REASONS FOR JUDGMENT
Favreau J.
[1]
This is an appeal under the informal procedure
of a reassessment made by the Minister of National Revenue (the Minister) under
the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), as amended (the Act) on November 26, 2012, concerning the 2011
taxation year.
[2]
The issue is whether the Minister was justified
in disallowing the amount of $6,909 claimed by the appellant as a charitable
donations credit, in the calculation of non-refundable tax credits for the 2011
taxation year.
[3]
In making and confirming the reassessment, the
Minister made the following assumptions of fact:
[Translation]
(a) in her income tax return for the 2011 taxation year, the appellant
claimed a tax credit for charitable donations to Action Canadienne
Internationale de Bienfaisance (the organization) for
the amount of $6,909;
(b) the appellant stated that most of this amount had been paid in
cash, and failed to prove that the amount had been paid;
(c) the
few receipts submitted by the appellant to support certain amounts paid to the
organization did not contain all of the required information. The missing
information included the serial number of the receipt and the place or locality
where the receipt was issued.
[4]
In her Notice of Appeal and during her
testimony, the appellant explained why she was unable to produce an official
receipt entitling her to claim the amounts paid to or incurred on behalf of Action
Canadienne Internationale de Bienfaisance (ACIB), a
charitable organization duly registered with the Canada Revenue Agency (ACIB
#885502 9843).
[5]
Following the 2010
earthquake in Haiti, the appellant’s spouse, Paul D'Auteuil, a daycare
teacher, went to Haiti as a volunteer to help build a camp for disaster victims
about 60 kilometres north of Port-au-Prince. Mr. D'Auteuil’s services in Haiti
were apparently rendered under the auspices of ACIB, since an official receipt
for $10,882.86 was issued in his name for the 2010 taxation year.
[6]
ACIB’s charitable activities focus solely on the
mission of the École Mixte de la Foi de Montrouis in Haiti. Some 300 children attend
this school. Yvette Levasseur is the founder and president of ACIB. The
organization’s offices are located at 164 Fonteneau Street in Repentigny.
[7]
The appellant and her
spouse attended Église Le Contact at 380 Larochelle Street in Repentigny and
apparently met Ms. Levasseur through this organization. Église Le Contact has
provided financial support to the École Mixte de la Foi for several years.
[8]
The relationship between Ms. Levasseur and
the appellant and her spouse deteriorated in early 2011 because of numerous
irregularities observed, that is, apparent theft, fraud, breach of trust and
misappropriation of funds. For example, in February 2011, the appellant
and her husband gave Ms. Levasseur one cheque for US$700 to buy school
uniforms for the children, and another for US$500 for school fees for 20
children. The appellant and her spouse apparently noticed that
Ms. Levasseur had used this money for other things without justification,
and no receipts were produced for the purchases. As a result, the appellant and
her spouse decided to remit the money directly to the school principal, Brutus
Dieufort. Ms. Levasseur was aware of the actions of the appellant and her
spouse, and assured them that tax receipts would be issued.
[9]
In May 2011, the appellant and her spouse
travelled to Haiti as executive members of ACIB with Ms. Levasseur. All of
Ms. Levasseur’s travel expenses were covered by ACIB. During this trip,
the principal of the École Mixte de la Foi gave the appellant and her spouse invoices
for 900 new books purchased on his behalf or on behalf of the École Mixte de la
Foi, but paid for by the appellant and her spouse.
[10]
In addition to the donations for the purchase of
textbooks, enrolment of students at the school and school uniforms, the appellant
and her spouse paid for food and supplies for a year-end party for children and
staff at the school, and for medicine. A portion of these donations were hand
delivered to the principal of the École Mixte de la Foi, who issued receipts
with the school’s official stamp.
[11]
Since the appellant and her spouse had lost
trust in the ACIB president, they reported the irregularities they had observed
to the organization’s board of directors at a meeting in June 2011.
Nothing was done, and Ms. Levasseur remained the organization’s president.
