Tardif T.C.J.:
1 The appellant has appealed, under the informal procedure, from the assessments made by the Department of National Revenue (the “Minister”) for 1990, 1991 and 1992.
2 The respondent argued in his Reply to the Notice of Appeal that the amounts of $4,000 in the 1990 taxation year, $4,500 in the 1991 taxation year, and $5,000 in the 1992 taxation year were not eligible charitable gifts because they did not meet the requirements of section 3501 of the Income Tax Regulations; the respondent based his argument on sections 8 and 118 of the Income Tax Act.
3 René Bergeron, a chartered accountant by training, represented the appellant at the hearing. The appellant testified and called Fernand Morand and Mariette Falardeau, an auditor with Revenue Canada, to testify.
4 Fernand Morand and the appellant described the vocation of the Centre de Prière l'Alliance Inc. The appellant explained his involvement and interest in the Centre de Prière l'Alliance Inc. Lastly, he described the circumstances of and the basis for the issuing of the receipts for the 1990, 1991 and 1992 taxation years.
5 The testimony revealed that the appellant and his spouse devoted themselves to a variety of activities on a volunteer basis to ensure the effective and efficient operation of the Centre de Prière l'Alliance Inc.
6 As part of this involvement, the appellant performed services for which he received no remuneration or wage; however, in keeping with a policy established by the Centre de Prière l'Alliance Inc., he was entitled to be reimbursed for expenses such as gas, parking charges, meals, etc. Each year, he totalled the cost of his expenses and made a claim to the Centre de Prière l'Alliance Inc., which issued him a cheque as reimbursement.
7 In each of the years at issue, the appellant endorsed the cheque issued by the Centre and gave it back to it; the Centre de Prière then issued a receipt corresponding to the amount of the cheque.
8 This somewhat dubious practice may raise several questions, especially with respect to the free and voluntary nature of the gift. This perception was confirmed by the testimony of Mr. Morand and a copy of a letter that was introduced; I believe that it is useful to reproduce a passage from this letter, in which he stated:
[TRANSLATION]
If the people working with us had not given back these funds, we would not have been able to pay that expense.
9 The content of this letter clearly shows that there was a well-established system, the purpose of which was to recover the funds for which the cheques were issued. Mr. Morand explained that the Centre de Prière l'Alliance Inc. had subsequently changed the way in which it operates; he explained that the Centre now had a tight and transparent accounting system which enabled him to maintain effective and consistent control.
10 As to the instant case, I have no reason to doubt the appellant's testimony; he testified sincerely and honestly. I am of the view, in this specific case, that the appellant did indeed make a free and voluntary donation to the Centre de Prière l'Alliance Inc. of the amounts owed to him, which were paid to him by cheque. There were two distinct transactions, one involving the reimbursement of expenses incurred by the appellant and the other through the endorsement of the cheque, which became a donation.
11 Since the appellant did donate the amounts for which he claimed the tax advantages in the years at issue, his appeal is allowed.
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