Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Taxation – Charitable registration – Legislation – Interpretation – Administrative law – Judicial review – Does a charitable foundation breach the requirement that it act exclusively for charitable purposes by participating in a transaction which benefits itself and other charities but decreases the tax payable to the Minister by a third party – Does article XXI(7) of the Canada US Tax Convention as implemented by the Canada-United States Tax Convention Act, 1984 require the Minister to treat a Canadian public foundation’s gift to a United States charity as one made to a qualified donee – What is the proper interpretation of the legislative requirement that charities keep “records and books of account in such form as will enable the Minister to determinate whether there are any grounds for the revocation of its registration under this Act” – Can the Minister rely on a legislative provision to revoke a charity’s registration for an alleged failure to disclose information to a Canada Revenue Agency (“CRA”) auditor “voluntarily and promptly”, while also arguing that the audit has uncovered other grounds for revocation – Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “Act”), sections 168(1) and 230(2)(a).

The applicant was found to qualify as a registered charity under s. 149(1)(f) of the Act and designated a charitable public foundation. The CRA sent a notice of intention to revoke the applicant’s registration pursuant to s. 168(1) of the Act, and a formal confirmation notice was issued by the Minister. The grounds for the revocation were that the applicant: a) participated in a tax planning arrangement for the private benefit of others; b) transferred an amount of $574,000 for a share purchase that was in fact a non-charitable gift to a non-qualified donee arising from the tax planning arrangement; c) made a gift to a non-qualified donee in the form of a $500,000 transfer to a non-profit organization in the United States; and d) failed to maintain adequate books and records. The Federal Court of Appeal dismissed the applicant’s appeal, finding that the Minister acted reasonably in revoking the applicant’s registration on the basis of grounds a) and d).