While the majority of Canadian charities are engaged in legitimate charitable activities and you generally don’t have to worry that the receipt issued to you for your donation is valid for tax purposes, once in a while a story involving a donor and charity comes along that’s so incredible you just shake your head in disbelief.
Take the recent case of Windsor, Ont., resident Tu Van Le. One day in 2005, one or more individuals whom Mr. Le did not know “simply appeared at his door.”
Mr. Le decided to give them all of the furnishings, clothing, electronic equipment and all of the other household items that were in his home except for one bed and his dishes. The household items were picked up three hours later by the men, who returned with a truck. Mr. Le also gave them $3,000 in cash “which he just happened to have in the house.”
In return for nearly all his household possessions, the individuals gave him three “charitable donation” receipts totaling $46,500 and issued by two charities, CanAfrica International Foundation and the Triumphant Church of Christ International. While Mr. Le testified that at one time he did have a list of what was taken and the “appraisal” amounts for these items, he has since “lost this list.”
Needless to say, the Canada Revenue Agency reassessed Mr. Le, denying the tax credits for the charitable donations he made to these two organizations. He appealed to the Tax Court of Canada, where the main issue was whether or not a true gift was made to these two organizations.
When asked by the court why he would give away almost all of his belongings, Mr. Le’s first explanation was that he was planning to sell these items anyway, as he was moving. While he did, in fact, move, it seems that he moved a few metres away to another address on the same street. As the judge said, “It does not seem to me that [such] a move … would warrant a sale or the giving away of all (or almost all) of one’s belongings. He would not even have to cross the street to move the items from one place to the other.”
His second explanation was that he and his wife were splitting up and that “he was enraged with his wife so he gave almost everything away.” The judge responded that this still does not explain why he would give away both his and his children’s items.
The judge concluded that Mr. Le’s explanation of what happened and why it occurred “simply stretches his credibility to the point of disbelief” and therefore denied his charitable claims.
The CRA’s theory was that Mr. Le actually purchased the charitable donation receipts from both of these organizations, each of which has since had its charitable status revoked. The president of CanAfrica International Foundation was subsequently charged with fraud in connection with the issuance of false donation receipts to the tune of $21-million, although the CRA believes the number may be closer to $39-million. Ambrose Danso Dapaah pled guilty in December 2008 and was sentenced to 51 months in jail.