Glooscap Heritage Society in battle with Canadian Revenue Agency over unpaid HST

Society's bank account frozen, assets in jeopardy of being seized

Harry Sullivan
Published on August 18, 2014
The bank account belonging to the Glooscap Heritage Society in Millbrook, which houses the Mi'maw Museum and the Central Nova Tourist Association, has been frozen by the Canada Revenue Agency over $240,000 in HST the agency says it is owed.

MILLBROOK - The future of the Glooscap Heritage Centre in Millbrook is in question after the society's bank account was recently frozen by the Canadian Revenue Service (CRA).

Lloyd Johnson, society chairman and the only surviving board member, said he has been informed by the CRA that the centre, which also operates the Mi'kmaw Museum, owes $240,000 in outstanding HST fees.

"That brings our situation to a halt," he said, of not being able to access society funds to pay operating costs and museum/gift shop staff. Johnson said the frozen account contains approximately $40,000.

The Central Nova Tourist Association is also housed at the site but because the society is a tenant in the building, which is owned by the Millbrook First Nations band, the tourism operations are not affected by the CRA account freeze.

"We were going along really well and things were going smoothly until the account was frozen," Johnson said, adding that he hopes to appeal the CRA decision, although so far those efforts have been futile.

Johnson said he was planning to meet with the society's tax lawyer on Tuesday in an effort to find a resolution to the impasse with the CRA.

For the moment, he said, the centre is being operated through funding it generates itself through shows, bus tours and sales from the gift shop.

But with annual operating costs set at approximately $230,000, the frozen funds are necessary for the centre's continued survival beyond December.

But failing a reversal of the CRA's demand for the $240,000, "which we don't think we owe," he said, is if a long-term payment schedule can be established.

The whole issue revolves around a previous agreement the centre once had with a tax shelter company known as Global Learning Gifting Initiative (GLGI).

Johnson said he (along with the late former Chief Lawrence Paul), has been involved in trying to establish a Mi'maw Museum in Millbrook since 1978.

Since opening in 2006, however, the centre has not been able to obtain any operational funding from either the federal or provincial governments, a factor that Johnson said ultimately led to a partnership being formed with GLGI.

Under that agreement, GLGI arranged for donations from contributors to flow to it through the centre, in exchange, Johnson said, for some in-kind computer software and overhead expense assistance.

"They send them to us and then we forward them to Global," he said, of the donations that numbered in the multi-millions of dollars.

"We're given funds to cover the overhead of the museum, because you have to understand that up to now, we have never received operational funding either from the federal government or the provincial government," Johnson said.

The benefit for donors, however, is that they were given receipts valued much greater than the actual donations.

"It comes from the more affluent people of Canada," Johnson said, of the donations.

"People who are donating to these tax shelters are expecting a receipt, which is higher than the donation. And that's the nature of the beast." he said.

"This is happening coast to coast and it's happening everywhere. Global is just one of the many. I guess the best way I can say, you know, Global, is a shrewd company that preys on minorities for personal gain. And we were in the situation of trying to get funds for a museum. They came to us and said if you will sign on to an agreement we will assist you in meeting your needs and that is setting up a learning centre. And so that is what we did, for language and culture and so on."

The society initially ran into trouble with the revenue agency in 2012 when its charitable status was revoked after the CRA deemed that its operations were primarily benefitting Global.

According to information released by the CRA at that time, it said an audit had determined that over a two-year period starting on Jan. 1, 2008, the society received more than $24.8 million in cash and property. Of the $13.4 million in cash that was received, the agency says the society paid more than $3.75 million to the promoters of the tax shelter.

The audit also found that the society was directed to pay more than $8.76 million to another charity participating in the tax shelter, while the society retained $900,000 for its own activities.

The CRA further said that the society had issued $11.4 million in tax receipts that were grossly inflated.

Johnson said when the society's accounting firm looked at its financial books, the records were returned.

"And he said this is not illegal, but through Grant Thornton it's immoral, so we cannot do your audit."

The society's lawyer also suggested that the partnership with Global should cease after it had caught the attention of the CRA, Johnson said, at which point the entire six-member board, with the exception of he and Paul, opted to step down.

"And Lawrence said: ‘Are you going to bail too?' And I said, ‘no, I can't,'" Johnson said.

When the initial Global partnership ended, so did the society's main source of funding, he said, at which point Paul suggested writing to the previous donors.

"So he said if these people that donated are that kind hearted and are really concerned about us, let's send everyone a request for a donation. In a whole year we never received one donation," Johnson said.

"So Chief Lawerence Paul comes back and says we still have overhead and so on and Global wants to know if we'd be interested in doing it again.

"And so that's what we did and the donations flowed back in."

Johnson said not only is the society being asked to pay for HST money he does not believe it owes, but he believes the CRA is also undervaluing the worth of computer software that Global provided as an in-kind payment.

"They were flowing money through us and the donations were sent to us and we forwarded the money to them along with the HST. Somewhere along the way, I believe that they didn't pay the HST."

Johnson said the only salvation for the society at this point is if he steps down as chairman and an entire new board is established.

In the meantime, not only is the society at risk of having its assets seized by the CRA but Johnson's personal assets are also at risk.

On top of that, the Millbrook RCMP have begun an investigation into the society's affairs for what Johnson said he has heard is in reference to an alleged misappropriation of funds.

An RCMP spokesperson was not available for comment on Monday. A call to both Global for comment was not returned by deadline while a spokesperson for the CRA said it would provide a later statement.

"Why would I participate (in the Global scheme)?" Johnson said. "Because the system has denied us for eight years."

Twitter: @tdnharry