On August 19, 2016, the Tax Court of Canada (the “Court”) released reasons for judgement in the case of Guobadia v R. The Court’s informal procedure in this matter dealt with an appeal of a notice of reassessment issued to a taxpayer by the Minister of National Revenue (the “Minister”). The taxpayer in question was reassessed outside of the normal assessment period pursuant to subsection 152(4) of the Income Tax Act (“ITA”) and the taxpayer’s claims for charitable donations in certain earlier years were disallowed. Subsection 152(4) of the ITA allows the Minister to reassess when the taxpayer “made a misrepresentation attributable to neglect, carelessness, willful default or has committed fraud.”
The Minister’s basis for the disallowance in this case was that the charitable donations in question had not actually been made by the taxpayer, as well as that the related charitable donation receipts did not contain the information required by the Income Tax Regulations, section 3501. At paragraph 32 of the decision, the Court stated that even if a charitable donation receipt contains all of the information required by law, it may not be accepted by CRA if it does not accurately reflect the donation to which it relates. The Court then indicated, at paragraph 33, that the reverse is also true. That is, even if the receipt accurately reflects a true donation, the lack of required information being set out in the receipt may mean that it will also not be found to be acceptable.
In this decision, the Court assessed the credibility of the taxpayer herself in relation to the donations under review and found her testimony to be “vague and contradictory”, as well as her evidence “improbable” that she attended two churches where she tithed, donating 10% of her income to each one. On this issue, the Court found that the taxpayer had no evidence to support that the donations were made and that the related donation receipts were invalid as a result. For these reasons, the Court dismissed the appeal. Although this is an informal procedure, and thus without precedential value, this case is potentially persuasive insofar as it confirms that donation receipts may be disallowed where all of the required information is not set out on the receipts or where they inaccurately reflect the value of the underlying donation.