Global Learning Loses Tax Court Appeal
OCTOBER 23, 2015
On October 19, 2015 The Honourable Justice F. J. Pizzitelli of the Tax Court of Canada issued his report on the outcome of the GLGI / CRA court case which you can read HERE
The Judge ruled: “The appeal from the reassessment made under the Income Tax, Act …is dismissed.” This means that the Appellants (GLGI donors) have lost the tax court case in its entirety including donation claims for both cash and courseware. Read More
Will GLGI Launch an Appeal Before November 19?
After donor's surprise, shock and anger subside, the most common response is 'what about an appeal'. Many have offered to assist with the funding if there was an opportunity to overturn this judgement, or at least to long delay collection.
However, consensus seems to be that the manner in which the judgement was issued makes it almost certain that an appeal will fail due to the judge totally destroying every aspect of the program. There is no grey in his judgement - he ensured that appeal and success of any single element could not overturn the other 4 or 5 major elements.
GLGI lawyer Rahul Shastri has said this: "As you might expect, all necessary advice has been provided to the Lead Appellants. They are aware of their options.
As matters stand it is not likely that the Lead Appellants will fund the cost of an Appeal. Further, it is almost a certainty that GLGI, which has gone well beyond the extent of its litigation fund, would do so. This, I expect, may have a bearing on the Lead Appellants' decision.
Insofar as funding an appeal is concerned, your group can expect costs of the same to run between $300,000-$400,000. The disbursements alone for the transcripts and the reproduction of documentary evidence (numbering thousands of pages) will likely run in excess of $50,000.
Your group should be aware that given the findings of fact made by Tax Court (as I suspect you've surmised from your review of the decision), a successful appeal is far from assured."
GLGI is no longer in business and the promoter has no further funds available for the fight. Robert Lewis has commented:
"I did expect some justice, we all must fight against this tyranny. I am so sickened by this result. We must do something for all. Our next move is a protest about why do you, CRA, even issue tax shelters. I did what I promised. Lets do something as donors. This seems to be our only route. We all started with their issued booklet "the advantages of giving to charity". It seems to me that enough is enough."
"I am very sorry for the result."
What Can We Expect CRA to Do Next?
No one outside of the organization knows what CRA's plans are and any comment would be pure speculation. However, it is likely that CRA will rollout over time the responses to taxpayer appeals (Notices of Objection). Most likely those will be in the form of Confirmation by registered mail of CRA's original reassessing position. Will those bills look like the judgement in the appellants' cases? No one knows for sure, but a worst case scenario would suggest that could be the case.
At the same time, CRA will request payment in full within 30 days or, alternatively, provide instruction for appealing to the Tax Court of Canada.
To a large degree, however, taxpayers who choose to manage their CRA debt much like other debts should not be overly concerned as long as they are responsible and make acceptable arrangements.
Sometimes CRA has demonstrated less than reasonable leniency to debtor taxpayers and has wide and far reaching collection powers including freezing bank accounts, accessing investments and equity and garnishing wages.
Of course for those unable or unwilling to pay, there are several alternative options.
So What Options Will Taxpayers Have? (click the links to learn more)
1) Arrange to pay in full
2) Negotiate with CRA to make payments over time
3) Apply to cancel or waive interest under the Taxpayer Relief provisions
3) Submit an application to appeal to Tax Court of Canada - cost is between $0 and $550 and does not require an attorney to apply
4) File a formal consumer proposal offering to make acceptable payment arrangements
5) File for asset and income protection under the bankruptcy laws
6) Investigate legal specialized strategies to protect one's assets and income from unsecured creditors such as CRA
What Value Would There Be in Approaching MP's and Ministers in the New Liberal Government?
There is much thought along this line. To what effect? Can it hurt? Stay tuned as the ideas are formulated.
Just a few editorial comments about government involvement in donation tax shelters since the mid 1990's:
* It will be the Chretien / Martin government's legacy to have increased the donation limits of one's income from 25% to 75% (why? certainly not for anyone's benefit other than the wealthy); and their legacy to have created the implicit acceptance of the industry through allowance of generous tax shelter rules
* It will be the Harper government's legacy to have professed the value of charity (including those of GLGI's charities); to have not found acceptable manners of ceasing proliferation of tax shelter participation; to have allowed the wealthy to avoid tax by use of private donation strategies; and to have created a scenario of unfathomable hardship for many 10's of thousands of Canadian taxpayers
* How the Trudeau government handles the fallout from what the liberals originally created will help define their legacy
* The absolute field day lawyers will have over the next 10 years, attempting to right the wrongs, will define Canadian Taxpayer Rights for generations to come