To All Participants in the Canadian Humanitarian Trust (“CHT”) and Canadian Gift Initiatives (“CGI”) Programs:
I am a trial lawyer and a partner in the law firm of Morrison Brown Sosnovitch LLP: see our website at www.businesslawyers.com.
Also, I was and am a participant in both the CHT and the CGI Donation Programs for the years 2003, 2004 and 2005.
For each of those years Canada Revenue Agency (“CRA”) reassessed my income tax returns to disallow the deductions for charitable donations which I had claimed arising out of my participation in these Programs.
In each instance I filed an Objection to the Reassessment of CRA and subsequently appealed to the Tax Court of Canada when CRA failed to reinstate the deductions which I had claimed.
My appeals were held in abeyance by the Tax Court of Canada for almost five years while 15 other appeals, referred to as “test case” appeals moved forward through the appeal process.
In December 2014, 12 test case appellants either settled or withdrew their appeals, leaving only three appellants with active appeals: the promoters Steven Rosen, Leonard Karmiol and Alexander Marusich, and they have no legal representation as Osler Hoskin & Harcourt LLP have removed themselves as their lawyers of record. Also, Leonard Karmiol’s appeal has apparently been abandoned.
Then at the request of CRA’s legal counsel, the Tax Court removed my three appeals from the abeyance category and directed that my appeals move forward as the test case appeals.
By Order of the Tax Court I was examined for discovery in my test case appeals on January 22, 2016.
The Tax Court has now set aside one month of Court time for the hearing of these appeals and has ordered that the hearing commence in Toronto, onMonday, February 20, 2017.
The principal issue in the test case appeals, and most likely in your Objections and /or Appeals, is whether the fair market value of the Donated Pharmaceuticals as reflected in the tax receipts issued by the respective charities is a proper deduction for tax purposes.
As at January, 2015 approximately 5,800 taxpayers had objected to their CHT Reassessments, and approximately 950 taxpayers had objected to their CGI Reassessments. Some of these taxpayers have also appealed to the Tax Court.
Currently, there are more than 250 CHT appeals pending before the Tax Court.
The logistics of moving these appeals forward to a hearing are enormous and expensive. For a start, there are more than 6,600 documents which have been listed and produced by CRA’s legal counsel in each appeal.
The trial preparation will be significant.
My estimate of the legal costs required to take these appeals to a hearing before the Tax Court of Canada is at least $500,000.
The outcome of these test case appeals will no doubt affect your pending Objections and/or Appeals. If the test case appeals are successful then it is very likely that your cases will also be successful. On the other hand if the test case appeals are dismissed by the Tax Court then it is likely that your cases will also be dismissed. Therefore you have a vested interest in the outcome and in ensuring that the strongest possible case is prepared and presented to the Tax Court at the hearing of these appeals.
I am prepared to commit the resources of this law firm to this effort if the participants in the CHT and CGI Programs are prepared to contribute towards the legal costs required to bring these appeals to hearing.
If each participant contributes at least $1,000, then there should be sufficient funds to enable these test case appeals to proceed to a hearing before the Tax Court having regard to the number of participants whose Objections and/or Appeals to the Tax Court are still pending.
The monies raised will be used to fund the legal fees and disbursements of this firm, including myself, our associates and our student at law, in taking these test case appeals to a hearing before the Tax Court.
My involvement on your behalf will be as follows:
1. I shall present to the Tax Court a list of the persons who have filed Objections and/or Appeals and who support my appeals and have contributed to the legal costs.
2. I shall provide each participant, by email and upon request, with an update of the progress of the test case appeals as they move forward to a hearing before the Tax Court.
3. Depending upon the circumstances, I may ask some of you to testify at the hearing.
On the other hand, if I conclude that we are unable to raise enough money to allow me to proceed with these appeals then your full contributions will be returned to each of you.
If you are interested in participating, then please complete and sign the attached Identification Form and return it to my office along with your cheque payable to Morrison Brown Sosnovitch LLP, in trust.
Also, please forward this email to any other participants in the CHT or CGI Programs of whom you are aware.
I look forward to a response from each of you as soon as possible.
V. Ross Morrison Partner Direct: 416.368.5972 Main: 416.368.0600 Fax: 416.368.6068 Email: [email protected] Website: www.businesslawyers.com
1 Toronto Street, Suite 910, PO Box 28, Toronto, ON M5C 2V6