Docket: 2016-988(IT)I
BETWEEN:
FATMIR SYLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on November, 4, 2016
at Toronto, Ontario
Before:
The Honourable Justice B. Paris
Appearances:
|
For the Appellant:
|
The Appellant himself
|
|
Counsel for the Respondent:
|
Alexandra Humphrey
|
JUDGMENT
The
appeal from the assessments made under the Income Tax Act for the 2003,
2004, 2005 and 2006 taxation years is dismissed, in accordance with the
attached Reasons for Judgment.
Signed at Ottawa, Canada, this 17th day of November 2016.
“B. Paris”
Docket: 2016-989(IT)I
BETWEEN:
LILIJETA
SYLA,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
Appeal heard on November, 4, 2016
at Toronto, Ontario
Before:
The Honourable Justice B. Paris
Appearances:
|
For the
Appellant:
|
The Appellant
herself
|
|
Counsel for
the Respondent:
|
Alexandra
Humphrey
|
JUDGMENT
The
appeal from the assessments made under the Income Tax Act for the 2003,
2004 and 2005 taxation years is dismissed, in accordance with the attached
Reasons for Judgment.
Signed at Ottawa, Canada, this 17th day
of November 2016.
“B.Paris”
REASONS
FOR JUDGMENT
Paris J.
[1]
These appeals were heard on common evidence at
the request of the parties.
[2]
The issues in these appeals are: whether Mr.
Syla is entitled to charitable donation tax credits for his 2003, 2004, 2005
and 2006 taxation years; whether Mrs. Syla is entitled to charitable donation
tax credits for her 2003, 2004 and 2005 taxation years; and whether the
Minister was entitled to reassess the 2003 and 2004 taxation years of both
taxpayers after the normal assessment period.
[3]
With respect to the 2003 and 2004 taxation
years, the Respondent bears the onus of proving that the Minister was entitled
to reopen those years for reassessment. The Respondent must show that the Sylas
made a misrepresentation on each of their returns for those years and that
those misrepresentations were due to carelessness, neglect or wilful default.
[4]
In this case, Mr. and Mrs. Syla admit that they
did not make charitable donations in the amounts they each reported in their
income tax returns for the years in issue. Those returns were prepared and
filed on their behalf by William Ankomah, who later pled guilty to defrauding
the Crown by making false charitable donation claims for his clients in tax
returns he prepared and filed for them.
[5]
Therefore the evidence shows that the charitable
donation claims contained in their 2003 and 2004 tax returns were false, and
constituted misrepresentations within the meaning of paragraph 152(4)(a)
of the Income Tax Act (“ITA”).
[6]
The question to be determined then is whether
the Sylas exercised reasonable care in the filing of their returns for 2003 and
2004. According to their testimony, they were referred by a friend of a friend
to Mr. Ankomah in early 2004 because his rates for preparing returns were lower
than what other tax preparers were asking. It was Mr. Ankomah who recommended
that they make charitable donations to a charity he was involved with, in order
to obtain tax refunds. Mr. Ankomah told them that the donation requirement
could be met by giving him Mrs. Syla’s tax refund after it was received. The
Sylas say they accepted this advice and trusted Mr. Ankomah, because he
appeared to be a professional tax adviser and knowledgeable in the field. They
had almost no experience with income tax, arriving in Canada in 1999 as
refugees from Kosovo, where they said there was no income tax.
[7]
Neither Mr. or Mrs. Syla reviewed the returns
that Mr. Ankomah prepared and filed, but they received a one page summary of
the information contained on the returns. They did not review that form either
because they said that they did not understand the language well enough. This
same process was repeated for the 2004 year.
[8]
I accept that neither Mr. or Mrs. Syla had any
intention to deceive anyone concerning the charitable donation claims. When the
matter was reviewed by the Canada Revenue Agency in 2009 and the reassessments
were issued, Mr. and Mrs. Syla admitted that they did not make the donations
reported in their returns.
[9]
Still, I am not convinced that they exercised
reasonable care in the filing of their 2003 and 2004 tax returns. First and
foremost they did not go over their returns with Mr. Ankomah. If they had, they
would have immediately discovered that the amounts of the charitable donation
claims were false. Even though they had difficulties with the language, they
were accompanied by their son, a young adult, who was more proficient in
English than they were and who was assisting them with translation. Therefore,
the false claims should have been obvious to them had they taken the time to
simply review the returns. I also believe that they were careless in not
attempting to get more information from Mr. Ankomah or other acquaintances or
work colleagues on how they could be entitled to tax refunds roughly three
times as large, collectively, as the amounts they paid Mr. Ankomah. I believe
this kind of windfall would strike anyone as very unusual and meriting further
investigation. However, neither Mr. or Mrs. Syla asked any questions about it
or sought any further advice. Their decision to trust Mr. Ankomah in this
regard strikes me as reckless. Had they taken reasonable steps to investigate
the representations made by Mr. Ankomah, they would have discovered that the
donation claims were false.
[10]
In summary, while Mr. and Mrs. Syla were misled
by Mr. Ankomah, they took no reasonable steps to ensure that the tax returns he
filed were accurate. For this reason, the Minister is entitled to reassess the
Sylas for their 2003 and 2004 taxation years.
[11]
Mr. and Mrs. Syla both testified that they did
not receive any donation receipts from Mr. Ankomah to support any of the
amounts claimed. There was, however, a charitable donation receipt in the
amount of $2750 attached to the copy of Mr. Syla’s 2006 tax return produced by
the Respondent at the hearing. I find though that the receipt is invalid
because Mr. Syla admitted that he did not make a donation in that amount in
2006. Since, according to paragraph 118.1(2)(a) of the ITA, a
claim for a charitable donation tax credit must be supported by a donation
receipt from the charity and since the Sylas do not meet this condition for any
of the years in issue, their appeals cannot succeed.
[12]
Furthermore, the lesser amounts paid each year
by Mr. and Mrs. Syla to Mr. Ankomah cannot be considered charitable gifts,
because I find that Mr. and Mrs. Syla only made the payments in order to receive
the tax refunds. They cannot be said to have made any gifts to any charities
because, in order to constitute a gift, there must be a voluntary transfer of
property owned by a donor to a donee, in return for which no benefit or
consideration flows to the donor (The Queen v. Friedberg, 92 DTC 6031 at
6032). It is clear to me that, had Mr. Ankomah not told them that they would be
entitled to tax refunds in excess of the amounts they paid, that they would not
have paid him the lesser amounts as purported donations.
[13]
For all these reasons, I have no choice but to
dismiss both Mr. and Mrs. Syla’s appeals for all years.
Signed at Ottawa,
Canada this 17th day of November 2016.
“B.Paris”
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