The Tax Court of Canada recently released a decision in Winston Blackmore v. Her Majesty the Queen in which appeals from the tax assessments made under the Income Tax Act for an individual leading a polygamous community in B.C., “Bountiful”, were dismissed. The court held that the community did not qualify as a religious communal ‘congregation’ which would have provided them with various tax benefits and special tax treatment.
Under section 143(4) of the Income Tax Act, there are four requirements which qualify a group as a ‘congregation’, namely, whether the members of the community:
(a) live and work together;
(b) adhere to the practices and beliefs of and operate according to the principles of the religious organization of which it is a constituent part;
(c) do not permit any of the members to own any property in their own right; and
(d) require the members to devote their working lives to the activities of the congregation.
The court held that the community did not meet any of the requirements to qualify as a ‘congregation’. There were various reasons cited including the fact that there were members working outside of the community that did not devote their working lives to the activities of the congregation and the community did not explicitly prohibit private ownership of property by all of its members, in either its practices or in its religious doctrine and principles or in any existing articles of incorporation. The court dismissed the appeals and also imposed “gross negligence” monetary penalties for four of the taxation years as a result of the significance difference between the actual income the Appellant earned and the amount reported on the Income Tax returns.
The full decision can be accessed here: http://decision.tcc-cci.gc.ca/en/2013/2013tcc264/2013tcc264.html
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.