Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: General questions on the sale of art and registered charities and non-profit organizations.
Position: See below.
Reasons: See below.
June 15, 2017
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your correspondence about tax implications as related to the sale of art and about registered charities and non-profit organizations (NPOs). The office of the Honourable Bill Morneau, Minister of Finance, sent me a copy of a letter from you about this issue as well. Thank you also for your understanding regarding the delay of this response.
The Canada Revenue Agency (CRA) can respond to questions on tax implications with respect to the sale of art only following a review of all the facts relating to each particular case. Based on the limited information you sent, the CRA cannot answer your question. However, I can give you the following general information.
Generally, prints, etchings, drawings, paintings, sculptures, or other similar works of visual art are considered listed personal property. When you sell listed personal property, you need to report any capital gains or losses on the disposition on your income tax and benefit return. For more information, please read the information under the heading “Listed personal property” in Chapter 2 of Guide T4037, Capital Gains 2016, available at cra.gc.ca/E/pub/tg/t4037.
If you are operating a business dealing with art work, you need to report on your return any business income or loss from the sale of art works. A business is an activity that you intend to carry on for profit, with evidence that supports your intention. For more information on this issue, please read Guide T4002, Business and Professional Income 2016, available at cra.gc.ca/E/pub/tg/t4002.
You mention that you want information on foundations (a type of designation for registered charities) and NPOs. While both work on a non-profit basis, they have different definitions under the Income Tax Act. You can find information on the difference between registered charities and NPOs, including their reporting rules, the application process, and their obligations under the Income Tax Act, at cra.gc.ca/charitiesandgiving, under the heading “Popular topics.”
I appreciate the opportunity to respond to your questions and trust the information I have provided is helpful.
Sincerely,
The Honourable Diane Lebouthillier
Claudia Sita (Charities)
Nancy Shea-Farrow (ITRD)
2017-069856
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