Capital Cost Allowance on Art: What the Rules Say

A business that holds art often asks whether the art can be depreciated for tax. This note sets out the rules as we read them, and the records we can keep for each work. It is not tax advice. Your accountant decides.

What the Rules Say

A business can generally claim capital cost allowance (tax depreciation) on art acquired to earn business income.

Prints, drawings, paintings, sculptures and similar works costing $200 or more (and hand-woven tapestries, carpets and appliqués costing $215 or more per square metre) can be depreciated only if their creator was a Canadian citizen or permanent resident at the time the work was created (Income Tax Regulations, sections 1102(1)(e) and 1104(10)(a)).

On our reading, such art falls in Class 8, the class for tangible capital property not included in another class: 20% a year.

Quebec

For Quebec tax, Class 8.1 gives 33 1/3% a year for drawings, prints, engravings, sculptures, paintings and similar works acquired after 21 April 2005 whose creator was a Canadian citizen or permanent resident when the work was created; it does not include tapestries, carpets or appliqués.

When the Work Is Sold

Some or all of the deduction may be added back to income (recaptured) when the work is sold, depending on the proceeds and the balance of the class.

The Records We Can Keep

For each work in the collection record we keep, we can record what your accountant may need: the creator, the creation date, the cost, and the acquisition and installation dates. Your accountant decides whether these records are sufficient, and whether and how to claim.

Not Tax Advice

This note is not tax advice. The wording above is our own, not a quotation of the law. Title does not calculate tax, classify works or advise on claims.

To talk about keeping these records for your collection, write to [email protected].