There have been lots of cases involving what are referred to as “abusive gifting tax schemes” or leveraged donation schemes. I try not to comment on them all because the results are almost identical, with the taxpayer losing, and there are just so many of these cases. It appears that over 200,000 taxpayers invested in these schemes, and the total amount was in excess of $7 billion.
Why am I writing about Aidoo v. The King? There is an interesting argument made in this case that the CRA should have done more to prevent these schemes and that BIPOC communities were disproportionately affected by these schemes and therefore the CRA’s conduct is racist. The judge does not accept this line of criticism of CRA. Here is a part of the judge’s decision:
Systematic Racism
[47] I am aware of the social reality of racism and appreciate that the reality of racism should be approached with sensitivity by the Courts. These reasons should not be taken as disregarding the Appellant’s beliefs or lived experience. For the respectful reasons that follow, the Appellant’s arguments do not assist him in this matter.
[48] The Appellant argued in one of his filings with the Court that the CRA failed to intervene to prevent the “disproportionate targeting of Black, Indigenous and People of Colour (BIPOC) in the situation in which only CRA had access to information also amounts to breach of Subsection 15(1) and (2)…” This complaint is based on the allegation that the GLGI program was “heavily promoted in the black and other racial minority communities because the funded projects were more concentrated in the African, Caribbean and South Asian communities and countries overseas.” There is more, but that is the gist. This argument fails because the CRA does not have a duty to intervene, for reasons set out elsewhere in this judgment. Regarding the alleged breach of Charter rights, this Court may not entertain that argument: as stated in Lans,[22] the Tax Court does not have jurisdiction to adjudicate an allegation that the Act was applied in a discriminatory manner contrary to s. 15 of the Charter. That judgment cited Main Rehabilitation,[23] a leading case that distinguishes between an assessment and the process preceding an assessment.
[49] The relief that the Appellant sought included demanding that the Respondent give him statistical information. More specifically, in one of his filings he said:
Since the CRA collects race and demographic information as part of Social Security system, the Agency was aware of the race disparity associated with the GLGI Tax shelter between 2004 –2007, at least. Appellant, therefore requests that CRA provide additional statistics of participants in the GLGI program in the form of race demographics in comparison to the National demographic statistics since the information were missing from the Sections 15.5 and 16 of Respondent’s “Reply” document.
[50] That the CRA would possess information on the specific cultural background, ethnicity, identity or minority status of all tax filers is not clear and instead is, respectfully, dubious. Information concerning citizenship might be collected through the tax system, together with demographic information such as marital status, age and province of residency. Other demographic information may be collected in connection with the Old Age Security Pension and the Guaranteed Income Supplement. But the Appellant would at a bare minimum need to provide some reasonable basis for asserting that the CRA would generally collect, process and parse racialized data, otherwise the request for information is a fishing expedition. I asked him at the hearing to provide a tangible basis for his allegations and he was not able to do so. The Appellant’s demand for demographic information lacked a basis and production was not ordered.
[51] Further, the Appellant had opted to have his appeal heard in the Informal Procedure, which is a procedural path intended to ensure the expeditious and cost‐effective resolution of a tax dispute. He demanded information in relation to paragraph 15.5 of the reply pleading. That paragraph listed the number of participants in GLGI from 2004 to 2007, and a breakdown of cash and in-kind amounts. The Appellant’s demand was roughly analogous to a demand for particulars. However, a demand for particulars in the Informal Procedure is unusual and to be discouraged unless there is some substantial and obvious justification for it, and seeking particulars concerning the detailed 42-page reply pleading in this matter was untenable. This conclusion is amplified by the lack of a basis for the demand and the irrelevance of the requested information (if it ever existed) to the assessing position.
[52] The Appellant referred me to Penate,[24] suggesting that the taxpayer was absolved from her tax liabilities as a result of suffering blatant sexism and racism. There is no doubt that Ms. Penate was treated deplorably by contractors who engaged her roofing company, but the result in that case was based on the way she managed the business and its remittance obligations. She met the test for due diligence and thus was not liable as a director. Penate does not stand for a general proposition that being a victim of racism or sexism cures a tax problem.
[53] To the extent that the Appellant raised arguments concerning racism to seek damages, or relief from interest or penalties, it is trite to say that this Court does not have jurisdiction over such matters, as noted above.
[54] To the extent that the Appellant relied upon arguments concerning racism to challenge the correctness of the assessment, that also fails. It is well-established that the exercise of assessing tax is non-discretionary, and any resulting assessment is dictated by statute (Iris Technologies):[25] in other words, it is the product of the law as applied to facts, supported by evidence. If one of the Minister’s delegates raised assessments for no reasons other than grudges or biases, that would be shameful. That said, a baseless assessing position without support in law or fact would be something that a taxpayer could successfully challenge on its merits in this Court.[26] However, it cannot be said that the Minister’s assessing position in GLGI appeals is baseless in fact or law. The opposite is true. If the Appellant’s allegations concerning systemic racism were intended to serve as an attack on the correctness of the 2007 reassessment, they must also fail because of the robust fact finding and analysis in various cases.[27] The Appellant’s task in this appeal, as is the case in any other appeal in this Court, was to attack the correctness of the disputed assessment. He did not succeed.
Here is the full decision in Aidoo v. The King 2025 TCC 100.