Syla v. R. - TCC: Fraudulent donation claims - years opened up - appeals dismissed

Syla v. R. - TCC:  Fraudulent donation claims - years opened up - appeals dismissed

Syla v. The Queen (November 17, 2016 – 2016 TCC 266, Paris J.).

Précis:   Mr. and Mrs. Syla claimed false charitable donations which they may have bought from their accountant (in at least one case a false receipt was filed with Mr. Syla’s 2006 tax return). Mr. Syla claimed donations in 2003, 2004, 2005 and 2006.  Mrs. Syla claimed donations in 2003, 2004 and 2005.  The Court first concluded that the otherwise statute-barred years of 2003 and 2004 could be opened up.  It next looked at the donations claimed and found them to be without any factual basis and dismissed both appeals.  There was no order as to costs since these were both informal procedure appeals.

Decision:   The Court, quite properly, made short work of the appeals.  On the issue of statute-barring:

[7]             Neither Mr. or Mrs. Syla reviewed the returns that Mr. Ankomah prepared and filed, but they received a one page summary of the information contained on the returns. They did not review that form either because they said that they did not understand the language well enough. This same process was repeated for the 2004 year.

[8]             I accept that neither Mr. or Mrs. Syla had any intention to deceive anyone concerning the charitable donation claims. When the matter was reviewed by the Canada Revenue Agency in 2009 and the reassessments were issued, Mr. and Mrs. Syla admitted that they did not make the donations reported in their returns.

[9]             Still, I am not convinced that they exercised reasonable care in the filing of their 2003 and 2004 tax returns. First and foremost they did not go over their returns with Mr. Ankomah. If they had, they would have immediately discovered that the amounts of the charitable donation claims were false. Even though they had difficulties with the language, they were accompanied by their son, a young adult, who was more proficient in English than they were and who was assisting them with translation. Therefore, the false claims should have been obvious to them had they taken the time to simply review the returns. I also believe that they were careless in not attempting to get more information from Mr. Ankomah or other acquaintances or work colleagues on how they could be entitled to tax refunds roughly three times as large, collectively, as the amounts they paid Mr. Ankomah. I believe this kind of windfall would strike anyone as very unusual and meriting further investigation. However, neither Mr. or Mrs. Syla asked any questions about it or sought any further advice. Their decision to trust Mr. Ankomah in this regard strikes me as reckless. Had they taken reasonable steps to investigate the representations made by Mr. Ankomah, they would have discovered that the donation claims were false.

[10]        In summary, while Mr. and Mrs. Syla were misled by Mr. Ankomah, they took no reasonable steps to ensure that the tax returns he filed were accurate. For this reason, the Minister is entitled to reassess the Sylas for their 2003 and 2004 taxation years.

On the validity of the donations claimed:

[11]        Mr. and Mrs. Syla both testified that they did not receive any donation receipts from Mr. Ankomah to support any of the amounts claimed. There was, however, a charitable donation receipt in the amount of $2750 attached to the copy of Mr. Syla’s 2006 tax return produced by the Respondent at the hearing. I find though that the receipt is invalid because Mr. Syla admitted that he did not make a donation in that amount in 2006. Since, according to paragraph 118.1(2)(a) of the ITA, a claim for a charitable donation tax credit must be supported by a donation receipt from the charity and since the Sylas do not meet this condition for any of the years in issue, their appeals cannot succeed.

As a result both appeals were dismissed.  There was no order as to costs since these were both informal procedure appeals.