleged $12,000
donations he claims to have made to the Ordre Antonien libanais
des Maronites, since the donation amounts shown on the receipts
are false;
(d)
the appellant did not make the donations for which he is claiming
credits in his tax returns; rather, he was involved in the
following scheme:
(i)
in some cases, the Ordre Antonien libanais des Maronites issued a
receipt to a taxpayer showing a donation of money equal to the
amount that the taxpayer paid it by cheque and then returned to
the same taxpayer the same or nearly the same amount of money in
cash;
(ii)
in other cases, the Ordre Antonien libanais des Maronites issued
a receipt to a taxpayer showing a donation of a certain amount of
money when the taxpayer had not paid anything at all or had paid
in cash a minimal amount in comparison with the amount indicated
on the receipt;
(e)
in filing his tax returns and in supplying information under the
Act for the 1989 and 1990 taxation years, the
appellant made a
misrepresentation attributable to wilful default concerning credits claimed by him in
respect of charitable donations of $12,000 for each of those
years;
(f)
the appellant knowingly, or
at least under circumstances amounting to gross negligence, made
a false statement or omission by claiming credits for charitable donations of $12,000 for
each of the 1989 and 1990 taxation years when he had not made any
donation at all;
(g)
since the appellant knowingly, or under circumstances amounting
to gross negligence, made or
participated in, assented to or acquiesced in the making of, a
false statement or omission in the tax returns filed for the taxation years at issue,
the tax that the appellant would have been required to pay on the
basis of the information provided in the tax returns filed for
those years was lower than the amount of tax actually payable by
$3,019 for 1989 and $3,157 for 1990.
And in
Marie-Hélène Abboud's
appeal (2000-1230(IT)I) the allegations were as
follows:
[TRANSLATION]
(a)
when she filed her tax returns for the 1991 taxation year, the
appellant claimed a charitable donations credit in respect of
$3,000 that she says she donated to the Ordre Antonien
libanais des Maronites during that taxation year;
(b)
the appellant did not in any way whatsoever donate an amount of
$3,000 to the Ordre Antonien libanais des Maronites during the
1991 taxation year;
(c)
the appellant did not submit to the Minister a valid receipt
containing the prescribed information for the alleged $3,000
donation she claims to have made to the Ordre Antonien libanais
des Maronites, since the donation amount shown on the receipt is
false;
(d)
the appellant did not make the donation for which she is claiming
a credit in her tax return; rather, she was involved in the
following scheme:
(i)
in some cases, the Ordre Antonien libanais des Maronites issued a
receipt to a taxpayer showing a donation of money equal to the
amount that the taxpayer paid it by cheque and then returned to
the same taxpayer the same or nearly the same amount of money in
cash;
(ii)
in other cases, the Ordre Antonien libanais des Maronites issued
a receipt to a taxpayer showing a donation of a certain amount of
money when the taxpayer had not paid anything at all or had paid
in cash a minimal amount in comparison with the amount indicated
on the receipt;
(e)
in filing her tax returns and in supplying information under the
Act for the 1991 taxation year, the appellantmade a misrepresentation attributable to
wilful default concerning
the credit claimed by her in respect of a charitable donation of
$3,000;
(f)
the appellant knowingly, or
at least under circumstances amounting to gross negligence, made
a false statement or omission by claiming a credit for a charitable donation of $3,000 for
the 1991 taxation year when she had not made any donation at
all;
(g)
since the appellant knowingly, or under circumstances amounting
to gross negligence, made or
participated in, assented to or acquiesced in the making of, a
false statement or omission in the tax return filed for the taxation year at issue, the
tax that the appellant would have been required to pay on the
basis of the information provided in the tax return filed for
that year was lower than the amount of tax actually payable for
that year by $3,000.
[5]
The appellants testified and explained the circumstances in which
and the reasons why they made charitable donations to the Ordre
Antonien libanais des Maronites. The appellant Fayez Abboud
explained the development of his career and described the
circumstances which brought about his coming to Canada. His
spouse, who is of French origin, did the same.
[6]
Both doctors, they practised at hospital centres in the Outaouais
area, earning incomes much higher than those of average
Canadians. The appellant Fayez Abboud was born in Lebanon, a
country that has been severely affected and terrorized by war.
War has orphaned countless children and injured thousands of
people there and resulted in the displacement of thousands of
Lebanese. He explained that he felt called upon to act at the
time the war was at its deadliest.
[7]
He explained that he was solicited over the telephone by a
representative of the Ordre Antonien libanais des Maronites, with
whom he talked three or four times in 1989 and 1990, the
representative always being the one who initiated the
conversations.
[8]
After assessing his ability to pay and considering a number of
factors, the main one being providing assistance to those who had
been orphaned, injured or displaced by the war, and after
consulting his accountant, he concluded that he had to do
something and that he could donate $12,000 for 1989. He therefore
wrote, for that year, a postdated cheque for $12,000, which he
sent to the Ordre Antonien libanais des Maronites in
Montreal.
[9]
In 1990, the same thing occurred: after being solicited again, he
decided to make another donation in the same amount and he
followed the same procedure, that is, he prepared a postdated
cheque cashable at the end of the year.
[10] The
cheques were cashed in March in one case and April in the other.
Also, in both cases the cheques were drawn on the appellant
Fayez Abboud's line of credit, on which there was a very
high interest rate.
[11] The
appellant Marie-Hélène Abboud was not solicited
directly by the Ordre Antonien libanais des Maronites. She
explained that she made the donation to show solidarity in a
cause that meant a great deal to her spouse, especially since he
had suggested and recommended that she make the donation, which
she spontaneously agreed to do.
