Case information

Taxation — Income tax — Charitable donations — Reassessment — Remission power — Applicant making partial cash payment for charitable donation, and receiving interest-free loan for balance, using “split-receipting” approach — Retroactive legislative amendments to income tax legislation permitting split-receipting, but with cut-off date — Taxpayers making donations prior to cut-off date denied relief — Affected donors requesting that Minister of Finance recommend remission of amounts owing — Minister refusing to recommend remission — Federal Court dismissing applicant’s judicial review application from Minister’s refusal — Court of Appeal dismissing appeal — Whether Minister’s refusal to recommend remission was reasonable in light of alleged inequity and misapprehension of governing law, and reliance on an irrelevant tax appeal process — What is proper approach to judicial review of executive decisions on remission requests — Financial Administration Act, R.S.C. 1985, c. F-11, s. 23(2).

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Between 2001-2003, the applicant and other donors made charitable donations pursuant to a “leveraged donation scheme”, which allowed for “split-receipting”, whereby taxpayers could make a partial cash donation (approximately 30% of the total amount) and then receive an interest-free loan for the balance of the donation, which would be paid back over time. Donors would still receive tax receipts for the full amount. In 2012-2013, amendments to the Income Tax Act (“ITA”) effectively allowed “split-receipting”, with a retroactive application date of December 20, 2002. Later, the Canada Revenue Agency reassessed the tax returns of certain donors, including the applicant, for the years 2001-2003, and denied the expected tax credits. The donors appealed to the Tax Court of Canada. Eventually, a Settlement Agreement provided for partial relief, based on the ITA amendments, but only for donations made after the retroactive application date of December 20, 2002. Donors excluded from such relief, including the applicant, petitioned the Minister of Finance to exercise his discretion under s. 23(2) of the Financial Administration Act and recommend the “remission” (i.e., forgiveness) of the tax amounts owing, alleging that these amounts were “unreasonable or unjust”, or that it was “otherwise in the public interest” to remit the taxes owing. The Minister refused to recommend remission.

The Federal Court dismissed the applicant’s application for judicial review from the Minister’s refusal to recommend remission. The Court of Appeal then dismissed the applicant’s appeal.