INCOME TAX |
Gifts |
Chabot v. Canada
A-116-00
2001 FCA 383, Desjardins, Décary and Noël JJ.A.
7/12/01
23 pp.
Appeal from Tax Court of Canada decision dismissing appellant's appeals with respect to assessments made by MNR for 1992, 1993 and 1994--Appellant claimed tax credit for charitable gifts under Income Tax Act, s. 118.1(1),(2),(3)--In addition to disallowing deduction claimed, Minister assessed penalties against appellant in accordance with Act, s. 163(2) on ground appellant had made false statement in tax returns knowingly or under circumstances amounting to gross negligence--Décary J.A. (Desjardins J.A. concurring): by appending certificate of appraisal to otherwise incomplete receipt, charitable organization satisfied requirements of Income Tax Regulations--Taxpayer failed to establish right of ownership in paintings claimed to have donated-- Paintings to be determined and purchaser to be notified that paintings certain and determinate in order for purchaser of indeterminate paintings to acquire ownership--Sale of paintings did not occur since paintings not certain and determinate when required to be--Taxpayer could have structured transactions and defined relationship with art dealer so as to acquire right of ownership in certain and determinate paintings--Gift not made when donor not owner of items donated--Income Tax Act, s. 163(2), imposing penalty when false statement made, penal provision which must be narrowly construed--Subsection dealing with blameworthy conduct on part of taxpayer in formal relationship with Revenue Canada --Taxpayer penalized because of disagreement between himself and Minister with respect to question which, until judgments of F.C.A. in Duguay v. Canada (2000), 2000 D.T.C. 6620 and Marcoux-Coté v. Canada (2000), 2000 D.T.C. 6615, bothered Revenue Canada: validity for taxation purposes of implementing systems for donating paintings undervalued at time of purchase and overvalued at time of donation--Taxpayer never claiming paintings donated in 1993 and 1994 came from Gingras estate--Taxpayer claiming rather that paintings purchased as part of interest he acquired in value of paintings in estate--Revenue Canada never arguing that taxpayer engaged in tax avoidance--Not "circumstances amounting to gross negligence" required by Act, s. 163(2) of Act and wilful blindness sanctioned by Court in Duguay and Marcoux-Côté--Lamarre J. erring in "legal appraisal" of taxpayer's conduct for purposes of assessing penalty--Appeal allowed in part--Noël J.A.(dissenting in part): Lamarre J. correct in denying appellant tax credit for charitable gifts since appellant unable to establish ownership of paintings claimed to have donated--Trial Judge justified in finding gross negligence on evidence-- Evidence establishing deduction claimed by appellant for 1992 nearly four times amount paid for works appellant claimed to have donated and in 1993 and 1994 more than nine times greater than price--Trial Judge concluding that appellant deliberately failed to provide list in his possession --Trial Judge justified in concluding as she did and this Court should not intervene--Appeal dismissed--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 118.1 (as enacted by S.C. 1997, c. 25, s. 26; 1998, c. 19, s. 22; 1999, c. 22, s. 32; c. 31, s. 136), 163 (as enacted by S.C. 1997, c. 25, s. 52; 1998, c. 19, ss. 45, 189; 2000, c. 12, s. 142, Sch. II, s. 1(z.28); c. 19, s. 49--Income Tax Regulations, C.R.C., c. 945.