Citation: 2013 TCC 297
Date: 20130920
Docket: 2012-5173(IT)I
BETWEEN:
EMILY SOWAH,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
C. Miller J.
[1]
Emily Sowah appeals the
Minister of National Revenue’s (the "Minister") assessment of her
2006 taxation year in which Ms. Sowah’s claim for a $10,252 charitable donation
was denied. The Minister’s position is, first, that the receipt submitted by
Ms. Sowah does not meet the legislative requirements; and, second, that in any
event, she has been unable to prove she made the cash donations of $10,252 to
the Jesus Healing Center.
Facts
[2]
Ms. Sowah did not
appear at the hearing to give evidence, but her husband, Mr. R. Twumasi, acted
as her agent and also testified.
[3]
Mr. Twumasi explained
that, starting in late 2004, he and the Appellant began to attend the Jesus Healing Center, as a friend had recommended it. He claimed that they went every
Sunday, and donated $100 or $200 cash each time, sometimes more. According to
Mr. Twumasi the Appellant would either put the cash in an envelope at home or
in an envelope provided by the church that was tucked in with the hymn book or
bible in the row in front. Mr. Twumasi explained his wife would simply just put
the cash in the envelope and deposit it in the offertory dish that was passed
around.
[4]
Mr. Twumasi said that
all the donations came from the Appellant’s salary. They would withdraw cash as
needed from the bank for domestic purposes, and when they ran out they would
simply take out more. The cash for the donations, according to Mr. Twumasi,
came from this household money. Mr. Twumasi provided no bank records to
corroborate these regular cash withdrawals.
[5]
In 2006, Ms. Sowah had
income of approximately $86,000 and Mr. Twumasi had income of
approximately $8,000. He said he was working that year, though not perhaps for
the full year. He was an accountant and was responsible for doing all his
wife’s returns. As well as a mortgage, the Appellant and Mr. Twumasi had a line
of credit, which currently stands at around $60,000 but Mr. Twumasi could not
recall what it was in 2006.
[6]
Mr. Twumasi claimed
that the Pastor at the Jesus Healing Center, who he named as Edwin Areposo,
indicated, as soon as they started going in late 2004 or early 2005, that the
church needed money for a new building. It was not until 2006, however, that
the Appellant started to make any donations to support the building. No
building was ever undertaken.
[7]
Ms. Sowah’s charitable
giving history from 1997 to and including 2005 was minimal, a few years with
nothing at all and the other years averaging approximately $270 a year. Mr.
Twumasi alleged they would make donations of a couple of thousand dollars, but
would not claim such amounts if they could not readily track down receipts. I
found this evidence difficult to accept.
[8]
Mr. Twumasi initially
filed the Appellant’s 2006 return without claiming a charitable donation, but
received a receipt from the Jesus Healing Center two or three months later, so
he then made an adjusted return, claiming the $10,250. The receipt is
reproduced as Appendix A.
[9]
I point out the
following with respect to the receipt: no specific date is given, but an
indication of January – December 2006; the address of the Jesus Healing Center is provided but no indication of the locality of where the receipt was issued;
there is no statement on the receipt that it is an official receipt for income
tax purposes.
[10]
In early 2007, Mr.
Twumasi caught wind of some problems with the church elders so he and Ms. Sowah
stopped attending the Jesus Healing Center.
[11]
Before turning to the
evidence of the Canada Revenue Agency ("CRA") officer, Mr. Huenemoeder,
I note that Mr. Twumasi had an injury back in 1993 that caused mental
impairment. Indeed, in 2000 he filed for a disability tax credit, by providing
a doctor’s certificate that certified that he could not live independently, and
that his wife had to manage the money affairs. It certified that Mr. Twumasi
was unable to think, perceive and remember. At trial, Mr. Twumasi confirmed he
no longer has problems with memory. He was quite capable of conducting the
Appeal for his wife and left an impression he was no longer under any
disability. He continues, however, to claim the disability tax credit.
