LinTholl
Canadian Art Can Cut Your Taxes
Did you know that the Canada Revenue Agency (CRA) allows businesses to claim deductions on qualifying art rentals and purchases as capital costs? Investing in Canadian art not only enriches your corporate space but can also provide tax benefits, making it a smart financial decision for your company.
To qualify for a deduction, the artwork must meet these criteria:
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Valued at $200 or more, verifiable by invoice / receipt.
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An original piece of art; (Sure is!)
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Produced by a Canadian artist (living or deceased), or an artist who was Canadian at the time of creating the artwork. (You bet. Canadian through and through)
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Have been created less than 100 years ago; (Ha. No worries on that one!)
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Is not being held for resale or otherwise counted as inventory, and; (Direct sale from me)
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Must be displayed in a business or office setting, not purchased for personal use. (This one is up to you!)
Pieces of art, as described above, are classified as a Class 8 asset under the Canada Revenue Agency’s Capital Cost Allowance (CCA) guidelines, alongside items such as furniture and telephone equipment. This means that you can deduct the cost of your art purchase. For companies looking to offset taxes on profits at year-end, this strategy offers a valuable opportunity to reduce taxable income while enhancing your corporate environment.
For buyers with a GST or HST number, there’s an added benefit: you can recover the taxes paid on qualifying art purchases by claiming input tax credits. This allows you to recoup a portion of the tax costs, further enhancing the financial advantages of investing in art for your business.
I strongly recommend consulting a Chartered Professional Accountant (CPA) to understand the specifics before purchasing Canadian art for investing and to ensure you maximize your deductions.There are many more complexities to the deductions than I can cover here, so make sure to ask your accountant for specific advice if you are considering an art purchase for business purposes.
Note: The above information should not be regarded as tax advice. Always consult with a CPA about your specific circumstances.