Here is an advisory recently posted on the site of the Canadian Cultural Property Export Review Board warning people to be cautious about any tax shelter involving the gift of cultural property in Canada. The Canadian Cultural Property Export Review Board has instituted a number of measures to minimize the possibility of inflated donations or valuations of cultural property including changes to the application form.
Here is a copy of the advisory:
“Advisory on Tax Shelter Gifting Arrangements
In light of recent media coverage on tax shelters, the Canadian Cultural Property Export Review Board suggests that designated institutions and public authorities, donors and monetary appraisers exercise caution when presented with proposals to participate in tax shelter gifting arrangements for cultural property.
Tax shelter gifting arrangements promote tax advantages for participants as a primary motivation for donating cultural property to Canadian institutions. Canada Revenue Agency has posted alerts online which the Review Board encourages stakeholders involved with cultural property to note.
For purposes of administering the Income Tax Act and the Cultural Property Export and Import Act, information may be exchanged between Canada Revenue Agency and the Review Board.
Starting immediately, all future applicants for certification to the Review Board will be asked to provide a tax shelter number if the cultural property is part of a tax shelter gifting arrangement.
For more information, please contact the Canada Revenue Agency”
Here is the application form for Certification of Cultural Property for Income Tax Purposes by the Canadian Cultural Property Export Review Board
Note these additions:
“Tax Shelter Gifting Arrangement
Check the appropriate box to indicate whether the disposition is a tax shelter gifting arrangement. If this is the case, provide the tax shelter identification number.”
“Purchase Price: If the property in question was purchased, the application must include the purchase price(s) and copies of sales transaction documents.”
Not only do you need to disclose purchase price but also sales transaction documents, no matter when it was purchased.
The cost of cultural property to a taxpayer will not necessarily be determinant of fair market value. However, the cost may be relevant to the Review Board when deliberating on market evidence for purposes of making determinations that reflect market conditions around the time of disposition. If the property in question was purchased, the application must include the purchase price(s) and copies of sales transaction documents. This information must be provided to the monetary appraiser(s) for inclusion and consideration in the appraisal assignment.”
“By signing the application for certification, the designated institution or public authority certifies:
1.that the information in the application and any accompanying documentation is true and correct
2.that the property cited in the application will not be permanently disposed of (deaccessioned) within 25 years of the date of certification, except to an institution or public authority that is, at the time of such disposition, designated for the same category of property by the Minister of Canadian Heritage under subsection 32(2) of the Cultural Property Export and Import Act.”
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.