Citation: 2013 TCC 145
Date: 20130506
Docket: 2012-2914(IT)I
BETWEEN:
FESTUS EHIOZOMWANGIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Campbell J.
[1]
On October 2, 2008, the
Appellant was reassessed for the 2006 taxation year. The Minister of National
Revenue (“the Minister”) denied tax credits which had been claimed in respect
to a number of charitable donations totalling $10,198.
[2]
Although the
assumptions of fact referenced only donations to Centre D’Alphabetisation
Multiculturel et Documentation (“Multiculturel”), the following receipts were
submitted by the Appellant during the hearing (Exhibit A-1):
(a) four receipts from
Centenary Hospital Association (“Centenary”) in the total amount of $108;
(b) a receipt from
Multiculturel in the amount of $3,425;
(c) a receipt from
Metro Street Focus Organization (“Metro Street”) in the amount of $4,220; and
(d) a receipt from
Above All Christian Gathering in the amount of $2,280.
[3]
These receipts total
$10,033. At the outset of the hearing, Respondent Counsel advised that the
Respondent was prepared to concede a donation of $165 from the total amount of
$10,198 originally put in issue.
[4]
The issue is whether
the Appellant can claim the tax credits in respect to these alleged donations
in the 2006 taxation year. It is the Appellant that has the onus or
responsibility of proving, on a balance of probabilities, that he made
charitable donations to these four different organizations in the amounts
specified on the face of the receipts and that the receipts contain the
information prescribed in the Income Tax Act Regulations (the “Regulations”).
[5]
The Appellant is a
registered nurse and he and his wife also operate a clothing and fabric store.
His evidence was that one of his customers brought a flyer to his store
respecting Multiculturel. He did not produce a copy of the flyer and he could
not recall the name of the customer, although he stated that he called him
after the initial meeting in respect to items he was prepared to donate to this
organization. Those items consisted of clothing, fabric, computer equipment and
a desk and some furniture, specifically, a mattress and couch. The items were
picked up from the Appellant in January or February of 2006.
[6]
In respect to the Metro Street receipt for $4,220, the Appellant testified that his donation, like that to
Multiculturel, consisted entirely of items such as clothing, toiletries and
food products. He first heard of this organization through a couple who came to
his store as customers. He did not recall their names and he was unsure of how
they calculated the value of the donated items, although he thought the actual value
was probably more than the amount stated on the receipt.
[7]
The receipt for $2,280
is from the Appellant’s church, Above All Christian Gathering, and states that
the cash was received from the Appellant’s wife. The Appellant stated that each
time he attended church, he donated cash amounts, between $50 and $200, which
were placed in church envelopes and which contained his name. He produced two
sample envelopes which contained the name of the church, and spaces for the donor
name and amount of the donation that might be given. However, the Appellant did
not produce any of the envelopes that would have been used to substantiate his
donations in 2006, nor did he call any church official to verify the amount
claimed.
[8]
Finally, with respect
to the four hospital receipts, the Appellant testified that he gave a monthly
fee and that he was told he could have a monthly parking space for a donation.
[9]
The auditor of the
Canada Revenue Agency (“CRA”) testified that she had been assigned to an audit
of Multiculturel and that, as a result of this audit, the charitable status of
this organization was revoked. No records existed in support of its educational
mandate or for its financial statements; receipts were deficient and could not
be supported and it had exceeded its registered mandate by operating outside Canada. Although its director advised the auditor that “gifts in kind” were being shipped
to Cameroon, there were no records, such as shipping/delivery documentation, to
support this claim. Of the total seventy-one receipts that could be identified
in 2006 by Multiculturel, sixty-eight were for “gifts in kind” and three were
for gifts of services. In addition to these seventy-one receipts, there were
missing receipts for which taxpayers could not be identified. The receipt to
Multiculturel, which the Appellant produced in Exhibit A-1, was typical of the
sixty-eight receipts issued for “gifts in kind” and, according to the auditor’s
evidence, they all contained identical wording.
[10]
The auditor also
testified that the Appellant had e-filed his 2006 tax return and claimed a
total of $10,198 in donations but that he did not provide a breakdown. Until
the hearing, she stated that he had never provided the receipts at Exhibit A-1,
although asked to do so, and that the Multiculturel receipt had been obtained
through the audit.
Analysis:
[11]
Subsection 118.1(1) of
the Income Tax Act (the “Act”) defines “total charitable gifts”
by making a specific reference to “fair market value of a gift”. In part, it
states:
“total
charitable gifts”, of an individual for a taxation year, means the total of all
amounts each of which is the fair market value of a gift (…) made by the
individual in the year or in any of the five preceding taxation years (other
than in a year for which a deduction under subsection 110(2) was claimed in
computing the individual’s taxable income) to a qualified donee, …
[12]
Subsection 118.1(2)(a)
refers to receipts containing the prescribed information as proof of the gift:
(2)
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 proven by filing with the Minister
(a)
a receipt for the gift that contains prescribed information;
[…]
[13]
An official receipt of
a registered organization must contain the information as required by section
3501(1) of the Regulations:
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 donation is a cash donation, the
day on which or the year during which the donation was received;
(e.1)
where the donation is a gift of property other than cash
(i)
the day on which the donation 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 day on which the receipt was issued
where that day differs from the day referred to in paragraph (e) or (e.1);
(g) the name and address of the donor
including, in the case of an individual, his first name and initial;
(h)
the amount that is
(i)
the amount of a cash donation, or
(ii) where the donation is a gift of property other than
cash, the amount that is the fair market value of the property at the time that
the gift was made;
(i) the signature, as provided in
subsection (2) or (3), of a responsible individual who has been authorized by
the organization to acknowledge donations; and
(j)
the name and Internet website of the Canada Revenue Agency.
