INCOME TAX |
Gifts |
Canada v. Malette
A-435-03
2004 FCA 187, Noël J.A.
18/5/04
11 pp.
Appeal from Tax Court of Canada's decision ([2004] 1 C.T.C. 2125) decision that in determining fair market value (FMV) of donation to public gallery, discount to take into account number of works donated (so-called blockage, bulk, volume or market absorption discount) could not be applied-- Taxpayer donating 981 works of art by Canadian artist, Harold Feist, to Algoma Art Gallery--Canadian Cultural Property Export Review Board determining FMV for purposes of fixing amount of charitable donation under Income Act Act, s. 118.1 --First determining provisional FMV and then applying volume or market absorption discount based on number of works, sales history of Feist's works--In reaching his conclusion, Tax Court Judge relied on fact legislation (Income Tax Act, Cultural Property Export and Import Act) refers to gift of "object" in singular and on Whent v. Canada, [1996] 3 C.T.C. 2542 (T.C.C.), which he read as holding blockage discounts could not be applied in determining FMV of cultural property--Fact blockage discount would not apply to donation of Renoir paintings not establishing such discount not appropriate in other circumstances--Tax Court Judge apparently overlooked respondent's concession that if blockage discount can be applied as matter of law, this was appropriate situation in which to apply such discount-- Application of such discount function of supply and demand --Need to value each object individually, as respondent contends, not precluding application of blockage discount-- When circumstances such that blockage discount must be applied, FMV of individual works cannot be arrived at without discount being applied--Nothing turning on constant use of "object" in singular in relevant legislation-- Interpretation Act, s. 33(2) provides "words in the singular include the plural"--Furthermore, FMV of each gifted object cannot be arrived at without application of blockage discount --Scheme of Income Tax Act not authorizing departure from accepted valuation principles and methodology--When Parliament wishes to depart from accepted meaning of FMV it does so in express terms (see ss. 10(4), 69(6), 69(7))-- Donations of cultural objects encouraged by means of credit against taxes computed by reference to FMV and by related capital gains exemption-- But nothing supporting contention Parliament intended to further enhance these incentives by attributing to gifted objects value beyond that determined in accordance with accepted valuation principles and methodology--Finally, decision in Whent not supporting view blockage discounts cannot be applied as matter of statutory construction--Appeal allowed--Interpretation Act, R.S.C., 1985, c, I-21, s. 33(2)--Cultural Property Export and Import Act, R.S.C., 1985, c. C-51, ss. 32 (as am. by S.C. 1991, c. 49, s. 218; 1995, c. 38, s. 1), 33.1 (as enacted idem, s. 2)--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 10(4), 69(6),(7), 118.1 (as am. by S.C. 1994, c. 7, Sch. II, s. 88).