Decision Date: January 23, 2014
Link: Case Summary Document
Citation: [2014] TCC 25 (Tax Court of Canada, Miller J, )

Summary:

This was an appeal from a reassessment made under the Income Tax Act of Canada for the 2004, 2005 and 2006 taxation years. Part of the appeal related to taxation credits for alleged charitable donations of $44,464 made by Mr and Mrs Dhillon (the appellants). These were as follows:

Jaswinder Dhillon Ravinderjit Dhillon  Charity

2004

$9,500

$5,004

Whit-Tee Youth Shelter Inc.

2005

14,500

 3,500

Whit-Tee Youth Shelter Inc.

2006

5,100

Whit-Tee Youth Shelter Inc.

2006

5,005

 1,855

New Hope for Africa

The appellants’ evidence was that the relevant taxation returns were prepared by a person identified as ‘Steve’ in 2004 and by a person whose name the appellants could not remember in 2005 and 2006.  These persons were in the same building as Orbit Financial Services (Orbit) and Isaac Amaoko who were convicted of preparing and filing false income tax returns in which they claimed fraudulent charitable tax donations on behalf of their clients in the 2004 to 2006 taxation years. It emerged that the efile number used for the appellants’ tax filing in 2004 was one used by Orbit and Amaoko (albeit under another name).

The efile number used for the appellants’ 2005 and 2006 returns was one identified as connected with the Tax Help Centre, which was in the same building as Orbit. The Tax Help Centre had operatives called William Ankomah and Frank Osei.  Osei was the contact person for the appellants’ 2005 and 2006 filing. The Tax Help Centre was the subject of a raid by the RCMP and Canada Revenue Agency (CRA) in 2007. In that raid blank receipt books and letterhead for Whit-Tee Youth Shelter Inc (Whit-Tee), New Hope for Africa (New Hope)  and other ‘charities’ were found.

Seized evidence and interviews with clients showed that Ankomah offered to file returns claiming false charitable tax donations. Clients, who made no charitable donations at all, did not receive the charitable donation receipts when their tax returns were prepared and were not told the name of the charity which was used. They paid Ankomah 10% of the amount of the alleged charitable donation. Ankomah was subsequently convicted of fraud.

Mr Dhillon’s evidence was that he gave the claimed donations to Whit-Tee in cash to persons he identified as ‘Dave’ or ‘Oscar’.  At New Hope, he gave the money to ‘Steve’.  Both the alleged charities were located in a warehouse. He did not obtain receipts at the time of giving the donations, but kept records in a book of his own which was not produced in court.

Her Honour was underwhelmed with the appellants’ evidence (at [16]-[17], [21]):

It is my view that the Appellants have not given any credible evidence to demonstrate that they made charitable donations to Whit-Tee or New Hope…In addition, I find it difficult to believe that the Appellants would give $44,464 in cash over a three year period to people whose names they did not know and not receive a receipt for the cash at the time it was given. I find that Mr. Dhillon was not credible…I have concluded from the evidence that the Appellants had their 2004 tax returns completed by Amoako and Orbit and their 2005 and 2006 returns prepared by Ankomah and his associates at Tax Help. I have also concluded that the Appellants did not make the charitable donations claimed in their income tax returns in 2004, 2005 and 2006.

The appeal was dismissed.

The case may be viewed at: http://www.canlii.org/en/ca/tcc/doc/2014/2014tcc25/2014tcc25.html

Implications of this case

This was another example of tax fraud relating to charitable donations in Canada. In this case, the ‘charities’ in question simply did not exist. The raid on the Tax Help Centre referred to above yielded electronic data containing approximately 6000 tax records which the CRA later used for reassessment purposes.