Taxpayers who donated to the Banyan Tree Foundation Gift Program between 2003 and 2007 have had their class action certified; in Ontario, for a class action lawsuit to proceed, the class must be certified by the Ontario Superior Court of Justice. The taxpayers are suing Banyan Tree Foundation Gift Program, three associated corporations, and its lawyers who provided a legal opinion that was used in its marketing.
The Banyan Tree Foundation Gift Program was one of a number of organizations that issued charitable receipts for amounts in excess of the contributions made by taxpayers. Initially, these organizations are registered as charities and are marketed as such. However, after an audit by CRA, their charitable registration is revoked and the organizations instead register as a tax shelter.
While the specific facts in this case are unique, there are other organizations that were once registered charities that are now registered as tax shelters. The taxpayers who donated to these organizations are now finding that CRA is denying their charitable deductions. If the taxpayers lose at the Tax Court of Canada or Federal Court of Appeal, it is likely that similar class action lawsuits, against the organization, its promoters, and their lawyers, will be filed.