Sure parents go ahead register your children as charities!

"God does not want to see students graduate with huge burdensome student loans"

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__________________________________________________ Judge nixes charitable tuition tax scheme Undated aerial photo of Trinity Western University campus (Handout photo from TWU)
By Adrian Humphreys
March 14, 2011

An appeal court has rebuked parents who funded their children’s education at a prestigious Christian university through a creative tax scheme that judges said twisted the notion of charity beyond legal recognition.

The case, which a judge said “explores the very nature of charitable giving,” dealt with students attending B.C.’s Trinity Western University. The school solicited family members to donate to a registered Christian charity. Donors received a tax receipt that would lower the income tax they paid, and nearly all of the students then received scholarships or bursaries for their education.

Students were told to point out that “God does not want to see students graduate with huge burdensome student loans,” (emphasis ours) according to court records.

It seemed an ingenious way to pay for a post-secondary education and it was increasing in popularity — with almost $5-million in tax receipts being issued at its peak for students at Trinity Western and other Christian colleges — until the tax agency declared it is not a true gift if the donor is expecting and receiving a direct and often equal financial benefit in return.

“What is disturbing is that the objective evidence points so very clearly to an understanding, indeed a knowledge, at the time of donation, that 80% to 100% of monies they donated would go to cover the education cost of those students who solicited the funds — primarily their offspring,” said Justice Campbell J. Miller of the Tax Court.

The Federal Court of Appeal upheld his ruling this month, disallowing tax deductions claimed by six families that donated money to the National Foundation for Christian Leadership (NFCL) in 2002 and 2003 and received funding for a family member to attend Trinity Western.

The court looked at why this scheme differed from someone donating to the Cancer Society when a family member has cancer, suggesting a donation for the general good of research or services was charity but one that directly provides medicine to the family member of the donor was not.

In this case, in order to receive a bursary students needed to raise donations; their scholarship eligibility was tied to successful fundraising.

“It is also clear the children benefited. The benefit could be put in monetary terms — by providing funds to NFCL, the appellants significantly reduced the responsibility of paying tuition and other university related expenses directly to their children or to the university,” said Judge Miller.

Materials for the program said donors could receive tax credits of up to 45% of the donation, almost halving the cost of their child’s education.

In the cases before the court, donations ranged for $50 to $14,000.

In 2000, the NFCL issued tax receipts for $1,782,000. The following year it issued tax receipts for $2,066,000. In 2002 that jumped to $3,246,000 and then to $4,692,000 in 2003.

Then it was challenged by the government, which devastated the charity. In 2004, tax receipts were issue for only $1,300.

It has not issued tax receipts since, according to its annual filings with Canada Revenue Agency.

Last year’s tax filing contained a note saying: “The board of National Foundation for Christian Leadership is continuing to review the direction the charity will take in the future and have decided to remain inactive until that decision is made.”

The foundation’s phone number is no longer in service. The NFCL maintains its charitable status, however, a tax department spokeswoman confirmed.

A phone message to the lawyer representing the parents was not returned Monday. The CRA declined to comment on any specific case.

Jonathan S. Raymond, president of Trinity Western University, said he knew few specifics of the case.

“This whole matter pre-dates my time here at TWU and I don’t fully understand the issue, so I am not inclined to speak on the matter about which I know so little,” he said Monday.

National Post
ahumphreys@nationalpost.com