Donative Intent, Charitable Tax Credit, and Inflated Donation Schemes | Canadian Tax Decisions & Tax Law
What is Donative Intent - or - When Does Someone Make a Gift for Income Tax Purposes? Canada v Berg, 2014 FCA 25 This is an appeal of the TCC decision of Berg v The Queen, 2012 TCC 406. See the summary of that decision for the facts and reasoning. The FCA allowed the Crown's appeal. In short, the taxpayer participated in a charitable donation program that was designed, through a series of transactions, to result in inflated tax receipts. The TCC reasoned that the only benefit the taxpayer received was an inflated tax receipts, such that the taxpayer was permitted to claim a tax credit for the donation to the extent actually impoverished in the purchase and transfer involved in the scheme. Thus, the TCC held that the potential to save more tax than actual donation expenditure did not destroy the donative intent of the taxpayer, such that a valid gift was still made. The FCA stated that section 118.1 of the ITA is intended to provide individual taxpayers with tax credits for gifts they