Prescient Foundation - Court of Appeal finds that participation of a charitable foundation in tax-planning transactions was inconsistent with having an exclusive charitable purpose

A registered public charitable foundation participated with other charites in transactions which were intended to avoid capital gains tax on the assets of a private company by the charities purchasing its shares, and having the appreciated assets "donated" to the charities, with the charities using the sales proceeds of the assets to pay the share purchase price (or something like that - the actual implementation of the plan was execrable).  Mainville JA found that the foundation's participation in these transactions was inconsistent with its obligation to operate only for charitable purposes, so that the proposed revocation of its registration was justified.

Mainville JA also rejected (in dealing with an unsuccessful attempt of CRA to apply a draft amendment) the submission of the Justice lawyer that "to qualify as charitable, a charitable public foundation must…only disburse funds to a qualified donee."  This position was inconsistent with CRA's published policy that a charitable foundation can carry on charitable activities, rather than being restricted to writing cheques to qualified donees (see T4063).

Neal Armstrong.  Summaries of Prescient Foundation v. The Queen, 2013 FCA 120 under s. 149.1(1) - charitable foundation and related business, and s. 230(2).