[12] Given
her income, it was a relatively modest effort. A cheque was
written, and the donation was sent by mail. The cheque was cashed
in the days that followed, the funds being taken out of the
appellant Marie-Hélène Abboud's
account.
[13] In
Marie-Hélène Abboud's case, the process
was regular, standard and ordinary. The donation was made through
a cheque that was cashed in the days that followed and debited to
an account with a positive balance. A receipt was then issued
corresponding to the amount of the cheque.
[14] There
is nothing that can justify rejecting either appellant's
testimony. They could afford to make the donations. The cause
underlying the donations was noble, rational and real. If it had
been a scheme to evade taxes or reduce their tax burden, I think
that the amounts of the donations would have been higher than
those at issue here and that the appellants would no doubt have
arranged to have everything spread out over more than three
years; moreover, both of them might have profited more
significantly from the scheme.
[15] The
respondent adduced very substantial, well-documented
evidence showing unequivocally that the Ordre Antonien libanais
des Maronites was at the centre of a veritable network that
perpetrated several hundred frauds. It was a structured,
efficient, large-scale organization. A very large number of
taxpayers were knowingly involved in it, and the operation was
very profitable for both the donors and the recipient, which
issued fraudulent receipts. The investigators and auditors did
very good work. The investigation was thorough and very serious
and led to a finding that the vast majority of the subscribers
were indeed parties to the fraud. Is such circumstantial evidence
a sufficient basis for concluding that all the donors were
involved in the fraud even where there are no facts or
information linking them to it directly?
[16] Does
such evidence, the presentation of which was certainly very
convincing as regards the scheme's existence, necessarily
entail the conclusion that the appellants were also involved in
and parties to the system set up by the Ordre Antonien libanais
des Maronites just because they made three donations? I do not
think so.
[17] The
abundant evidence adduced by the respondent had the effect of
creating a strong presumption that the appellants too were
involved in the scheme behind the frauds.
[18] Such a
presumption, founded essentially on circumstantial evidence, was
certainly not a sufficient, adequate or satisfactory basis for
concluding that the appellants were knowingly involved in and
actually profited from the scheme.
[19] The
evidence presented by the respondent showed that the vast
majority of those who were given receipts were parties to or
involved in the scheme. Gaëtan Ouellete, a Revenue
Canada investigator, even said that he believed that all those
who were given receipts, without exception, were involved in and
parties to the system. In his opinion, there were no
exceptions.
[20] That is
a conclusion that is more intuitive than based on reality, since
in answer to the very specific question [TRANSLATION] "Did
you find any facts or indications whatsoever that could link the
appellants directly to the system?", he said no. However, he
immediately added that everything suggested that the answer
should be yes.
[21]
Questioning the appellants' tax files for the years at issue
was warranted because of the quality of the circumstantial
evidence. However, that evidence alone is not sufficient for a
finding that the assessments are valid, let alone for upholding
the penalties, especially since the burden of proof was on the
respondent.
[22] The
appellants testified credibly, plausibly and reasonably.
Admittedly, I noted and pointed out during the hearing that there
were some factors that could raise doubts and give cause for some
suspicion; I am referring, inter alia, to the dates on
which the appellant Fayez Abboud's cheques were cashed
and the fact that the donations were made using his line of
credit, on which there was a very high interest rate and which
also had a negative balance at the time the cheques were
cashed.
[23] On the
other hand, the appellants could afford to make such donations.
They said clearly and unequivocally that they had no connection
with the people at the centre of the scheme. They provided
plausible, reasonable and credible motives and justifications.
The Court must decide on the balance of evidence, which does not
mean that some doubt cannot exist.
[24] In the
circumstances, it is my view that the balance of the evidence is
in the appellants' favour.
[25] For
these reasons, the appeals are allowed, without costs.
Signed at
Ottawa, Canada, this 19th day of March 2001.
J.T.C.C.
Translation
certified true on this 30th day of August 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
2000-1230(IT)I
BETWEEN:
MARIE-HÉLÈNE ABBOUD,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on common evidence with the appeals of Fayez Abboud (2000-1231(IT)I)
on January
24, 2001, at Ottawa, Canada, by
the
Honourable Judge Alain Tardif
Appearances
Counsel
for the Appellant: Darquise Jolicoeur
Counsel
for the
Respondent:
Nathalie Lessard and Simon Crépin
Judgment
The appeal from the assessment made under the Income Tax
Act for the 1991 taxation year is allowed, without costs, in
accordance with the attached Reasons for Judgment.
Signed at
Ottawa, Canada, this 19th day of March 2001.
J.T.C.C.
Translation
certified true on this 30th day of August 2002.
Erich
Klein, Revisor
[OFFICIAL
ENGLISH TRANSLATION]
2000-1231(IT)I
BETWEEN:
FAYEZ
ABBOUD,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeals
heard on common evidence with the appeal of Marie-Hélène Abboud (2000-1230(IT)I)
on January
24, 2001, at Ottawa, Canada, by
the
Honourable Judge Alain Tardif
Appearances
Counsel
for the Appellant: Darquise Jolicoeur
Counsel
for the
Respondent:
Nathalie Lessard and Simon Crépin
Judgment
The appeals from the assessments made under the Income Tax
Act for the 1989 and 1990 taxation years are allowed, without
costs, in accordance with the attached Reasons for
Judgment.
Signed at
Ottawa, Canada, this 19th day of March 2001.
J.T.C.C.
Translation
certified true on this 30th day of August 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
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