Tax - Income tax - Tax credits
All taxpayers participated in buy-low, donate-high charitable tax programs and claimed charitable donation tax credits, with respect of donations of software to children’s society. Several companies, who had same or related director, purchased software and sold it to participants, which included taxpayers, for certain amount and participants received donation receipt from children’s society for much higher fair market value amount. Minister reassessed all of participants, including taxpayers, and reduced charitable donation tax credits on basis that fair market value of donated software was less than amount claimed, and that programs lacked requisite donative intent. Taxpayers appealed. Appeals dismissed. Based on evidence given by experts and other witnesses, it was found that Minister’s assumptions that software was not worth claimed fair market value was not demolished. It was also found that conclusions by one expert, that one of software’s value was $0, because of technical flaw in installation, was consistent with fact that company was able to purchase license to produce software for very modest amounts. Shortly after, software was of little commercial value given rapid technological advances over intervening period. Although it was unfortunate that taxpayers were taken advantage of by promoters of donation programs, they were also found to be, to certain extent, wilfully blind to excessive valuations placed on donated software. Fact that one taxpayer was erroneously reassessed to get benefit was not relevant for purpose of determining donation tax credit of other taxpayers.
Abreo v. The Queen (2019), 2019 CarswellNat 2251, 2019 CarswellNat 2561, 2019 TCC 122, 2019 CCI 122, Brent Paris J. (T.C.C. [Informal Procedure]).
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