2017-0698561M4 Listed personal property and registered charities

Principal Issues: General questions on the sale of art and registered charities and non-profit organizations.

Position: See below.

Reasons: See below.

Author: Shea-Farrow, Nancy
Section: 40, 149

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

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© Her Majesty the Queen in Right of Canada, 2017

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté la Reine du Chef du Canada, 2017