Tax Appeal Was Not Bountiful for Mormon Sect Leader

Bountiful is literally not on the map. It is the name that the Mormon fundamentalists call the community based at Lister, just a kilometer north of the U.S. border and seven kilometers from Creston.

Winston Blackmore, the leader of a Mormon sect in the town of Bountiful, British Columbia, was at the losing end of a Tax Court of Canada decision on August 28 in Vancouver. The Tax Court of Canada considered a section of the Income Tax Act (the Act) for the first time ever in this decision in Winston Blackmore v. The Queen (2013) TCC 264.

Appealing his assessments made by the Minister of National Revenue for the years 2000-2006, Blackmore argued that the additional income in dispute for those years, some $1.8 million, should be exempt income on the basis that section 143 of the Act ought to apply.

Section 143 is located in Division F of Part I of the Act, which is titled “Special Rules Applicable in Certain Circumstances”. It affords separate tax treatment to those communal religious organizations that can bring their community within the statutory definition of “congregation” contained in subsection 143(4). However, four specific tests must be met; unfortunately Bountiful did not meet them. 

However, if the court had found that section 143 applied in these appeals, the Blackmore’s tax liabilities would have effectively been shifted to the members of Bountiful through the complex nature of the deemed trust provisions that would inure as a result. “It becomes a question of 'who is in and who is out' as a member of the community in respect to each taxation year in order to ascertain the group to which such tax treatment might apply,” ruled the Judge.

Further the Judge also imposed penalties. He concluded “that the Appellant was grossly negligent and therefore responsible for the imposition of the assessed penalties. Being unsuccessful in the issues in these appeals, the Appellant offered little explanation in respect to why he made such massive misstatements in his income reporting in tax returns for successive years.”

This was not your typical tax case, nor was it a short disposition; the trial consisted of numerous testimonies from a broad range of witnesses and the reasons are 335 paragraphs long. But it’s worth the read: http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/31278/index.do

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.