In the recent decision of Guindon v. Canada, 2015 SCC
41, the Supreme Court of Canada ruled that administrative penalties
assessed against Julie Guindon for false statements she made in the
context of a leveraged donation program do not offend her
The program involved donations of Turks and Caicos timeshare
units to a registered charity at a fair market value greater than
the cash payment made by the participants to acquire the
timeshares. Ms. Guindon, a non-tax lawyer, provided an opinion
letter on the tax consequences of the program on the basis of a
precedent provided by the promoters of the program. The opinion
stated that she had read the supporting documents despite the fact
that she had not done so. She was also the president and
administrator of the recipient charity of the donated timeshares
and signed tax receipts that were issued to the participants. The
total receipted amount was approximately $3.9M.
The donation scheme was determined to be a sham: no timeshare
units were created and no transfers from the donors to the charity
occurred. The Canada Revenue Agency (CRA) assessed third-party
planner penalties under section 163.2 of the Income Tax
Act (Canada) against Ms. Guindon for each of the tax receipts
issued in excess of $540,000.
Ms. Guindon appealed the CRA's assessment and argued, in
part, that section 163.2 creates a criminal offense and therefore,
she had been deprived of various Canadian constitutional procedural
safeguards that are afforded to persons who are charged with a
The Supreme Court of Canada upheld the penalties and concluded
that section 163.2 is a noncriminal provision that is essential in
securing compliance with the administrative scheme of the
Income Tax Act (Canada). This decision affirms that tax
planners and preparers, and even directors of registered charities,
could face extremely high penalties for failing to comply with the
requirements of the Income Tax Act (Canada).
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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