Federal judge denied Laila McMillan’s request for a judicial review of a Canada Revenue Agency decision that denied tax relief on interest going back to 2005.
Federal judge denied Laila McMillan’s request for a judicial review of a Canada Revenue Agency decision that denied tax relief on interest going back to 2005.
A B.C. woman who donated thousands of dollars to a group later found to be operating a “tax shelter scheme” has been denied her bid seeking tax relief.
Laila McMillan claimed a credit for donating $41,615 to the Canadian Humanitarian Trust on her 2005 tax return. The charity was later found to be taking in cash donations from thousands of Canadians — money that was ostensibly used to buy medicines in developing countries at inflated prices.
The scheme then generated in-kind donations that participants claimed on their tax returns, wrote Federal Justice Sébastien Grammond in a recent ruling.
In McMillan’s case, she made a cash donation of $11,340 in 2005. An in-kind donation made up the remainder of the $41,615 the woman claimed on her 2005 tax return.
Because the tax shelter charity involved so many people, it wasn’t until 2015 that the Canada Revenue Agency came back to McMillan with a reassessed 2005 tax return. She owed $13,551.01.
“In May 2020, the Federal Court of Appeal ultimately ruled that the Canadian Humanitarian Trust was, in fact, a donation tax shelter scheme, and disallowed claims for charitable tax credits for in-kind donations,” Grammond wrote.
McMillan objected, and in 2023, appealed her tax return to Canada’s Tax Court. Those arguments were struck down in February 2024.
The woman then turned to Canada’s federal court seeking a judicial review of the CRA’s decision to deny her relief for interest on owed taxes she had accumulated over two decades.
Grammond cited the Tax Court’s determination that McMillan could not shift responsibility onto her ex-husband, who had organized the 2005 donation.
As the court put it: “she claimed the donations on her 2005 tax returns and now she must live with the consequences.”
A CRA officer later found that McMillan was told multiple times over years that she could pay off what she owed to avoid interest, but that she declined to do so, the judge wrote.
The revenue agency had previously granted McMillan some relief for financial hardship between 2012 and 2015 but turned down her requests when it came to arguments that paying taxes would hurt her financial situation when she retired.
A revenue agency officer had determined McMillan was not entitled to discretionary taxpayer relief on interest she had accumulated since 2005.
That decision, ruled Grammond, was handed out “reasonably and fairly.”
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