The taxman cometh

Things have finally come to a head with respect to the mayor's charity. The Canada Revenue Agency (CRA) has notified Trinity Global Foundation that intends to yank its registered charity status and with it the ability of the “charity” to issue tax receipts. Since these receipts were grossly inflated, thanks to the assistance of a tax shelter, Global Learning Gifting Initiative (GLGI), people with a lot of money could spend a little to save a lot more. The rest of us bore the brunt of that by paying more in taxes or receiving less in services.

But the “charity” did well, assuring donors that they were lucky to be able to do good in the world and, not only didn't it cost them anything, they actually made a lot of money through their generosity. It was all perfectly legal. And, if there were any problems with the taxman, the GLGI legal department would have their backs.

But now, according to London Free Press's Chip Martin, Trinity Global is facing the same fate that has befallen other “charities” working with a tax shelter. Apparently, CRA is not convinced that everything at Trinity is in accordance with the rules. It's about to pull the plug. That could put a damper on the generosity of the donors. No tax receipts? That's not what they signed on for.

For its part, Trinity is asking CRA to reconsider. Its lawyer is asking for time for Trinity to put together a defense of its status. To lose that status now “would result in immediate unavoidable irreparable harm,” the lawyer claimed.

Surely the board of directors of Trinity Global saw this coming and could have prepared a case. Back in November, all but two of them, president Ugo “Joe Jr.” Fontana and vice-president/secretary/treasurer Patrick Holmes, resigned their positions although the mayor is still listed as the Chairman of the board on the Trinity website. So they certainly suspected that something was in the works.

I hadn't expected Fontana to talk about the situation. The lawyer who is handling his criminal charges with respect to fraud, forgery and violating the public trust had coached him to maintain his silence and he did. I thought he would do likewise with respect to the CRA. But no, early yesterday afternoon, there he was in interviews with the Free Press and CTV. It was all captured on video.

Fontana denied there was any wrongdoing on his or the charity's part. This was about a difference of interpretation between Trinity and the CRA. “I sleep well at night,” he claimed. If so, he must be using some of those over-valued pharmaceuticals for which donors receive those generous tax receipts. He certainly didn't look as if he were sleeping well. He looked harried and defensive.

But he was adamant that all was on the up and up. They had rigorous rules. They didn't just hand out receipts holus-bolus. One had only to look at the audited statements on the website.

Which website he meant wasn't clear. A look at Trinity's website certainly didn't contain any audited statement although there was an indication that one would be available to a donor. The only statements I could find were on the CRA website. On them, Trinity reported that it had given donations ranging from $5,000 to $900,000 to ten organizations, the lowest to a Rotary Club outside Canada and the rest to nine organizations across the country, organizations already heavily sponsored by various levels of government. For each listing, the return stated the total amount of the gift and the portion that was a “gift-in-kind”. For each organization, the amount of the gift-in-kind was 0. By deduction, one would conclude that the total gift therefore would be actual cold hard cash.

But that turned out to be not the case, as Chip Martin learned when he called one of the “donees” of Trinity's largesse. According to the report filed with CRA, Trinity had given Western Area Youth Services (WAYS) $900,000. That information astounded executive director Brenda Hall. WAYS had only received some courseware, 200 licences for some software training. They hadn't even activated a quarter of them. They had been happy to receive them but certainly hadn't put a dollar value on them.

That courseware had been donated to a teen centre in Toronto last spring, too, when Trinity made a big splash about opening a Centre of Hope. There was no mention of the evaluated cost, just that six computers and 1,000 licences to access online courseware had been donated to a drop in centre for at risk youth. But if it was anything like the WAYS situation, that might have amounted to several million dollars. In what universe is an online tutorial on word processing worth millions of dollars?

WAYS also had not solicited the donation. It was offered to them by Kristy Taylor, executive director of a Trinity program, Show Kids You Care. Since that program had been providing some money to WAYS for snack programs for the past ten years ($4,300 in 2012), the gift had been accepted when Taylor introduced it last year. Nobody said anything about a value of $900,000.

The Show Kids You Care program has an interesting history. It was previously known as the Children’s Emergency Fund (CEF), a Toronto-based charity which lost its charitable status in May 2009 for lending its receipting privileges to tax shelter promoters, including pharmaceuticals. At that time, one of the people who headed the organization was none other than Kristy Taylor. She seems to have learned little from her previous run in with the CRA. In fact, when the stories about Trinity first appeared in the London Free Press, she wrote a very strong defence of the charity, pointing out that it had distributed access to courseware across the country, including 500 subscriptions for the Boys and Girls Club in London.

Fontana, too, is unrepentant. In the interviews, he insists that his work is philanthropic, that his charity has saved thousands of lives and fed thousands of children. He doesn't do it directly, he does it by accepting donations of cash or goods and donating them to other charities that do the work. That's how a foundation operates, he says.

But, wondered the CTV reporter, how does a charitable foundation nobody ever heard of operating out of a little office which costs less than $500 a month in rent issue 150 million dollars dollars of tax receipts?

Fontana didn't have much of an answer. “We don't sell the programs; we don't promote the programs that others do. We facilitate the issuance of tax receipts once we have done our due diligence.” Their statements are audited. They have third party evaluators.

And that's pretty much it.

But a communication from Simple Financial Management across the street from Trinity Global on York St. Provides some clarification:

“Tired of paying too much in taxes?” it asks. “Simple Foundation Management is very pleased to announce that GLGI has partnered with Trinity Global Support Foundation, with their office based out of London, ON, with Hon. Joseph F. Fontana P.C., Chairman of the Board!!"

It goes on to invite the recipient and a guest to dinner at a nearby upscale restaurant and learn how to “eliminate debt, save taxes, protect your estate, and retire in comfort."

“During our dinner presentation, we will be featuring strategies on how you can save on 2011 income taxes!!!” it gloats.

It's the same business that ran the Kijiji ad suggesting that for a $500 donation to Trinity Global could net you a $27,000 tax write-off.

It's real Simple.