In Ayre v. The King, 2025 TCC 41, the Tax Court of Canada dismissed six lead cases, along with ninety-nine bound appeals, challenging the Minister of National Revenue’s denial of charitable donation tax credits.[1] The Court found that the appellants participated in tax shelter gifting arrangements involving cash and pharmaceutical donations without the requisite donative intent. As such, they were deemed not to be entitled to tax credits under section 118.1 of the Income Tax Act.[2] The case is currently under appeal to the Federal Court of Appeal.
Background
The lead appellants participated in registered tax shelter and gifting arrangements created, promoted, marketed and administered by Relief Lending Group Inc (“RLG”) and MissionLife Financial Inc (“MLF”).[3] These programs claimed to allow participants to make large charitable donations of pharmaceuticals by paying a small upfront cost and contributing the remainder by way of a large “loan”.[4] In exchange, the participants gained tax receipts for the full amount of the donation, including the “loan” and claimed tax credits that exceeded their cash outlays.[5]
The Minister reassessed the appellants under section 118.1 of the Income Tax Act and denied the donation credits because there was no valid gift, the financing arrangements were unsupported by any real economic substance and were assumed by the Minister to be a sham, and the fair market value of the property donated was inflated.