"The “essence” of the program ... was that “little cash was given to a few charities and the [art gallery charity] was required to acquire art from the creators of the Program with the Donations allocated to it”. (Para. 9.)
Most surprising about this scheme is that so many people took part in it, when the return (18% on your money) was relatively low compared to the riskiness of the tax scam.
The TCC judge relied on the FCA's decision Maréchaux v. Canada, 2010 FCA 28, saying that Ms. Kossow never made a gift entitled to a donation tax credit because she got something substantial in exchange: the 25-year interest-free loan that expanded her gift to 5 times her cash outlay (with no charity ever getting any of that fake loan money). (Para. 18.) The FCA agreed that Marechaux applied to this case and that was the end of the appeal.
See Kossow v. Canada, (2013 FCA Near) (The SCC refused leave to appeal: File 35756.)