Purchasing charitable donation receipts was just the first step in this outrageous case.
Occasionally, I come across a tax case that has me wondering how stupid the taxpayer thinks the courts are. I find it mind boggling when a taxpayer tries to convince the court that his/her claim is correct when the evidence and situation is just so completely preposterous. Maybe given the fact that it is so preposterous they believe the court will believe them on the basis that truth can be stranger than fiction. Consider the case of Tu Van Le v. Her Majesty the Queen; 2011 TCC 292, in which the taxpayer attempted to convince the court that he had made charitable donations disallowed by CRA.
The appellant claimed charitable donations when filing his 2005, 2006, and 2007 income tax returns. He claimed $14,500, $17,000, and $15,000 respectively for a total of $46,500. The donations in 2005 and 2006 were to the CanAfrica International Foundation, and the 2007 donation was to the Triumphant Church of Christ International. The donations were backed up with receipts from the charities. However, CRA had revoked the charitable status of the CanAfrica International Foundation in 2007, and the Triumphant Church of Christ International in 2008.
The president of the CanAfrica International Foundation was charged with fraud in relation to the issuance of false donation receipts and pled guilty. Evidence revealed that fraudulent charitable receipts issued by this organization may have totalled as much as $39 million. Investigators found that charitable donations were purchased for 10 per cent of the amount of their face value. The Minister disallowed the appellant’s claim on the basis that he had purchased the donation receipts.
One would think that any rational person would accept that they had been caught, but not Mr. Le. He appealed to the Tax Court of Canada. He claimed that one day in 2005, persons he didn’t know and whose names he couldn’t recall, came unsolicited to his home. Presumably they represented these charities, because he decided to give them the contents of his house, including furniture, clothing, electronic equipment, and other household items as well as $3,000 cash that he had in the house. The persons then left his house and returned a few hours later with a truck and removed the goods. They gave him the three donation receipts claimed on his returns.
The appellant claimed to have had a list of the items donated and appraisal amounts for them, but had lost it. He explained that he was moving and had planned to sell the items rather than incur the cost of moving them to his new residence. Evidence showed that he had moved, but only a few doors away from his residence at that time. When the court raised its eyebrows at this explanation, the appellant came up with a second explanation. He and his wife were splitting up and she had moved out. He stated that he was enraged with his wife so he gave almost everything away, and besides, she didn’t want the items anyway.
For some reason, the court did not accept the appellant’s stories and dismissed his appeal. The court stated that the main issue in the appeal was credibility. Clearly, the court felt the appellant’s stories lacked credibility. The court found it very unlikely that the appellant would give his household items plus cash to strangers who just appeared at his door. It was far more likely that he had purchased the receipts. However, in a nod to the possibility that the appellant’s story was true, the court stated that without an appraisal of the goods, there was no proof that the amounts represented the fair market value of the items.
For the appellant to think that anyone would believe his story is incredible and showed a lack of respect for the court. That the court would even hear the case is a credit to the system.