Recent Case Reminds Charities about the Risks with False Donation Receipts

June 30, 2012 | Andrew Valentine

The recent decision of the Tax Court of Canada in Grosset v. The Queen offers a reminder to charities and their donors to beware the risks involved with false receipts.

The case involved two taxpayers, Oneil and James Grossett, appealing from a CRA reassessment.  They were reassessed for four past taxation years on the basis that they had claimed charitable tax credits for gifts that were never made.

Both appellants had used the services of the same accountant.  The accountant had previously pled guilty to selling false donation receipts.  He had sold receipts for approximately 10% of the amount of the donation shown on the receipt.  The accountant had admitted to selling a total of $39 million in false receipts between 2002 and 2005.  He had issued the false donation receipts for several charities in which he was a director. The CRA began investigating the appellants after searching the accountant’s office and discovering receipts for the apparent sale of donation receipts.

The appellants’ filed tax returns that included claims for charitable donations in amounts ranging from $3,590 up to $23,039.  The Court noted that the donation amounts were well outside of their financial position (some donations equalled one quarter to one half of their respective incomes).  The Court also noted that these donations were inconsistent with their previous donation history (or lack thereof).  The Court confirmed the reassessment.

The Court stated that, as the taxpayers had knowingly purchased false charitable donation receipts, they had clearly included a misrepresentation in their tax returns.  In knowingly doing so the Minister could therefore look outside of the normal assessment 3-year period and reassess the appellants for the years in question.

This case serves as a warning to charities to make sure they have an account of their tax receipt booklets and have adequate policies and procedures in place to ensure that all receipts are issued properly.  For charities, issuing false receipts can result in deregistration, and potentially further sanctions under the Income Tax Act.   For donors, the use of false donation receipts will justify reassessment for taxation years beyond the normal reassessment period, plus potential interest and penalties.  Advisors too should take account of the very significant penalties that can apply for issuing false receipts or contributing to a misrepresentation on a tax return, as well as the possibility of civil exposure to their clients.


This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada’s anti-spam laws, please contact us at

© Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting