Citation: 2014 TCC 258
Date: 20140826
Docket
2013-4109(IT)I
BETWEEN:
DAVID
ANELE IMOH,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent,
Docket:
2013-4405(IT)I
AND BETWEEN:
OLADELE
BELLO,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR JUDGMENT
Lyons J.
[1]
David Anele Imoh and Oladele Bello, the appellants,
each appeal the Minister of National Revenue’s (the “Minister”) disallowance of
charitable donation tax credits claimed under section 118.1 of the Income
Tax Act (the "Act").
[2]
Mr. Imoh claims to have made charitable donations totalling
$15,000, in cash, to Revival Time Ministries (“Ministries”) in each of the 2007
and 2008 taxation years and $15,000, in cash, to Revival Time Ministries
International (“Revival”) in the 2009 taxation year.
[3]
Mr. Bello claims to have made charitable donations
totalling $15,000, by cheque and cash, to Revival in 2009. At the hearing, Mr.
Bello indicated that he was no longer pursuing the late-filing penalty.
[4]
The issues in these appeals are whether Mr. Imoh and
Mr. Bello each made the donations to enable each of them to claim tax credits,
and if so, whether the charitable donation receipts they received from the
respective organizations contain the prescribed information as required by
section 3501 of the Income Tax Regulations (the “Regulations”).
I. Legislation
[5]
Section 118.1 of the Act provides for a tax
credit to persons for donations to qualified charities. Subsection 118.1(3)
allows a deduction from tax payable for gifts made to a registered charity. Paragraph
118.1(2)(a) reads:
An
eligible amount of a gift shall not be included in the total charitable 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;
[6]
Subsection 3501(1) of the Regulations sets out
the requirements for official charitable donation receipts for income tax
purposes, which provides as follows:
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.
Relevant to these appeals is paragraph (a).
II. Evidence
David Imoh
[7]
David Imoh testified that in 2005 he had contributed
$6,000 to a charity unrelated to Ministries or Revival.
[8]
He was introduced to Ministries and Revival by a
friend, Gode Nkawala, who explained that the programs for giving encompassed
such purposes as the less privileged, scholarships for children, hospitals and
other programs in Angola, South Africa, Kenya and Zimbabwe.
[9]
Mr. Imoh telephoned Daniel Mokwe and met with him at
the Oakdale office. Daniel Mokwe expanded the explanation of the programs as
helping “all of Africa” as and “when need arises”. Shortly after that meeting,
Mr. Imoh was invited to a social gathering to meet other contributors and was
provided with pamphlets.
[10]
He decided to donate. Mr. Imoh said he made monthly
cash donations totalling $15,000 to Ministries in each of 2007 and 2008, and
$15,000 to Revival in 2009, and received receipts #1032 and #1689, from
Ministries, and receipt #022, from Revival (“the three receipts”). He called
Daniel Mokwe periodically to see how things were going.
[11]
By 2009, he had received a letter from the Canada
Revenue Agency (“CRA”) requesting receipts. After six months, he was informed
that the singular receipt that he had provided for each of 2007, 2008 and 2009
was insufficient. He informed the CRA that the contributions were made in cash
and he obtained two letters, each dated May 3, 2009 relating to 2007 and 2008
(“the two Letters”), from Revival which he sent to the CRA. The two Letters
provided a breakdown of the $15,000 showing contributions of $1,250 per month.
After six months, the CRA told him that the three receipts and two Letters were
insufficient and disallowed his claims. By 2011, he had given everything to the
CRA.
[12]
Mr. Imoh became aware in 2012 via a newspaper article
of the revocation of the charitable designation of Revival Time Ministries Int.
(“Revival Int.”).
Oladele Bello
[13]
Mr. Bello testified that a friend had introduced him to
an accountant, George (“George”). George explained Revival’s charitable
activities as helping the poor in West Africa. Later, he met Dan who represented
Revival. Mr. Bello was impressed and “in the spirit of giving” he decided to contribute,
as a first‑time contributor, in 2009.
