I made an access to information request of the Canadian Cultural Property Export Review Board (CPERB) a few years back to ask about documents relating to the use of CPERB as part of abusive charity gifting tax schemes and also some very interesting investigative reporting by the Vancouver Sun reporter David Baines. I received part of it in 2013 and another piece recently. Still further is yet to come.
There is one interesting quote in one of the memos presumably relating to charities that are using the CPERB system as part of abusive charity gifting tax schemes. "Charitable institutions don't think clearly about this issue and about what they're doing when they issue a receipt in whatever value they want".
In the 2014 Federal Budget the Department of Finance removed cultural property that is part of a tax shelter gifting arrangement from the exception to the deemed fair market value rules. Here is an excerpt from the budget:
For the purpose of calculating a Charitable Donations Tax Credit (for individuals) or a Charitable Donations Deduction (for corporations), the value of a gift of property is deemed to be no greater than its cost to the donor if, generally, the donor acquired the property as part of a tax shelter gifting arrangement or held the property for a short period. Gifts of certified cultural property are exempt from this rule and also benefit from a capital gains exemption. As a result, Canadians are encouraged to donate culturally significant property to designated institutions and public authorities to help preserve Canada’s national heritage. Representations as to the fair market value of certified cultural property are reviewed by the Canadian Cultural Property Export Review Board. As part of its duties, the Board is responsible for certifying cultural property for income tax purposes, including determining its fair market value. The donation of certified cultural property could be a target for abuse by tax shelter promoters because of the combination of its favourable tax treatment, inherent uncertainties in appraising the value of art and artifacts, and the exemption from the rule that deems the value of a gift to be no greater than its cost to the donor in certain circumstances. Budget 2014 proposes to remove, for certified cultural property acquired as part of a tax shelter gifting arrangement, the exemption from the rule that deems the value of a gift to be no greater than its cost to the donor. Other donations of certified cultural property will not be affected by this measure. This measure will apply to donations made on or after Budget Day.
Here are the various PDFs from CPERB in response to the access to information request.
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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.