Many Thanks again to everyone who replied to this topic. I didn’t expect it to create this much discussion, but I have learned several useful things from your replies!
That is, I believe, a mischaracterization of the decisions.
Such decisions and rulings were generally made in cases of “flips” or cases where values were in dispute and appeared to be…let’s say… “surprisingly beneficial” to the donor. Any regular donation, or donation of property for which FMV is readily determinable have never been challenged and likely never will be (ie publicly traded securities, real estate etc)
It is those cases where someone bought things like art or software for cheap, and then “donated” it to a charity at an excessively (and magically) inflated value that motivation has been considered…and generally found wanting.
One case, that I read, unfortunately, I can’t share it here, was, legitimated donations with receipts, but when questioned by CRA, the taxpayer’s response, was, for the benefit of the preferential tax credit, and got the denial
There has to be more to that story. A legitimate donation is a matter of statute, not opinion. It’s a strict construction. I can think of no “purposive” section in the ITA that disqualifies a legitimate donation.
If it complies, it’s a credit (or deduction for a corp).
If that was the reason given, and there is no qualifying information (ie a leveraged donation etc) otherwise, I’d be filing a Notice of Objection.
One of the quoted case, it’s available in public, but I can’t find the source now, too many to go through. I remembered, it was a lawyer, took out a huge amount from RRSP, somewhere in $60K, and donated everything to a charity. He was aware of the 29% tax credit over the $200. I don’t see anything wrong with that, CRA denied it for the lacked of intent to donate, and he appealed, and the court rejected the appeal as the taxpayer had the onus to prove his original intent.
Having read the case (not in great detail), I agree with the decision. I don’t think the decision was made over the taxpayer’s anticipation of the federal & provincial tax credits. I believe the court was influenced more by the sales pitch over flowing out other benefits to the taxpayer as a result of the “donation”. Basically, it was a different flavour of the art donation schemes. The average taxpayer is not going to face a problem from CRA with legitimate donations to legitimate charities. This one doesn’t look like either.
That’s the suspected motive, could very well be the case but without evidence. In this case, CRA and the court asked the taxpayer to prove that wasn’t the motive, but when you are donating something, I don’t see how anyone can prove something like that.
Especially, I think the court did allow a very small portion of the donation credit, just not the whole thing, coz it’s unreasonable to do so.
@jyliucpa; I think the evidence is quite conclusive - see @SmallBizGuy and
This is exactly the type of “donation” that legitimate charities are fighting. Ask Mark Bloomberg what he thinks of this “donation.”
@obhorst Couldn’t agree more. I’ve worked in the Charity Sector for over 20 years now and it is rife with attempts to do all kinds of improper things. As soon as there is even a hint of something “back” to the donor…there is an issue, unless it’s a trivial piece of swag. Lots of donations come with things like ball caps, t-shirts etc and these are fine. Move beyond that and it’s more likely a “scheme” and not a “donation”.
I restart this thread every year for the same reason: Once or twice a year I have to re-learn the very un-intuitive and cumbersome process for how to transfer Charitable Donations between spouses. I will ask the same question again: WHY DOES TAXCYCLE MAKE IT SO HARD TO TRANSFER DONATIONS BETWEEN SPOUSES?? And, once again, I will re-iterate that I love TaxCycle 99% of the time, but this issue is incredibly aggravating, and it could be fixed very simply: Just make the check boxes for ‘spouse one’ or ‘spouse two’ or ‘both to claim their own’ available on the Charitable Donation worksheet without hiding another required change on the Optimizations worksheet. PLEASE - - can we get this fixed once and for all?
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Fully agreed - after typing 27 donation receipts I tried to transfer, which worked for the receipts but not for the money - very frustrating. Klaus
The easiest workaround (without any over-rides) is to go to the optimizations worksheet and check “No optimizations”. TaxCycle will still optimize the split pension even if no optimizations is selected.
I have many clients who need to split donations between spouses to end up in a better overall tax situation.
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I can think of one other very simple solution: TaxCycle could put a note at the top of the Donations Worksheet that says: “If you want to transfer donations between spouses, please go to the Optimization Worksheet and say ‘No’ to Optimize Donations”. This is not a perfect solution, but at least it would save the aggravation I go through every year.
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I actually wish they would just leave that section at the top of the Donations Worksheet that allows the professional preparer to have a say in deciding who will claim the current year donations (client, spouse, or each claim their own).
Ironically these options are completely available in the Donations worksheet for a “single” client but that area does not appear for a married or common law couple if optimizations are turned on… 
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Ironic is right! That’s the strangest part of this strange story.
Set your Optimization to “Reduce tax to zero” and it works all the time - including my Ontario clients.
Expiring is the only time I have ever changed it.