[14]
A log, which he signed, was maintained by George which
itemized the instalment cheques and cash contributions he had made in 2009.[1]
[15]
Except for the “Official Donation Receipt (Receipt #72)”
provided to Mr. Bello and dated December 31, 2009 (“Receipt #72”), no receipts
were provided when he made the contributions. The Receipt describes the type of
donation as a “cheque” with the value ascribed as $15,000. It was issued by Revival
to Mr. Bello and shows his address and Revival’s address as 217 – 2357 Finch
Ave W, Toronto, plus provides a charity number and refers to the CRA website
relating to charities.
[16]
According to Mr. Bello, the bank statements he provided
for 2009 show the following highlighted transactions relating to his claim for
the donations:
|
|
Cheques issued/Cash
withdrawals
|
Amount
|
|
|
#54
|
$100.00
|
|
|
#53
|
$200.00
|
|
|
#99
|
$300.00
|
|
|
#45
|
$300.00
|
|
|
#89
|
$190.00
|
|
|
Cash
|
$5,000.00
|
|
|
Cash
|
$200.00
Instant teller
Boivard location
|
|
|
Cash
|
$300.00
Instant teller
Dundas location
|
|
|
Cash
|
$1,000.00
|
CRA
[17]
Mr. Huenemoeder, a CRA Team Leader with the Charities
Audit Group for the past 12 years, testified with respect to the audit of
Revival Time Ministries Int., of which he has personal knowledge.
[18]
The CRA selected Revival Time Ministries Int. for
audit.[2]
In September 2008, CRA officials had an initial discussion with Daniel Mokwe
who initially informed the CRA that the books and records for Revival were lost
in the repossession of a storage unit because of a bill in the amount of $258
for storage. Revival was unable to verify if the books and records were in
storage or disposed of. Six months later, the CRA received the books and
records which were suspect because Revival had provided falsified bank
statements relating to revenues and expenditures.
[19]
The first concern was the significant receipting
discrepancies. The donation receipts totalling $830,000 conflicted with other
information showing $1.6 million or $1.7 million in donation receipts for 2007.
The CRA wanted to see if those amounts were deposited into the bank accounts.
According to the bank statements, $1.8 million or $1.9 million in donations
were deposited but the bank statements for Revival were unusual and contained
irregularities in the dates. Consequently, the CRA issued requirements to
various banks.
[20]
Documents obtained by the CRA from one bank show that
over a two-year period only $3,000 was received and deposited by Revival into
the bank account. However, bank statements provided by Revival for the same
period showed $2.5 million had been receipted as bank deposits.
[21]
To determine if there was proof of payment by cash, CRA
officials conducted a sampling of the donors. It subsequently expanded its
review to 900 donors for 2006 to 2008. None of the 900 donors contacted by the
CRA were able to provide cancelled cheques or proof supporting cash donations.
[22]
Mr. Huenemoeder acknowledged in cross-examination by
Mr. Imoh that the CRA allows cash donations if adequate proof is provided to
support the donations. However, Revival had not provided any validation or
verification of such donations by its books and records, nor did the donors
furnish adequate proof.
[23]
Mr. Huenemoeder said that the bank statements showed
expenses had been paid by the issuance of bank drafts to Africa, reggae bands
and an amount to a Toronto city councillor. Attempts were made to provide proof
that goods were shipped to Africa but no charitable purposes were revealed in
the expenses claimed by Revival.
[24]
In response to questions from Mr. Imoh in cross-examination,
Mr. Huenemoeder stated that he had met Daniel Mokwe three times during the
initial audit when gathering documentation and that the CRA had obtained copies
of receipts in the spring of 2009 so there was no need to show the receipts to
Daniel Mokwe.
[25]
Daniel Mokwe was also involved in another organization.
The CRA issued requirements against Daniel Mokwe for 2009 and 2010 but he
failed to comply. He was referred for criminal prosecution charges but he fled Canada before the charges were laid.
[26]
Effective January 8, 2011, Revival Time Ministries Int.’s
registration as a charity was revoked for cause by the Minister. The revocation
was challenged at, but was ultimately dismissed by, the Federal Court of Appeal
without leave being granted to the Supreme Court of Canada.
