http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/169564/index.do
Guobadia v. The Queen (August 19, 2016 – 2016 TCC 182, Smith J.).
Précis: The taxpayer and her husband attended their own church on Sundays. In addition the taxpayer claimed to attend two other churches and to donate 10% of her income to each of them as a tithe. The Tax Court did not accept her evidence, found her receipts to be inadequate and dismissed the appeal. There was no order as to costs since this was an informal procedure appeal.
Decision: This appeal presented four issues:
[5] There are four issues in this appeal and they are as follows:
i) Whether the Appellant was entitled to claim a deduction of $9,825 for the 2007 taxation year for a donation made to an organization described as Nations for Christ Ministries ("NCM");
ii) Whether the Appellant was entitled to claim a deduction of $5,200 for the 2008 taxation year for a donation made to an organization described as Hour of Evidence Christian Fellowship (“HOE”);
iii) Whether the Appellant was entitled to claim a deduction of $3,000 for the 2008 taxation year for a donation made to an organization described as Operation Save Canada’s Teenagers (“OSCT”); and
iv) Whether the Minister was entitled to reassess the Appellant beyond the normal assessment period pursuant to subsection 152(4) of the Act.
The decision essentially boiled down to one of credibility:
[39] The unchallenged evidence is that the Appellant made nominal donations to the Prince of Peace. If these amounts reflected what she and her husband could afford, how it is plausible or even probable that she would attend two other churches that were not of her faith where she was expected to donate an amount roughly equal to 10% of her employment income? I find it highly improbable.
[40] When the Appellant was asked to produce evidence to support the purported charitable donation of $9,825 made in 2007 to NCM, she produced copies of cheques made in 2008 that had not been claimed. When she realized during the course of her examination that she did not have any cancelled cheques for that year, she explained that she made only cash donations in 2007. Given the amount of money involved, I find that the Appellant’s last minute explanation stretches credulity and falls short of an honest answer.
[41] When asked why she had decided to attend NCM and subsequently HOE, her evidence was vague at best. She initially explained that she had moved and that these churches were closer to her home. However, during cross‑examinations, she admitted that she had not in fact moved. Her new explanation as to why she had changed churches was equally unconvincing.
[42] With respect to the organization known as OSCT, the Appellant testified that she initially prepared a cheque but later retrieved it and instead made a cash donation of $3,000. I find that her testimony on this issue was not credible.
[43] With respect to both organizations known as HOE and OSCT, I accept the Minister's evidence that they were both issuing inflated donation receipts prior to the revocation of their respective charitable status.
[44] At the end of the day, the Court can only speculate as to the amount of money, if any, actually donated by the Appellant to the three organizations in question, and concludes that it is highly improbable that the Appellant actually made donations equal to the face value of the receipts submitted.
In addition to rejecting the appellant’s evidence, the Court found that the receipts tendered were inadequate. Based on a review of the evidence the Court permitted the opening of the 2007 and 2008 taxation years which would otherwise have been statute barred.
As a result the appeal was dismissed. There was no order as to costs since this was an informal procedure appeal.