However, in August 2011, Ms. Levasseur confirmed by email that she
and the organization’s board of directors had agreed to issue
Mr. D’Auteuil the tax receipts for 2011.
[12]
Despite Ms. Levasseur’s promise to issue
the tax receipts, she ultimately offered a receipt for only $2,326.25, far
below the amount spent by the appellant and her husband on behalf of ACIB. In
the end, because the appellant and her spouse did not accept the offer, no
receipt was issued to the appellant and her spouse for donations to the
organization for 2011.
Applicable
legislation
[13]
Subsection 118.1(2) of the Act establishes the
following in order for the eligible amount of a gift that is not a Crown,
cultural or ecological gift to be included in total charitable donations:
118.1(2) Proof of gift
an eligible amount of a gift shall not be
included in the total charitable gifts, total Crown gifts, total cultural gifts
or total ecological gifts of an individual unless the making of the gift is
evidenced by filing with the Minister:
(a) a receipt
for the gift that contains prescribed information;
…
[14]
The information required under subsection 118.1(2)
of the Act is set out in sections 3500 and 3501 of the Income Tax
Regulations (the Regulations)
3500. In this Part,
“official receipt” means a receipt for the purposes of subsection 110.1(2) or (3) or 118.1(2), (6) or (7) of the Act, containing
information as required by section 3501 or 3502. (reçu officiel)
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,
(a) the name and address in Canada of the organization as recorded
with the Minister;
(b) the registration number assigned by the Minister to the organization;
(c) the serial number of the receipt;
(d)
the place or locality where the receipt was issued;
(e)
where the gift is a cash gift, the date on which or
the year during which the gift was received;
(e.1) where the gift is of
property other than cash:
(i) the date on which
the gift 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;
(f) the date on which the receipt was issued;
(g) the name and address of the donor including, in the case of
an individual, the individual’s first name and initial;
(h) the amount that is
(i) the amount of a cash gift, or
(ii) if the gift is of property other than cash, the
amount that is the fair market value of the property at the time that the gift
is made;
(h.1) a
description of the advantage, if any, in respect of the gift and the amount of
that advantage;
(h.2) the eligible amount of the gift;
(i) the signature, as provided in subsection (2) or (3), of a
responsible individual who has been authorized by the organization to
acknowledge gifts; and
(j) the name and Internet website of the Canada Revenue Agency.
Analysis
[15]
In this case, it is clear that the receipts and
other documents produced by the appellant do not meet the explicit requirements
of the Regulations. The failures to comply are significant and multiple.
[16]
For example, the receipt for the purchase of
books does not state that it is an official receipt for income tax purposes and
does not indicate the registration number assigned to the organization by the
Minister. The same is true for the receipts for the children’s party, child sponsorships
and school uniforms.
[17]
I have no doubt whatever that the appellant and
her spouse visited Haiti from May 25, 2011, to
June 15, 2011, for humanitarian purposes. The airline tickets,
receipts for accommodation and transportation in Haiti, calling card invoices
and photographs taken at the Pierre Elliot Trudeau Airport demonstrate this
beyond any doubt. The appellant and her spouse appear to be sincere, and I have
every reason to believe that they actually did incur the expenses claimed for
charitable purposes. That is not where the problem lies.
[18]
The problem lies in the fact that the appellant
did not provide any “official receipt” containing the information required
under section 3501 of the Regulations. The purpose of the requirements set
out in the Regulations is to avoid abuses of any kind. They are the minimum
requirements for defining the authenticity of a gift that can qualify the
taxpayer making it for a tax deduction. The Court has no discretion to disregard
the requirements of the Regulations.
[19]
In this case, the appellant has not proven that
the receipts meet the minimal requirements of sections 3500 and 3501 of the Regulations,
and therefore cannot be entitled to the donation tax credit at issue.
[20]
For these reasons, the appeal is dismissed.
Signed at Ottawa, Ontario, this 5th day of December 2014.
“Réal Favreau”
Translation certified true
on this 20th day of January 2015
Martha Sanipe,
Translator
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