Citation:
2015 TCC 122
Date: 20150512
Docket: 2013-3695(IT)I
BETWEEN:
KUZI
MAPISH,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Masse D.J.
[1]
The issue for the Court to decide in this case
is whether the appellant is entitled to the charitable donation tax credits
claimed in his 2007 and 2008 taxation years for donations the appellant allegedly
made to Revival Time Ministries International (hereinafter Revival). Although the
Notice of Appeal refers to the 2007, 2008, 2010 and 2011 taxation years, this appeal
only applies to the 2007 and 2008 taxation years.
[2]
The appellant is appealing reassessments by
which the Minister of National Revenue (hereinafter
the Minister) dismissed the charitable donation tax credits claimed by the
appellant, that is, $9,600 in 2007 and $11,600 in 2008.
[3]
First, the Minister submits that the receipts
presented by the appellant do not meet the requirements of the Income Tax
Act, R.S.C. (1985), c. 1 (5th Supp.) (hereinafter the Act), and the Income
Tax Regulations, C.R.C., c. 945 (hereinafter the Regulations). Alternatively, the Minister argues that, in
any event, the appellant is unable to establish that he made the donations that
are the subject of this dispute.
Factual Background
[4]
The appellant is originally from former Zaire, in
Africa. He testified that he is married with three children. His country of origin
is [Translation] “poor” and often at [Translation] “war.” Since
coming to Canada, he has always been committed to helping his compatriots who remained
in Africa. He stated that he has always made charitable donations intended to
benefit people in Africa. He therefore began to make donations to Revival,
which allegedly issued receipts to him for income tax purposes. He stated that Revival
was his church and that he attended church services. He stated that he made cash
donations and occasionally donated clothes and similar items.
[5]
In filing his income tax return for 2007, the
appellant reported employment income of $40,458.02 (see Exhibit I-1). He
also reported charitable donations of $9,600 made to Revival and filed a
receipt for this amount (see Exhibit A-1). This is a significant amount
compared to his gross income, representing approximately 25%.
[6]
In filing his income tax return for 2008, the
appellant reported employment income of $45,553.56 $ (see Exhibit I-2). He
also reported charitable donations of $11,600 to Revival and filed a
receipt for this amount (see Exhibit A-2). Again, this is a significant amount
compared to his income for this taxation year, representing approximately 25%.
[7]
The Minister assessed the appellant for the 2008
and 2009 taxation years on April 14, 2008, and April 9, 2009,
respectively. The Minister allowed the charitable donations as reported. On
January 25, 2010, the Minister reassessed him to disallow the
$9,600 charitable donation tax credit in 2007 and the
$11,600 charitable donation tax credit in 2008 claimed by the appellant.
[8]
The appellant objected to the reassessments; the
Minister confirmed them on August 29, 2013.
[9]
The Minister reassessed the appellant on the
basis that the appellant did not make any charitable donation to Revival in 2007
and in 2008. In the alternative, the Minister concluded that the receipts
issued to the appellant by Revival did not contain all of the information that
is required to be included in a charitable receipt pursuant to
section 3501 of the Regulations.
[10]
For the reasons that follow, I conclude that the
receipts provided by Revival do not contain all of the information required by
the Regulations and that on this basis alone, the appeals must be dismissed. I
also conclude that even if the receipts had conformed to the Regulations, the
appellant failed to prove, on a balance of probabilities, that he made the
donations in issue.
Statutory provisions
[11]
Subsection 118.1(3) of the Act allows a deduction
from tax payable for gifts made to
a registered charity. Paragraph
118.1(2)(a) provides that the making of the gift must be proved by
filing a receipt containing prescribed information. Paragraph 118.1(2)(a) provides as follows:
118.1(2) Proof of gift — An eligible
amount of a gift is not to be included in the total charitable 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;
.
. .
[12]
The prescribed information to be included in the
official receipt for the charitable gift is listed in subsection 3501(1) of the
Regulations. This subsection provides as follows:
3501(1) Contents
of receipts — 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.
[Emphasis added.]
Analysis
[13]
Read together, the provisions mentioned above
require that the following elements must be satisfied:
(a) a gift;
(b)
a receipt to prove that it was a charitable
donation.
[14]
The Minister submits that the appellant has not
proven the existence of either or both of these elements.
Validity of receipts
[15]
In Afovia v. The Queen, 2012 TCC 391
(CanLII), 2013 DTC 1016, [2012] TCJ No. 314 (QL), Justice Paris
of this Court reviewed the issue of the existence of donations and the validity
of a receipt. He stated as follows with respect to the receipt requirements:
[9] The question that must be decided by this Court is whether
it is mandatory that a charitable donation receipt contain all of the
information listed in subsection 3501(1) of the Regulations, including a serial
number and the name and Internet website of the Canada Revenue Agency. On the
basis of the clear wording of that provision, I find that all of the
information listed there is mandatory. The material portion of the section
states that “every official receipt issued by a registered organization ... shall show clearly in such a manner that it cannot be
readily altered ...” the information listed in paragraphs (a) to (j). (Emphasis added.)
. . .
