Definitions
"Listed Personal Property"
- "Listed personal property" (LPP) is a subset of "personal‐use property" (PUP)
- LPP of a taxpayer is the taxpayer's PUP that is all or any portion of, or any interest in or right to any
- Print, etching, drawing, painting, sculpture, or other similar work of art
- Jewellery
- Rare folio, rare manuscript, or rare book
- Stamp
- Coin
"Personal‐Use Property"
- PUP of a taxpayer is broadly defined to include property owned
by the taxpayer and used primarily for the personal use and
enjoyment of one or more of:
- the taxpayer
- a person related to the taxpayer
- where the taxpayer is a trust, a beneficiary under the trust or any person related to the beneficiary
- Also includes debts receivable from the sale of PUP and options to acquire property that would be PUP
Taxation of Personal‐Use Property
Capital Gains and Losses
- Capital gains arising from dispositions of PUP are generally taxable in accordance with normal rules
- Capital losses from dispositions of PUP (other than LPP) are deemed nil
- Policy is that capital losses on PUP represent "depreciation" from personal use
- On the other hand, a capital gain from PUP is a true increase in wealth that should be taxed
$1,000 Rule
- Special rule designed to exempt small transactions in PUP from taxation
- Where PUP disposed of, ACB and POD are each deemed to be the
greater of:
- $1,000; and
- Actual amounts
- Effect is to exempt transactions under $1,000 from tax
- Also creates "tax‐free zone" of $1,000
$1,000 Rule – Example 1
- Mr. A owns PUP with ACB = $500
- Mr. A sells PUP for POD = $700
- Capital gain in accordance with normal rules = $200 ($700 ‐ $500)
- But under $1,000 Rule, ACB and POD are deemed to be greater of $1,000 and actual amounts, so Mr. A's capital gain is nil ($1,000 ‐ $1,000 = $Nil)
$1,000 Rule – Example 2
- Ms. B owns PUP with ACB = $400
- Ms. B sells PUP for POD = $1,400
- Capital gain in accordance with normal rules = $1,000 ($1,400 ‐ $400)
- But under $1,000 Rule, ACB and POD are deemed to be greater of $1,000 and actual amounts, so Ms. B's capital gain is $400 ($1,400 ‐ $1,000)
Listed Personal Property Losses
- Exception to the rule prohibiting capital losses on PUP
- Capital losses on LPP are not deemed nil
- Can only be utilized against capital gains on LPP
- Policy is that LPP is more like an investment than other PUP, so it is appropriate to allow some recognition of losses
- In computing income, include taxpayer's taxable net gain from dispositions of LPP
- Taxable net gain from LPP = gains for the year from LPP less losses for the year from LPP
- LPP losses can also be carried back 3 years and forward 7 years, but only against LPP gains
- Note: $1,000 rule applies to LPP and can reduce or eliminate a loss from LPP before it can be applied against LPP gains for the year
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