[14]
Although the auditor’s
testimony and the Respondent’s submissions focussed on the lack of prescribed
information in the receipts, provided by the Appellant at the hearing, the
absence of any indication on the Appellant’s part of the fair market value of
the alleged donations is fatal to the Appellant’s success in this appeal in
respect to Multiculturel and Metro Street. Both of these receipts referenced
donations of goods in kind, such as clothing, furniture, computer equipment,
food and toiletries. Justice Webb, in Tu Van Le v. The Queen, 2011 TCC
292, [2011] T.C.J. No. 233, (“Le”), at paragraphs 15 and 16 of his
reasons, succinctly points to the requirement for a taxpayer, who wishes to
claim a tax credit for donations of gifts in kind, like those enumerated in the
two receipts, to provide evidence with respect to the fair market value of the
items. Justice Webb’s conclusions imply that, even though a taxpayer’s receipts
may otherwise meet the requirements of Regulation 3501(1), a claim for tax
credits for charitable donations will be unsuccessful where no evidence is
produced that would establish the fair market value of the items to the
satisfaction of the court.
[15]
These are similar to comments
which I made at paragraph 32 of my reasons in Tuar v. The Queen, 2010
TCC 236, 2010 D.T.C. 1173, respecting the necessity for proof of fair market
value of goods. The reasons in the Le case establish that the onus is on
a taxpayer to produce adequate evidence of fair market value, if called upon to
do so, and without it, all other things being equal, no claim can be made for
tax credits. This requirement relates back to the definition of “total
charitable gifts” in subsection 118.1(1) which bases it on the fair market
value of a gift. With respect to this precondition alone, the Appellant is not
entitled to claim the amounts as charitable donations for the Multiculturel and
Metro Street receipts.
[16]
I do agree, however,
with the auditor’s evidence that these receipts also are deficient in respect
to some of the prescribed information under the Act and Regulations.
Neither receipt specifies the day on which the items were received nor the
address and website of the CRA. The Metro Street receipt contains no authorized
signature of the organization and does not reference that it is a receipt for
income tax purposes. As I noted in my reasons in Tuar, receipts must
contain the appropriate information as prescribed by the relevant provisions in
order for an appeal to be successful in claiming tax credits for charitable
donations.
[17]
In respect to the four
receipts totalling $108 from Centenary, these all clearly state that the
amounts were paid for monthly passes that have a defined expiry date. On the
face of these receipts, they are for parking fees for a limited period of time.
There is no independent evidence of donative intent on the part of the Appellant,
apart from his evidence that he would not have paid the amounts if they could
not be considered charitable donations to the hospital. I simply reject that
evidence as implausible. The receipts are exactly what each one says they are
and that is for parking privileges at hospital premises.
[18]
Finally, in respect to
the receipt from the Appellant’s church, Above All Christian Gathering, in the
amount of $2,280, except for the Appellant’s evidence, that this amount was the
total of the separate gifts of cash he gave in marked envelopes at each church
attendance, the receipt is deficient in a number of respects, including: no
specific identification of whether the gift was cash or goods in kind, omission
of the donor’s address and of the address and website of the CRA, and the
receipt references a GST number, not a charitable registration number. In
addition, the receipt was made out to the Appellant’s wife and not to him.
[19]
The Appellant provided
no independent records to support his evidence that he made cash contributions
to his church totalling this amount. If, as the Appellant testified, these
contributions were made in marked envelopes, such as the two blank envelopes
that he submitted in evidence, then he could have produced those in order to
support his claim. Without verifiable records to support the alleged donations,
the Appellant has not met the onus which he bears in this appeal.
[20]
In addition to these
deficiencies, however, I do not accept the Appellant’s evidence as it related
to his alleged donations. He was vague and imprecise regarding the details of
all of these alleged donations. He was unable to recall names of individuals
from these organizations, telephone numbers, flyer specifics or dates. Because
much of his testimony was vague and some of it implausible, I cannot accept his
story or the receipts (even if the receipts satisfied the requirements of the Act,
which they do not) without independent evidence to support his testimony. In
addition, the audit of Multiculturel did little to support any of what the
Appellant claimed this organization was doing. There were no records to support
the delivery or shipment overseas of any goods. All of this casts doubt on the
Appellant’s evidence and consequently, without independent corroboration, his
appeal in respect to the 2006 taxation year is allowed, without costs, to the extent only of
permitting the Respondent’s concession of a charitable donation amount of $165.
Signed at Ottawa, Canada, this 6th day of May 2013.
“Diane Campbell”
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