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February 2020 Charity & NFP Law Update Donation Receipts Signed by and in Favour of Charity Officer Denied On January 30, 2020, the Tax Court of Canada (“TCC”) released its decision in Ampratwum-Duah v The Queen, denying the appeal by Rev. Augustine Ampratwum-Duah (the “Appellant”) of three concurrent reassessments respecting denial of charitable donations the Appellant had claimed for the 2005, 2006 and 2007 taxation years. Specifically, the Appellant testified he had made charitable deductions, in the total amounts of $3,550, $9,120 and $6,346 for his 2005, 2006 and 2007 taxation years respectively to the then-recognized charity, named “City Chapel Ministries International” (“CCMI”), of which the Appellant was the religious leader. Each of the three donation receipts put in evidence (one for each year) had been signed by the Appellant in his capacity as CCMI’s religious leader. The TCC stated that no corroborating evidence such as bank account or church records were submitted in evidence, nor were any other CCMI officials, such as the then-Treasurer, called to testify on the basis that no such records were available because the donations had been made more than six years earlier. The Appellant argued that his receipts should constitute sufficient evidence of the donations, that his income was sufficient to support the claimed amounts, and that too many years had passed to be able to obtain bank records. The CRA argued that no gift had been made, the Appellant had access as religious leader to CCMI records, and alleged the Appellant had signed his own donation receipts. The CRA also cited section 230 of the Income Tax Act (Canada) (“ITA”), which requires taxpayers to keep corroborating books and records sufficient to determine their tax liabilities for at least six years or until the expiration of any objection or appeal. In dismissing the appeal, the TCC found for the Respondent, on the basis that the requirement in subsection 230(6), that supporting books and records be retained and available until an appeal has been concluded, was not complied with. The TCC stated that corroborating books and records (both bank and CCMI supporting records) were reasonably required in this case, particularly since the Appellant was the sole signatory of the CCMI receipts. The TCC clarified that it had not found that the claimed donations were not made, but instead that there was insufficient evidence required by subsection 230(6) to reasonably support a finding confirming on a balance of probabilities that the subject donations were made. This case serves as a reminder for donors, in particular, of the need to retain sufficient books and records of account as evidence, as required under subsections 230(1) and (6) of the ITA, to demonstrate that a donation has been made. Registered charities are also required to maintain books and records in accordance with the ITA. In addition, from a practical standpoint, it would be prudent for registered charities to have a policy in place to ensure that any officer of the charity is not permitted to sign donation receipts issued to himself or herself, in order to avoid any actual or perceived conflicts of interest. Competition Bureau’s Role in Digital Advertising: Implications for Charities and Not-for-Profits |
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