What to Know when Donating Art as Cultural Property in Canada

This post, originally published on the Canadian Chapter of the International Society of Appraisers website here, and written by Ken Forsyth, outlines the basic information about donating art as cultural property in Canada. The landscape has changed recently and this provides a very informative review of the current environment institutions, donors and appraisers need to consider when assessing charitable cultural property donations.

Note that the links have been updated to redirect viewers to recent sites!



In today’s collecting marketplace, many high net worth individuals (HNWIs) are building large and, in some cases, important art collections. They will often make donations from their collections to museums and other organizations, either as charitable gifts or under a certification as cultural property. The process for this certification is overseen by the CCPERB (Canadian Cultural Property and Export Review Board), and approved donations benefit from a 100% capital gains exemption and a tax credit for their full fair market value. Due to abuses by various tax shelter promoters, special provisions were included in the 2014 Tax Act to curb fraudulent schemes and the misuse of this generous gifting regime. For items acquired as part of a tax shelter arrangement, or acquired less than three years prior to the date of donation, the value of the property is deemed to be no greater than its cost to the donor.

CCPERB determines the fair market value of items gifted as cultural property on the basis of professional appraisals provided by qualified independent appraisers. For items with an aggregate value under $50,000, one appraisal is required, while two appraisals are required for items worth $50,000 or more.* Appraisals may be solicited directly by the donor or through the receiving institution, but in all cases must be at arm’s length and conform with the format for monetary appraisals issued by CCPERB. The Canada Revenue Agency’s guidelines also stipulate that appraisers should be accredited, independent and knowledgeable about the principles, theories, and methodologies of the applicable valuation discipline. They must also follow the current version of the Uniform Standards of Professional Appraisal Practice (USPAP).

Individuals interested in gifting works in their collection should work with professional advisors (financial planners, tax attorneys and art advisors) to take advantage of tax laws and future estate-planning options. They should work with museums that have an interest and mission related to the donated work, and are able to receive gifts of cultural property as a designated institution. Finally, they should work with qualified independent appraisers familiar with the legal and procedural requirements for various gifting regimes, allowing the donor to take full advantage of the charitable contribution and any tax deduction. Given all of the various scenarios, potential donor institutions, and tax implications, it is important for HNWI art collectors to employ professionals for proper advice, direction and valuations.

(* in cases where the appraisal has been prepared by a committee, only one appraisal is required)

Written by Ken Forsyth, ISA AM

Questions To Ask When Hiring an Appraiser

This information, originally posted on the International Society of Appraisers website here, outlines the most important questions a client can ask an appraiser before agreeing to work with them.

What qualifies you to appraise this object?
Appraising personal property is an unregulated profession which leaves the consumer with the burden of determining whether the appraiser they engage is qualified.  A qualified appraiser is knowledgeable about the object being appraised and trained in appraisal theory, the principals of valuation, ethics and law. It is advisable to request a copy of the appraiser’s credentials.

Do you belong to a professional appraisal society that tests its members and have you been tested?
The educational requirements of appraisal organizations vary and it is important to know whether the knowledge and abilities of the appraiser you are hiring have been scrutinized.

Does that organization have a written Code of Ethics and Professional Conduct?
A code of ethics and professional conduct will identify the standards of ethical behaviour subscribed to by the appraiser and should specify their commitment to accuracy, objectivity, competence and professional standards.

What precisely does your membership designation signify?
Appraisal organizations use terms like affiliate member, accredited member, senior accredited member and certified member.  How these terms are defined can differ from one group to another and it is important to understand the distinctions.

Are your credentials current?
Professional appraisal organizations require appraisers to maintain their qualifications through continuing education, work experience and testing. It is critical to verify that the appraiser you hire is professionally active, competent and current. This can be done by checking the organization’s website to see if the appraiser is listed.

How long have you been doing appraisal work?
The merits of experience are difficult to overemphasize.

Can you provide references?
While professional appraisers maintain the confidentiality of their clients, they should still be able to provide you with business and personal references.

How do you charge for your services?
Charging fees based on the value of the object or fees that are contingent on a predetermined result or the occurrence of a subsequent event are unethical. Professional appraisers will charge an hourly rate, a flat rate or a fee per object.

Will your report comply with the professional standards?
The Uniform Standards of Professional Appraisal Practice (USPAP) is a set of rules for appraisers but it is also intended for users of appraisals so that they can assess the report they commission. Professional appraisers will be committed to work to these standards.

What protocol do you employ in handling confidential information and what type of security do you have for appraisal records?
The purpose of the appraisal is to be set out by the client in consultation with the appraiser. In doing so, the client determines who is to have access to the appraisal and the information it contains. The format and mode of transmission of the final appraisal is also to be determined by the client in consultation with the appraiser.

Appraisers are required to ensure high standards of security in both the dissemination of their appraisal reports and the storage of records. In consideration of the variety of contemporary communication possible, and aware of the vulnerability of electronic communications, appraisers ensure the same high standards of security.

Happy Appraising!