An estate received $475,000 from the RRSP of the deceased and paid a legacy bequeathed by the deceased to a charitable foundation of 70% of the estate. As this gift was deemed under the Quebec Taxation Act equivalent of the pre-2016 version of s. 118(5) to have been made by the deceased, the estate claimed a charitable credit in the terminal return of the deceased (and, pursuant to the equivalent of s. 118.1(4), in the preceding year). In preparing its own return, the estate included the RRSP receipt in income (as it was required to do) but also deducted the payment to the foundation under the Quebec equivalent of s. 104(6)(b).
In denying this deduction, Vézina JCA stated (at paras. 14, 15 and 18, TaxInterpretations translation):
Here, the decision to donate the Sum received was that of the deceased, which takes precedence over, and excludes, the subsequent decision of the Estate to distribute it as income.
Respecting a similar but not identical situation, three authors are of the view that the double deduction is contrary to tax law [then citing a brief discussion by Poyser et al. of the situation where a trust which "has a qualified done as an income beneficiary…[and] property [is] transferred to the charity in the exercise of that discretion… ."]
Only a literal (and almost blinkered) interpretation of the TI would justify not applying the [Poyser] conclusion on the first case to the second, so as to permit "double dipping."
After quoting Imperial Oil, [2006] 2 S.C.R. 447, 2006 SCC 46, at para. 25 as to interpreting "harmoniously with the scheme of the Act," he then stated (para. 20):
This contradicts ["heurtre"] using a fact (fictitious at that) to obtain an advantage and then through sleight of hand ["par la suite de l'occulter complètement"] obtaining a second.
Appeal dismissed.
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