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Investing in Canadian Art – A Tax Perspective
Investing in Canadian Art – A Tax Deduction
Having art in our space just makes it better. Art adds personality, evokes emotions and makes a blank wall beautiful.
The Canadian government has implemented alluring tax incentives to promote the purchase of original Canadian works of art.
The Canada Revenue Agency (CRA) has established that taxpayers who purchase or rent Canadian artworks, either for their personal office or for the common areas of their places of business (such as the lobby or hallway) can claim a tax deduction for the cost of purchasing or renting the work.
If you own a business, there are some great tax benefits to collecting Canadian Art.
Buying artwork is considered as an capital expense for corporations or individuals who operate a business. An individual or organization may qualify for an annual tax deduction provided certain criteria are met.
Under the Tax Act, this purchase must meet the following criteria:
1. The artwork must have been created by a Canadian artist and must be related to the business’s commercial activities and exhibited in a place of business where it will be seen by clients.
2. A print, etching, drawing, painting, sculpture, or other similar work of art that is greater than $200 in value
3. Made by a Canadian artist at the time the art was created, whether a Canadian citizen or a permanent resident
4. If the buyer is a GST and QST registrant, he can recover the taxes paid at the time of purchasing the artwork by claiming input tax credits.
If the purchase meets these criteria, the buyer is entitled to a declining deduction of 33% of the cost of purchasing the artwork (class 8.1) at the provincial level and of 20% (class 8) at the federal level.
Some works of art are, however, excluded and do not qualify for a tax credit, more specifically works having a value of less than $200 or created prior to the 1900s – created over 100 years ago.
CONTACT AN ACCOUNTANT
Of course, contacting your accountant for more specifics on this matter is highly recommended.
So, supporting Canadian art besides feeling good, supporting the Canadian economy and making your business stand out, is good for the bottom line. What’s holding you back?
Email us with any questions you may have?