III. Analysis
[27]
Read together paragraph 118.1(2)(a) of the Act
and subsection 3501(1) of the Regulations require that there be a gift
and an official receipt containing all the prescribed information.
[28]
The respondent asserts that neither Mr. Imoh nor Mr.
Bello have provided sufficient evidence that they made the donations that they
claim were made, and that each of them did not have a receipt containing all
the prescribed information as mandated by the legislation.
[29]
Mr. Imoh and Mr. Bello each have the onus to show, on a
balance of probabilities, that they made the donations they claim they have
made. For the reasons that follow, I find that the donations were not made and
neither Mr. Imoh nor Mr. Bello have discharged the onus.
Were donations made?
Mr. Imoh
[30]
Mr. Imoh argued that he had the option to make monthly
cash donations, and that the three receipts show that he made cash donations
totalling $15,000 in each of 2007, 2008 and 2009, respectively, and contain all
the elements required by the legislation.
[31]
Clearly, Mr. Imoh has that option as supported by the Regulations.
However, the Act strictly regulates the conditions of eligibility for
charitable donation deductions in requiring that donations be supported and
verifiable. The only proof offered by Mr. Imoh that he made the donations was
his testimony, and the three receipts and the two Letters issued by Ministries
and Revival.
[32]
Mr. Huenemoeder testified that the bank statements
provided to the CRA by Daniel Mokwe had been falsified and that there were
discrepancies in the receipting which could not be validated in the books and
records. I accept his evidence. He also said that none of the 900 donors
contacted were able to provide cancelled cheques or other proof of payment by
cash to support donations except for a singular receipt for the year of the
contribution similar to the three receipts presented by Mr. Imoh.
[33]
In his testimony, Mr. Imoh explained that since
December 2007, when he moved to Pickering, he would drive two or three times a
month to Revival’s office (“office”) located on Oakdale Road, in North West
Toronto, to make cash contributions. Each time it would take him up to an hour
to travel. Sometimes he went to the office on the way to pick up groceries at a
specialty African food store in the same vicinity. He said he placed his name
and the amount of his contribution on a slip of paper and placed it and the
cash in an envelope, and handed it to Juliette at the office. He received a
receipt (“individual receipts”) from her each time he dropped off his
contribution.
[34]
I find Mr. Imoh’s explanations implausible. It is
difficult to accept that on the strength of a phone call and a brief meeting
with Daniel Mokwe, plus a social gathering, that he would contribute such large
sums over a three-year period.[3]
[35]
Further, in Court Mr. Imoh stated that Ministries and
Revival were not religious organizations. However, Mr. Huenemoeder testified,
which I accept, that Revival was registered as a charitable organization for
the purposes of religion and advancement. I would expect that Mr. Imoh would
have been aware of this feature of any organization that he desired to make a
contribution to.
[36]
Of some import is Mr. Imoh’s failure to produce the
individual receipts - of which there would have been many over a three-year
period - that he said he had obtained from Juliette. I draw an adverse
inference from the failure of Mr. Imoh to call Juliette to confirm he made the donations.
[37]
Mr. Imoh stated that on the same day or the day before
he made the contribution, he would withdraw cash from the bank or various bank
machines. No details of the dates and specific amounts were given except that
he would contribute somewhere between $1,200 to $1,300 per month. He could have,
but did not, provide detailed banking records to substantiate the pattern of
cash withdrawals from his account thrice monthly. I would have expected more
attention to be paid given the large sums involved over a three-year period.
[38]
Another factor as to why I am rejecting Mr. Imoh’s
testimony is the following inconsistency. The two Letters he sent to the CRA
show $1,250 monthly was contributed. In Court, he said he gave $1,200 to
$1,300 monthly and explained that the $1,250 referred to in the two Letters is
not accurate but he did not challenge that with Revival because the annual
total of $15,000 was accurate. However, in his Notice of Appeal he states “I
made monthly contributions of $1250 every month for total of 12 months for each
of the three Income Tax Years.” If that was not accurate, one would not expect
to see that inaccuracy reiterated and included in the Notice of Appeal filed
with the Court several years later.
