The taxpayer participated in a donation scheme in which participants supposedly would acquire office software licences for a bulk rate and donate them for charitable receipts reflecting the ostensible fair market value (i.e. non-bulk rate) of the licences:
- A corporation ("Multisolve") would sell transferable software licences to an individual ("Intermediary") for $468 each. In lieu of cash payment, Multisolve would take vendor take-back charges over the licences for $468 (the "Liens").
- The Intermediary would donate the licences to a Trust.
- The participants would be named capital beneficiaries of the Trust.
- The Trust would distribute the licences to the participants as gifts.
- The participants would donate the licences to a charitable Foundation, along with a $468 cash "donation" to discharge the Liens.
The taxpayer received two charitable receipts, one for $468 per licence in respect of the cash portion, and one for $1031 per licence on the basis of a $1499 fair market value less the $468 Liens.
Hogan J upheld the Minister's decision to fully deny charitable credits claimed by the taxpayer. The taxpayer advanced no evidence that the software had existed. Respecting the cash "donation," there was a lack of donative intent given the taxpayer would not have paid the cash without the understanding that he would receive the software licences from the Trust, and the cash "donation" was earmarked to discharge the Lien.
See also the summary under s. 237.1(6).