[12] The appellants did not suggest and I am unable to conclude
that giving the word “shall” in section 3501 of the Regulations an imperative
meaning would lead to an unreasonable outcome. Parliament may have chosen to
include the requirement for a serial number on charitable receipts to
facilitate audits of charitable donations, in other words by ensuring that
records of donations are kept in an orderly fashion; the inclusion of the CRA
website address permits a donor to verify whether the charity is registered and
whether the donation is eligible for the charitable donation tax credit. I also
find that an imperative construction is consistent with the context. For
example, the requirement for serial numbers on receipts is also referred to in
subsections 3501(1.1), (3) and (4) and the requirement for the CRA website
address is repeated in subsection 3501(1.1) of the Regulations. I therefore
find that the information listed in subsection 3501(1) of the Regulations is
mandatory for official charitable receipts.
[13] Since none of the
receipts provided to the appellants by PDGL contain all of the prescribed
information, they do not meet the requirements of subsection 118.1(2) of the
Act and, for this reason, the appellants' claims for charitable gift credits
cannot succeed.
[14] The fact that the
appellants were unaware of what information was required on a charitable
receipt cannot relieve them of the obligation to support their claim for the
charitable donation tax credits with official receipts that contain the
prescribed information. This Court is bound by subsection 118.1(2) of the Act.
[16]
Justice Paris reiterated these same
principles in Ofori-Darko v. The Queen, 2014 TCC 54 (CanLII),
2014 DTC 1074, at paragraph 14:
[14] Furthermore the receipts do not show
when the gifts in kind were received by Redemption or what their fair market value
was at that time. Finally the receipts fail to show the locality or place of
issuance of the receipt. As I indicated in the case of Afovia et al. v. The Queen, the information listed in
subsection 3501(1) of the ITR, the
information listed in subsection 3501(1) of the ITR is mandatory for
charitable donation receipts, and therefore the receipts in these appeals are
insufficient to prove the making of a gift as provided for in
paragraph 118.1(2)(a) of the ITA.
[Footnote
omitted.]
[17]
In Sowah v. The Queen, 2013 TCC 297
(CanLII), 2013 DTC 1234, Justice Miller also made similar
findings, stating that
[16] . . . Case law is clear that
these requirements [set
out in subsection 3501(1) of the Regulations] are
mandatory and are to be strictly adhered to (see for example the cases of Afovia
v The Queen, Sklowdowski v The Queen, Plante
v Canada).
[17] Does the receipt provided by the Appellant meet all the
requirements? It does not. It fails on three counts. First, the receipt does
not contain the statement that it is an official receipt for income tax
purposes. In the case of Ehiozomwangie v R, Justice Campbell made it clear that the requirement that
the receipt indicate that it is an official receipt for income tax purposes is
one of the mandatory requirements. I agree. There can be no clearer reassurance
to a taxpayer on the face of a receipt than an indication that it is an
official receipt for tax purposes. Failure to meet this simple qualification
casts real suspicion on the credibility of the receipt. It is a mandatory
condition that has not been met in this case.
[18] Second, another simple requirement is the date on which the
receipt was issued. On Ms. Sowah's receipt no date is given, only the year
(January to December 2006). Again, this is a mandatory condition that simply
has not been met.
[19] Third, the receipt must show the locality or place where
the receipt was issued. This is a separate requirement from the address of the
organization as recorded with the Minister. Here, while we might presume the
address of the organization is the same place as where the receipt was issued,
this should not be left to presumption. Maybe there are several Jesus Healing
Centers throughout Toronto. It should be clear on the receipt from which place
the receipt is issued. It is not. Again, a requirement has not been met.
[20] The Appellant has therefore not provided a receipt with the
prescribed information and has therefore not met the second condition necessary
to obtain credit for a charitable donation. The Appeal can be dismissed on that
basis.
[Footnotes
omitted]
[18]
In the case at bar, there are a number of
inadequacies regarding the receipts for the taxation years in question:
(a) the name of the organization as recorded with
the Minister is not the same as that shown on the receipt. The name recorded is
“Revival Time Ministries International,” whereas the
name shown on the receipt is “Revival Time
Ministries;”
(b) the receipt for 2008 has an address stamped at
the bottom of the receipt showing the recipient’s address as being 415 Aokdale,
whereas the address appearing on the receipt header is
415 Oakdale. Thus, one must wonder what the recipient’s true address is;
(c) the receipt does not show the locality or place
where the receipt was issued. As indicated in Sowah,
supra, this requirement is a separate
requirement from the address of the organization as recorded with the Minister.
