Canadian tax incentive for buying original artworks

Do you know collecting original artwork offers aesthetic and cultural and financial benefits:

Space Enhancement:

Art improves environments, potentially increasing productivity and wellbeing.

Expression:

Your collection reflects your personal values and your organizational culture.

Investment Value:

Original artwork may often appreciate over time.

Cultural Value:

Your purchase directly sustains artists and the cultural landscape of Canada. 

Tax Benefits:

The Canadian government recognizes the value of art collecting:

• Business Art Deductions: Tax deductions may apply for business-related art purchases which is called Capital Cost Allowance (CCA): businesses can write off the entire cost of qualifying artwork. To qualify for tax deductions, artwork must meet these requirements:

1. Created by a Canadian citizen or permanent resident
2. An original work of art (painting, sculpture, photograph, etc.)
3. Valued at a minimum of $200

• Tax-Advantaged Donations:  Donations to museums and institutions can generate substantial tax credits

• Cultural Property Credits: Artwork by Canadian artists may qualify as Canadian Cultural Property

• Capital Gains Exemptions: Capital gains exemptions may apply to certain qualifying works

For complete information on tax benefits, visit the Canada Revenue Agency  and Canadian Cultural Property Export Review Board and Canada Revenue Agency’s guidelines on gifts of cultural property  and Government of Canada’s guide to cultural property.

Here is an example: If a painting is $10,000, the amount that can be claimed each tax year is: Year 1 – 20% of $10,000 can be claimed as a deduction = $2000 Year 2 – 20% of $8000 (the remaining value from year 1) =$1600 etc.

Consulting with a tax professional about your specific situation is highly recommended.