Donation tax shelter case

Hamilton’s own Mr Justice Randall Bocock goes head-to-head with Maréchaux in Berg v R, 2012 TCC 406.

Mr Justice Bocock distinguishes Maréchaux on the following grounds:

The case before the Court is easily distinguishable, since the Respondent has conceded in the partial agreed statement of facts, that the Transaction Documents were pretenses and thereby not legally effective documents. Legally, no tangible or potential benefit to the Appellant, beyond the camouflage afforded by the Inflated Gift Receipts which were needed to enhance the purported gift value beyond the Cash Donation Amounts, can be ascribed to the Transaction Documents which, on admission by the Respondent, gave rise to no legal rights, obligations or benefits.

This seems to put the Crown to a difficult choice. The Crown will not want to concede that the transaction documents associated with a scheme were anything other than pretenses because such a concession would tend to support the amount of the gift given by the donor. On the other hand, by arguing that the documents were a sham, the Crown, it seems, might be accepting that no benefit was conferred by the documents that would prevent the donor claiming the cash portion of the transfer as a charitable gift.

It will be interesting to see whether the Crown will appeal the decision.