While we might presume that the address of the
organization is the locality or place where
the receipt was issued, this should not be
left to presumption. It should be clear on the
receipt from which place the receipt is issued, because the address of the organization may be different from the place
where the receipt was issued. The organization
in this case has Web sites in the United States and, therefore, it is likely
that Revival has multiple branches across Canada and around the world;
(d) there are no dates on the receipts, only the
year (2007 on Exhibit A-1, and 2008 on Exhibit A-2). The appellant submits
that he made donations each month during the period in question and that the amounts
varied from one month to the other. It seems strange to me that the appellant
did not ask for a receipt each time he made a donation, given that those donations
were for either $500, $800 or $900 each time. These alleged donations were
significant compared to the appellant’s income. It is therefore surprising that
the appellant neither asked for nor obtained a receipt each time he made a
donation;
[19]
These are requirements that were not met. All
these requirements are mandatory. It is not a matter of fault, liability, good
faith or bad faith, or even negligence. These are mandatory requirements of the
Act and Regulations. Owing to these palpable and obvious inadequacies in the
mandatory requirements, this appeal must be dismissed. The appellant is
therefore not entitled to a charitable donation tax credit under
subsection 118.1(2) of the Act.
Proof of donations
[20]
The onus is on the appellant to provide proof of
the donations he claims to have made to Revival. The applicable standard of
proof is the balance of probabilities. This means that he must demonstrate that
it is more likely than not that he made the donations in question. The only
support for his position is his own testimony and the receipts issued by Revival.
This is not sufficient in the circumstances.
[21]
The respondent submits that the appellant did
not make any donation to Revival. Gary Huenemoeder is the Audit Team
Leader at the Charities Directorate of the Canada Revenue Agency (hereinafter
the Agency). Revival obtained its registration
number on July 1, 2006. The Agency audited Revival for 2006, 2007 and 2008. Mr. Huenemoeder
found that Revival had reported income in excess of $830,000 for its
first year of operation, which seemed to be very high for a first year. Mr. Huenemoeder
asked for the organization’s bank account statements and determined that, based
on the account statements, the organization had deposited 1.8 million
dollars in the bank. Mr. Huenemoeder suspected that something was wrong.
The Agency therefore required the production of documents from banks that
conducted business with Revival. Upon reviewing those documents, the Agency
discovered that only $3,000 had been deposited in the banks. Thus, all of the
documents that were provided to the Agency by the organization were false. The
Agency contacted 920 donors, requiring proof of payment of the donations,
and they all indicated that they had paid cash and not by cheque or by bank
draft. Revival’s pastor, Daniel Mokwe, provided the Agency’s auditors with
a box full of envelopes which he claimed were used by parishioners or donors.
There were 1,000 envelopes for donations totalling approximately $4,000,000.
All these envelopes were numbered sequentially and handwritten. However, the
handwriting on each envelope was the same. Not one of these envelopes had been
sealed. All of this constituted a basis
for suspecting fraud. Mr. Huenemoeder found
no evidence of charitable activities organized by Revival. Its registration as
a charitable organization was therefore revoked on January 8, 2011. Daniel Mokwe
has since fled Canada. If Mr. Mokwe ever returns to Canada, he will have
to face tax evasion or fraud charges.
[22]
Mr. Huenemoeder read the appellant’s file.
He verified Revival’s records and documents and was unable to establish that the
appellant had paid the alleged amounts. The Agency received the appellant’s bank
account statements, but these statements did not prove that the amounts claimed
had been paid or transferred to Revival.
[23]
For his part, it is obvious that the appellant did
not keep records of the donations he made in 2007 and 2008, even though the donations
he claims to have made were significant amounts compared to the appellant’s
income (approximately 25%). He stated that he donated money each week, sometimes
$800 and sometimes $900. He put money in an envelope which he gave to
Revival. He received a receipt at the end of the year and he relied on the
receipt to establish the exact amount he donated. As the appellant stated [Translation]:
“[T]hey are the ones who calculated the amounts I had
donated because I know what I donated; sometimes $800, $500 here, $500 there,
and so on. And sometimes $1, and that’s it. . . .” The appellant was
unable to confirm the exact amounts he donated to the organization without
relying on the receipts. The appellant provided the Agency with his bank
account statements, but at the trial he stated that all these documents had
been destroyed by a water leak at his residence. However, he could have obtained
copies from the bank, which he did not do. Since the appellant reported having donated
substantial cash amounts to Revival, I expected him to submit to the Court documents
demonstrating the source of these funds. He stated that he withdrew money from
his bank account to make donations to Revival. It seems likely to me that those bank records would have
contained information either confirming or contradicting their testimony. The appellant failed to provide any cheque, any ATM withdrawal
slip, any record of donations, or any donation envelope related to the alleged
donations. He may have donated a certain amount, but the Court cannot determine
exactly how much.
[24]
The receipts in issue are the only evidence of donations
made and said receipts were issued by an organization that was audited, after
which it was determined that the organization’s records and accounting books
were false. Aside from the receipts, no document or account statement was
adduced to support the appellant’s claims. Since the appellant failed to provide
any objective evidence to rebut the Minister’s assumptions that he did not make
the cash donations, the appellant failed to meet his burden of proof of
presenting evidence on a balance of
probabilities. While it is possible that any cash
amounts may have been donated, the evidence with respect to the donations and
the exact amount of the donations is insufficient.
Conclusion
[25]
For these reasons, the appeal is dismissed.
Signed at Kingston,
Ontario, this 12th day of May 2015.
“Rommel G. Masse”
Translation certified true
on this 14th day of
July 2015
Daniela Guglietta, Translator
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