GIFTING CULTURAL PROPERTY IN CANADA: TESTING A TAX EXPENDITURE

Abstract

The Canadian Income Tax Act provides a unique system of tax incentives to encourage the disposition of cultural property to public institutions by way of donation or sale. These tax incentives comprise a tax expenditure designed to indirectly support government policy objectives with respect to art and cultural property. This cultural property program is limited to gifts of particular property — “certified cultural property” — to “designated institutions.” The income tax incentives associated with disposition of cultural property are part of a larger statutory scheme under the Cultural Property Export and Import Act which controls the export out of and import into Canada of cultural property. At the centre of this statutory scheme is an administrative body, the Canadian Cultural Property Export Review Board, which plays a key role in fulfilling the objectives of the Cultural Property Export and Import Act and has a unique role in the administration of the income tax incentives pertaining to the disposition of cultural property; in particular in its responsibility for determining value for the purpose of issuing cultural property certificates under the Income Tax Act. Disputes over valuation of cultural property have been the focus of the debate amongst the stakeholders and in the Courts this is where this tax expenditure has been tested and recent decisions have determined its limits.