Section 46

Subsection 46(3) - Properties ordinarily disposed of as a set

See Also

Plamondon v. The Queen, 2011 DTC 1137 [at 746], 2011 TCC 47 (Informal Procedure)

Hogan J. found at para. 22 that, even if a collection of insects were the taxpayers' personal use property, they did not form an "unbreakable set," and therefore s. 46(3) did not apply to consolidate them into a single personal-use property. He found instead that each insect was a separate property. The taxpayers therefore had a deemed adjusted cost base of $1000 per insect as per s. 46(1)(a), and did not realize a capital gain when they donated the collection to to Laval University.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Personal-Use Property each donated dried insect was separate property 180

Administrative Policy

12 June 2013 STEP Roundtable, 2013-0481001C6 - 2013 STEP Canada Roundtable, Question 8

The CRA considers that a set for these purposes is a number of properties belonging together and relating to each other. For example, in the case of the hobby of philately, in the past, the CRA considered that a set is a number of stamps which were produced and issued by one country simultaneously or over a short period of time. The fact that the value of a number of properties, if sold together, exceeds the aggregate of their values, if sold individually, may indicate the existence of a set. However, this is not in itself a decisive factor.

CRA indicated that paintings might be a set if they "were painted as a set and would ordinarily be disposed of as a set," such as a set of portraits of former premiers or of members of a family tree, but that being painted by the same artist does not itself indicate that there is a set.

10 November 2004 External T.I. 2004-0077831E5 F - Biens à usage personnel

selling off personal collection one-by-one on auction site did not engage s. 46(3)

The taxpayer (Mr. X) accumulated over 35 years a collection of objects from an era out of a passion for objects from that era. Over the years, he exchanged and sold certain objects with the aim of obtaining new items for his collection. He then made a decision to dispose of the items in his collection, and sold the items one by one to different buyers on an auction website.

After indicating that the objects likely were acquired as capital property, and that they likely were personal-use property given that “where a taxpayer holds property because of the taxpayer’s passion for a particular epoch, the taxpayer holds it for personal enjoyment,” CRA went on to state:

[W]e do not have enough information to determine whether some or all of the items in Mr. X's collection are property that would normally be disposed of as a set. As noted in paragraph 14 of Interpretation Bulletin IT-332R, a set is a number of properties belonging together and relating to each other. Furthermore, for subsection 46(3) to apply, it is necessary, inter alia, that where a number of personal-use properties which would ordinarily be disposed of in one disposition as a set are disposed of in more than one disposition, they be acquired by one person or a group of persons not dealing with each other at arm's length. In this situation, if the property was sold to different purchasers who dealt with each other at arm's length, subsection 46(3) would not apply.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Collectibles collection of items of personal interest accumulated over 35 years, with some trading, and then auctioned off, likely were capital property 253
Tax Topics - Income Tax Act - Section 45 - Subsection 45(1) - Paragraph 45(1)(a) - Subparagraph 45(1)(a)(i) offering personal collection on an auction site did not constitute a change of use 118