Fair market value was price paid by taxpayers for art which they subsequently donated

Tax - Income Tax - Tax credits

Program was conceived, in which participants would invest minimum amount of $3,500 in art, get donation receipt for $10,000 and get 43 per cent return and taxpayers were participants in this program. Prior to 2000, program would buy art in group or unit of 11 prints, 10 which would go to charity of his or her choice, which was pre-arranged by program. After 2000, due to amendments in personal-use property provisions, art donations were no longer exempt from capital gains tax. Participants still purchased art by group but size of particular group shrank while price per group increased. Charitable donation receipts were then issued based on actual appraised fair market value of art, and participants would pay capital gain tax based on difference between price they paid in regards to art and value indicated on donation receipts. Minister disallowed amounts claimed by taxpayers as donation tax credit. Taxpayers appealed. Appeal dismissed. It was concluded that fair market value in this case was price paid by taxpayers for art, which they subsequently donated, and not appraised value as presented by taxpayers through evidence of appraisers. Appraisers evidence, that was given on their appraisals done many years ago, was not particularly impressive, because they failed to live up to standards and qualification of appraisers’ association. It appeared from evidence that appraisers did not refer to prior sales of property, there was no reference to providence, there was no reference to price paid by donors and no consideration was given to impact of flooded market place.

Kaul v. The Queen (2019), 2019 CarswellNat 137, 2019 TCC 17, Eugene P. Rossiter C.J. (T.C.C. [General Procedure]).

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