The Canada Revenue Agency announced a new policy in October 2012 called the Gifting Tax Shelter (GTS) policy. The purpose of this policy was primarily intended to deter taxpayers from particpating in Registered Gifting Arrangements , commonly referred to as Donation Tax Shelter. Under this policy, CRA would not process any taxpayers properly filed tax return until after they had completed their audit of the Gifting Arrangement. This often took 2 or 3 years or more, subsequently denying the taxpayer certain rights and causing consequential damages to many taxpayers. For example, the lack of a tax assessment caused problems for other benefits like the Old Age Security, Provincial Insurnace plans, getting a bank loan, etc.
Several appeals to Federal Court were launched by taxpayers to quash this policy. The most notable were the Ficek and McNally cases. In both of these cases, the taxpayer won. Initially, the CRA ignored these decisions, but when the McNally case was lost again on Appeal, the CRA had not choice but to follow the law. We truly hope they will continue to do so.
For the returns that are currently being held, CRA is following the process described below: