Abreo v. R. – TCC: One of the last software charitable donation cases fails based on the Court finding the software had very little value

Abreo v. R. – TCC:  One of the last software charitable donation cases fails based on the Court finding the software had very little value


Abreo v. The Queen (May 24, 2019 – 2019 TCC 122, Paris J.).

Précis:   As most readers are aware the early 2000’s saw a raft of charitable donation in kind cases involving art, medicine, software, etc.  Virtually all failed because the Courts held that the values attached to the gifts were inflated.  This is one of the remnants of those lines of cases.  One category of donation was of  “Lotus Smart Suite” (“LSS”) from Systelligence Systems Inc. (“Systelligence”);  the donation receipts claimed were for $600 per program.  The Minister allowed $120 per program, i.e., what the participants in the donation plan had paid.  The Court accepted the Crown’s evidence that the software was unlicensed and unauthorized by Lotus.  Accordingly, the taxpayers had not adduced evidence to refute the donation amount used by CRA.  In the case of the Blue and Purple Collection CD-ROMs donated in 2002 and 2003 the Court similarly found that the value was far less than the donation receipts claimed.  Thus the Court dismissed all of the appeals.

The Court however declined to award costs against the taxpayers since they had followed the Informal Procedure process in launching and pursuing their appeals.

Decision:   Perhaps the most salient observation both in these appeals and in the overall area of “profitable donation” appeals are the following comments of Justice Paris:

[77]  I would also like to address the issue of the Appellants’ good faith in participating in the programs, since the point was raised frequently in the submissions made by the Appellants. Mr. Healy also maintained that the CRA should be pursuing the promoters of these programs rather than the participants, and that the CRA had a duty to warn taxpayers against participating in the program.


[78]  While it is unfortunate that the Appellants were taken advantage of by the promoters of the donation programs and that this has caused them financial hardship, I believe that they were, to a certain extent, willfully blind to the excessive valuations placed on the donated software by the promoters and NCBS. It appears that none of the Appellants attempted to determine how the software sold to them by the promoters could immediately have a fair market value of four or five times what they paid for it for the purposes of their donations. I fail to understand how they were able to believe that the promoters would choose to sell them the software for a fraction of its alleged value. In any event, the fact that the Appellants were deceived is not a factor that I can take into account in my decision. The Federal Court of Appeal in Chaya v Canada, 2004 FCA 327, stated at paragraph 4 of that decision that:


It is not open to the Court to make exceptions to statutory provisions on the grounds of fairness or equity. If the applicant considers the law unfair, his remedy is with Parliament, not with the Court.