[39]
Although Mr. Imoh said that he informed Mr. Nkawala
about the hearing, he said that on the eve of trial Mr. Nkawala decided that he
would not attend.[4]
I draw a negative inference from the failure of Mr. Nkawala to attend to
corroborate Mr. Imoh’s testimony relating to the purported donations.
[40]
All of which casts doubt on the reliability of Mr.
Imoh’s evidence, and for that reason, he has not proved that he made donations
to Ministries in 2007 and 2008 and to Revival in 2009.
Mr. Bello
[41]
The representative for Mr. Bello argued that Mr. Bello
made donations totalling $15,000 in 2009 in good faith to Revival as a church
and despite the irregularities in its bookkeeping, he should be allowed a charitable
donation tax credit.[5]
[42]
His assertion does not accord with his testimony that
throughout 2009, he went to George’s office and gave instalment cheques and
later cash amounts totalling $15,000 to George. During cross-examination, he
admitted that the cheques were made payable to George, and he never observed
George forwarding any of the contributions to Revival, nor did he have any
evidence to show that the amounts were given to Revival or Daniel Mokwe. I find
that making cheques payable to George and giving cash to George does not amount
to making a charitable donation to a charitable organization. This alone is
sufficient for me to conclude that no donations were made by Mr. Bello to
Revival. However, I will deal with other aspects of the evidence.
[43]
Mr. Bello’s testimony contradicts the information in
his Notice of Appeal which indicates that instalment cheques were issued to
Revival, not George.
[44]
When asked in cross-examination if he had copies of the
instalment cheques, Mr. Bello said that all cheques were returned to him by the
bank. He explained that he did not retain the cheques because he obtained Receipt
#72 from Revival.
[45]
Receipt #72 identifies the type of donation as “cheque”
with the value ascribed in a singular sum of $15,000. However, in his
testimony, he said that cash contributions were also made later in the year.
Aside from Receipt #72, dated at the end of the year, not referencing any cash
contributions, his Notice of Appeal is also bereft of any suggestion that cash
contributions were made. Instead, the later refers only to instalment cheques;
a fact he had previously communicated to the CRA by letter dated June 18, 2012.
The inconsistencies make his evidence unreliable.
[46]
Furthermore, he did not retain copies of the cheques,
he did not obtain copies of images of the cheques from the bank, and he did not
make any attempt to obtain a copy of the log to corroborate the purported
cheque or cash donations. It is difficult to accept that he would not have
taken such measures to prove he made such donations given the large amount and
especially as a first-time contributor. I draw a negative inference from his
failure to produce such documentation to confirm the purported donations were
made.
[47]
The bank statements he produced at the hearing did not
support his assertion of instalment cheques. Three of the five cheques were
issued in January and three of the four cash amounts were withdrawn in
September; the amounts were sporadic, ranging from $100 (cheque) to $5,000
(cash). All totalled the amounts on the statements are considerably less than
the $15,000 claimed. Absent some other proof, I am not convinced that these
records support Mr. Bello’s testimony concerning his purported donations to
Revival.
[48]
Considering the above combined with Mr. Huenemoeder’s
evidence as to the falsification of documents by Revival, and that neither
Revival nor the donors contacted were able to validate, support or provide
proof of cash donations except for a singular receipt similar to Mr. Bello’s
Receipt #72, I find that Mr. Bello’s evidence is not reliable. I can only
conclude that he has not shown that he made any donations to Revival in 2009.
[49]
In light of the above findings, it is not necessary for
me to address the respondent’s secondary position that the appellants’ receipts
from Ministries and Revival are not organizations “as recorded with the
Minister” thus did not contain all of the information prescribed by paragraph
3501(1)(a) of the Regulations.
[50]
For these reasons, the appeals are dismissed.
Signed at Toronto, Ontario, this 26th day of August 2014.
"K. Lyons"
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