The Supreme Court of Canada has denied leave to appeal from the decision of the British Columbia Court of Appeal in Neville v. National Foundation for Christian Leadership.
The background to the case involves a prior decision of the Tax Court of Canada, upheld by the Federal Court of Appeal, denying tax credits claimed by individuals who had donated to a scholarship program run by National Foundation for Christian Leadership (NFCL), a registered charity. Parents and relatives of students attending certain religious schools had made donations to NFCL which had in turn resulted in scholarships being awarded to their children. CRA had denied all tax credits on the basis that no gift had been made for tax purposes (given the expected benefit to the donors in the form of scholarships being provided to their children). The denial of credits was upheld on appeal.
Subsequent litigation was commenced by a few donors to NFCL in the British Columbia Supreme Court seeking a return of their donations. The basis for the claim was that, as CRA and the Tax Court had concluded that no gift had been made, the donated funds should therefore be returned. The BC Supreme Court held that notwithstanding the conclusions of the Tax Court as to whether the transfer of property to NFCL qualified as a gift for tax purposes, from a property law standpoint there was still a valid gift and no basis on which to return the property. This decision was upheld by the BC Court of Appeal, based in part on the doctrinally less controversial argument that since the donors had benefitted from their donations, they were not entitled to a refund. It was from this decision that leave to appeal had been sought.
The denial of leave to appeal by the Supreme Court concludes this case. As is typical, no reasons were provided by the Supreme Court of Canada in denying leave to appeal. Charities can take some comfort, on the basis of the BC decisions, that the tax treatment of receipts issued in respect of a gift will not affect the validity of the underlying transfer of property to the charity, at least where a benefit was received by the donor. The case also serves as a reminder, to both charities and donors, about the importance of understanding the rules around the issuing of donation tax receipts and the claiming of tax credits, to ensure that such receipts are issued and the credits are claimed properly.
Miller Thomson acted for NFCL in this appeal.