Here’s a saying for you: if it looks too good to be true, it probably is.
And another, from Benjamin Franklin: “In this world nothing can be said to be certain, except death and taxes.”
This is a story about a combination of both of those ideas, and the fact that neither can stop people from trying things that seem too good to be true — often to their own detriment.
From 2003 to 2014, thousands of Canadians participated in what has been termed the largest tax scam in Canadian history.
Global Learning Systems (GLS) told taxpayers they could buy courseware packages for one price and, through a series of transactions, donate them for a much higher price: buy a $10,000 package in 2003, and you’d get a charitable receipt saying you’d made a charitable donation of $62,170.
The problem is the sheer obviousness of the situation: how can you donate $14,250 in one year, $116,000 in the next — as one taxpayer did — but receive charitable donation receipts that let you claim gifts of $57,004 in the first year and $928,052 in the second?
It worked for a while, until 2015, when the Canada Revenue Agency (CRA) won a case against the scheme in the Tax Court of Canada — pointing out in evidence that less than 10 per cent of the money collected was actually going to charities, while the rest was going to GLS promoters.
The problem is the sheer obviousness of the situation: how can you donate $14,250 in one year, $116,000 in the next — as one taxpayer did — but receive charitable donation receipts that let you claim gifts of $57,004 in the first year and $928,052 in the second?
Another taxpayer made cash donations of $28,500 over seven years — but received charitable receipts for $186,673.
A staggering number of Canadians got involved.
As one judge wrote about evidence presented in a 2019 case, “The amended T5003 form shows GLS’s disclosure to the minister of the magnitude of the GLS Program in 2003, which, according to the form, involved the issuance of 3,850 T5003 slips, software with a cost of $16,326,610 and eligible gifts of $103,440,600.”
Think about that: that’s very early on in a tax avoidance scheme that ran for over a decade, and there were already 3,850 taxpayers taking part. Some estimates suggest as many as 40,000 Canadian taxpayers used the system, often repeatedly.
A Tax Court decision last week — reported on by the Globe and Mail — said that just two years’ worth of deductions by taxpayers totalled $400 million.
The CRA is in the process of collecting the taxes that were improperly avoided using the scheme. But the CRA is not just after the avoided taxes, taxpayers are also being hit up for interest on the unpaid taxes, and penalties.
Many are going to Tax Court to appeal the CRA levies.
But court case after court case is showing that, along with death, taxes are in fact a certainty. As, in this case, are interest and penalties.
Once again: if it looks too good to be true, it probably is.
