Back in October we reported on the outcome of Mariano v. The Queen, a case which brought the Global Learning Gifting Initiative under close scrutiny and ended with the determination that this program is an example of abusive charity gifting tax schemes.
In summary, the somewhat complex Global Learning Gifting Initiative charitable donation program involved gifts in kind of software licenses by those donating and the issuance of charitable receipts to them in an amount roughly 3 or more times their actual value. The 25-day trial concluded with the taxpayer losing on all points, the Court concluding that there was no actual intent to donate and the valuation of the gifts was inflated.
With tax time now behind us, those who participated in the GLGI program may find a reassessment looming. With the amounts typical on receipts for the donations, these assessments may be significant, with those owing facing balances of tens of thousands of dollars.
So what is next? At this stage GLGI has shut down and there are no additional appeals planned. As a result, collection action by the CRA is anticipated to begin shortly.
Next steps. Whether or not you’ve received your assessment, it is time to get your financial affairs in order to mitigate losses and accessibility restraints.
We encourage donors who participated in GLGI to apply for Taxpayer Relief in order to reduce their interest and penalties. Under the Taxpayer Relief Program, the CRA has the ability to use their discretion to forgive interest and penalties in circumstances outside of a taxpayer’s control.
In addition we encourage taxpayers to pay their entire balance in full if possible. Doing so prevents further interest from accruing and stop CRA from taking legal action. Should your Taxpayer Relief Application be successful, the CRA will refund you whatever overpayment you have made.
If you can’t pay the entire balance in a lump sum, you will need to devise a plan for repayment. The CRA is not known for favourable negotiations, and calling directly and appealing to their sympathies will likely get you nowhere. Often these calls will result in a repayment plan that you cannot conceivably afford. Additionally, if you attempt to call directly and negotiate on your own, this may involve voluntarily offering up information, such as banking or employment details, which may then be used against you in collection attempts (i.e. frozen bank account or wage garnishment).
Our advice: do not attempt to negotiate directly. As mentioned, doing so may result in consequences that may be even more difficult to recover from. A third party acting on your behalf can assist in protecting your assets and working out a plan for repayment that you can keep up with and still maintain your other financial responsibilities.
At Tax Solutions Canada we are well-versed in the ways of the CRA and can assist you in getting things straightened out. Call us today at 1-888-868-1400.