When you invest in artwork you must have knowledge, time and patience just as you do when you invest in real estate or the stock market; however, in addition to diversifying your wealth, buying artwork is a pleasurable experience. But above and beyond the profitability aspect, investing in a work of art depends on your preference for a painting or a particular artist, on your knowledge of the artist and his works and, obviously, on his reputation.

The Quebec and Canadian governments have recognized the importance of encouraging the Canadian art market and its creators and they have implemented tax incentives intended to promote the purchase of Canadian artwork and encourage donations to museums and public institutions. The principal measures adopted by the governments to assist the cultural industry and, more specifically visual arts, are summarized below.

Encouraging purchases of Canadian artwork 

For a company, buying artwork for its offices represents an investment of the heart that humanizes the workplace and infuses creative spirit. Whether it's moving or daring--in form or content--it can inspire us and, in some way, support business owners who spend long hours at the office. Art in the workplace also creates a professional, quality environment that benefits everyone who works there while enhancing the company's image with clients and partners. By purchasing the work of local artists or young emerging artists, business owners are taking significant actions as good corporate citizens to support art and creativity.

Buying artwork, paintings, etchings, sculptures, drawings, photographs, etc. is considered as an amortization expense for corporations or individuals who operate a business. It qualifies as a tax deduction provided that certain criteria are met. The artwork must have been created by a Canadian artist and must be related to the business’s commercial activities, for example, it must be exhibited in a place of business where it will be seen by clients. If the

purchase meets these criteria, the buyer is entitled to a declining deduction of 33% of the cost of purchasing the artwork (class 8.1) at the provincial level and of 20% (class 8) at the federal level. Some works of art are, however, excluded and do not qualify for a tax credit, more specifically works having a value of less than $200 or created

prior to the 1900s – created over 100 years ago. Moreover, if the buyer is a GST and QST registrant, he can recover the

taxes paid at the time of purchasing the artwork by claiming input tax credits.

Conclusion

Investing in artwork can offer attractive tax deductions, not to mention that you and your clients will have the pleasure of seeing the artwork exhibited in your place of business. Lastly, if you choose to invest in the works of Canadian artists, you will gain substantial benefits when you sell the artwork.