Law Times

Law Times • OcTOber 15, 2012 Firms sued over advice on donations Crowns not resisting: AG NEWS Continued from page 1 as a result of following the faulty advice of a third party" such as a tax lawyer or adviser. The section im- poses a penalty on that third party. Although the section was sup- creating a criminal offence" as it is so far-reaching and broad. Parachin said in an e-mail that posed to act as a deterrent to advis- ers involved in overly aggressive tax planning, Parachin says the effect of the penalties wasn't what was stopping law firms from advis- ing on these arrangements. "It can tarnish a firm' ated with arrangements that are widely regarded within the chari- table sector as abusive. prised if law firms that declined to provide advice on charitable dona- tion arrangements in the past will suddenly decide now to advise in favour of them. The case involved a donation He adds he would be very sur- " s brand to be associ- the decision "illustrates how exces- sively broad draſting can backfire on the government." He added that the section "was presumably leſt open-ended in order to minimize the scope for tax advisers to skil- fully avoid the sanction. But the breadth of s. 163.2 has now come back to haunt the government as it was key to the provision being characterized as a criminal sanc- tion in Guindon." Aptowitzer notes "our feeling has been that the CRA has gone aſter Ms. Guindon because they wanted the precedent to go aſter some of the big law firms that have written the opinions. Now, they have a precedent, but it' program in which participants were supposed to acquire time- share units as beneficiaries of a trust for a fraction of their value and donate them to a charity in exchange for tax receipts for the actual value of the units. However, the court stated that no donation ever took place as the time-share units never existed and no trust was settled. Guindon, a lawyer who had no experience in tax law and practised primarily in family and estates matters, prepared an opinion that the donation program' used to attract potential donors. The court noted the opinion was "found to be badly flawed and pur- ported to rely upon documenta- tion which the appellant had never examined (and which, in fact, did not exist)." Aptowitzer says his client had s promoters faced pressure to sign the opinion before she had a chance to review the documents. The decision noted Guindon precedent they wanted." He pre- s not the sumes the CRA is going to appeal the decision or rewrite the law in a way that would overcome it. CRA spokeswoman Mylène Croteau wrote in an e-mail that the agency and the Department of Justice are currently reviewing the decision and have until Nov. 1 to appeal. Aptowitzer notes that in this case, LawPRO didn't cover Guin- don' s defence "even though the ap- pellant is a lawyer and that's because she wasn't acting in her capacity as a lawyer in signing the receipts." He adds that lawyers who provide tax advice on donation programs may not have insurance to protect them- selves from a prosecution for penal- ties under s. 163.2. Negative CRA decisions can go beyond Income Tax Act pen- alties against lawyers. Some situa- tions have prompted class actions against law firms. Last year, Fra- ser Milner Casgrain LLP settled a class action in relation to the Ban- yan Tree Foundation giſt program. That action followed a negative decision from the CRA about the program. Aptowitzer, however, be- lieves the Guindon case won't affect the class actions issue. LT Continued from page 1 the process. They want to get disclosure as early as possible in a case." Gerretsen also downplays the notion that Crowns have resisted Justice on Target. Noting he hasn't heard of such opposition, he asks, "Is everybody going to be happy with the system? I'll leave it for other people to judge. been more about encouraging people to plead guilty as early as possible rather than truly improving the efficiency of the system, particularly when it comes to trials. Noting people can now get legal aid at a higher income threshold of $18,000 for duty counsel assistance in situations such as guilty pleas, Addario worries they'll simply take that option since they can't afford private representation to take their matter to trial. He' Among Addario's concerns is the notion that Justice on Target has " creasing resolution rates than a truly fairer and faster justice system. "That achievement, which is relatively new, is nothing to brag about," he says. "We still have too many people in remand in Ontario, s concerned, then, that the positive statistics are more about in- noting that leaving people in pretrial custody is in itself an incentive for someone to plead guilty whether merited or not. As a result, Ad- dario suggests the focus of Justice on Target should be on examining bail options and ensuring faster trials for people in custody. In addition, he wonders whether the introduction of the inter- " he adds, lock program in impaired driving cases has affected the numbers since it also provides an incentive to plead guilty. Those cases "may skew the sample, guilty pleas have been a factor in the improving statistics. "Personally, I don't buy it," he says. "I don't think that would be appropriate at all. For his part, Gerretsen downplays the notion that inappropriate " LT " he says. PAGE 5 New eDItION CONSOLIDATED ONTARIO INSURANCE STATUTES AND REGULATIONS 2012 CONSultING eDItOR: AlAN l. RAChlIN Get convenient access to the most current insurance law – all in one practical resource. WHAT'S NEW IN THIS EDITION This edition includes updates to the latest legislation and regulations, and additional forms such as: wasn't only the legal professional responsible for the legal opin- ion concerning the program but was also the administrator of the charity who got the organization involved in the program and who signed charitable donation tax receipts. In relation to signing the re- ceipts, the court said Guindon's "conduct is indicative either of complete disregard of the law and whether it was complied with or not or of wilful blindness. [Guin- don] should have refrained from involving the charity and signing the tax receipts until she had either reviewed the documents herself or had another professional approve the program' went on to say that when Guindon issued the receipts, she could have reasonably been expected to know they were tainted by omission as no professional had ever verified the legal basis of the program. According to the court, Guin- don's conduct led to the conclu- s activities." The court sion that she could reasonably be expected to have known the tax receipts were false statements and the penalty would have been appli- cable if it were a civil one. However, the court found that s. 163.2 "should be considered as www.lawtimesnews.com • New Professional Services Guideline, Superintendent's Guideline No. 03/12 • New Certificate of Automobile Insurance (Ontario) • New Minor Injury Guideline • New Section A of Dispute Resolution Practice Code • New Motor Vehicle Accident Claims Fund (MVACF) forms ORDER # 985049-65203 $96 Softcover 1560 pages September 2012 978-0-7798-5049-5 Annual volumes available on standing order subscription Multiple copy discounts available Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AVAILABLE RISK-FREE FOR 30 DAYS Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800

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