[12]
I turn now to the
testimony of Mr. Huenemoeder, a charities audit team leader with the CRA, who
led the audit into the Jesus Healing Center, starting in March 2008 and
terminating with the revocation of the Jesus Healing Center’s charitable status
in May 2009.
[13]
Mr. Huenemoeder
testified that the Jesus Healing Center registered as a charity in January
2006, a year after Mr. Twumasi maintains he and the Appellant started attending
services at the Jesus Healing Center. He indicated there were few books and
records of the Jesus Healing Center, nothing that could validate the $3,200,000
worth of charitable donation receipts that had been issued by the Jesus Healing Center over a two year period. The bank statements of the Jesus Healing Center showed deposits of only $18,000. A list of donations suggested there were
760 individual donors. The audit team contacted a random sample of donors, none
of whom could support the amount of their donations. A review of expense
receipts by the audit team showed a computer expense of $2,000, though a claim
of over $700,000 for computers allegedly sent to Ghana.
[14]
Mr. Huenemoeder
interviewed Pastor Oforio at the location of the Jesus Healing Center (note the different name from that provided by Mr. Twumasi). He noted there were no
pews, only stackable chairs. None of the books and records included any
donation envelopes. He was led to believe from his interview with the Pastor
that the Jesus Healing Center received only $2,000 to $3,000 in donations a
week.
Analysis
[15]
Section 118.1 of the Income
Tax Act (the "Act") provides for a tax credit for
donations to duly qualified charities. Two things are essential:
a) gift to the charity;
b) a receipt for the gift with
prescribed information.
Receipt
[16]
I will deal first with
the issue of the receipt. The prescribed information for a receipt is found in
Regulation 3501(1) of the Income Tax Regulations (the "Regulations").
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.
Case law is clear that these requirements 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.
Failure to prove donation
[21]
I am also going to
address the first requirement – the need for a gift to a charitable
organization. I doubt the veracity of the Appellant’s claim of having donated
$10,250 for the following reasons:
a) I question Mr. Twumasi’s
integrity. He tells me he is no longer suffering any mental impairment from an
injury 20 years ago yet admits he continues to claim the disability tax credit
every year. On its face, this shows some disregard for requirements of the Act.
b) Mr. Twumasi claims
donations were made to help the building fund, yet there was no evidence of any
plans for a building. Further, the receipt showed funds were donated for
different reasons, none of which were mentioned by Mr. Twumasi.
c) Mr. Twumasi provided
no corroboration for the cash payments: no bank records, no ATM withdrawals,
nothing.
d) He provided a
different name for the Pastor than that given by Mr. Huenemoeder, who
interviewed the man. I would have thought that going to a church every Sunday
for a couple of years that Mr. Twumasi would have recalled the Pastor’s
name.
e) Mr. Twumasi’s claim
that money was put in envelopes provided by the church would accord with pews
with pouches in them, not with the use of stackable chairs for the
congregation. Further, he gave no indication that the Appellant wrote her name
on the envelope purportedly provided, so that the church could track the
donations. He also provided no sample of the envelope, nor did the audit team
come across any envelopes. Mr. Twumasi’s story in this regard simply does not
ring true and is not supportable.
f) The Appellant had no
history of charitable giving beyond a minimal annual amount.
g) The amount of the
alleged donations was approximately 13% of the Appellant’s after tax income, a
huge contribution that one would anticipate would cause the donor to at least
follow up that the purpose of the donation was being fulfilled: nothing in evidence
in that regard.
h) The books and records
of the Jesus Healing Center could not support the quantity of donations
evidenced by the receipts.
i) A sample of requests
to other donors by the CRA audit team revealed no corroborative support from
individual donors of their donations.
[22]
On balance there is
substantial evidence to suggest the Appellant did not make the sizable
contribution claimed. Maybe she did attend the Jesus Healing Center and maybe she did make some cash contributions, but she has not proven that she donated
$10,250. For this reason as well as for the deficiencies in the receipt, I
would dismiss the Appeal.
Signed at Ottawa, Canada, this 20th day of September 2013.
"Campbell J. Miller"
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