Transcript Vintage Photo Collections Are Valuable

VIA Mission Statement
VIA empowers
Canadians to save taxes
through philanthropy by
making landmark
contributions to
educational institutions
while promoting arts and
culture in Canada
Vintage Photo Collections
Are
Valuable
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Limited supply of vintage photos because of
digital cameras
Newspapers can’t afford to digitize large
historic collections: it requires money and
manpower
Universities want photos as a visual record
of history to study…they have resources to
digitize
News Photo groups sell the photos at a very
low price knowing that the photos will be
digitized and that they will retain the
commercial rights of the photographs without
the costs
This program brings together all parties and
allows the commercial value of the photos to
be unlocked
Everyone wins: taxpayer/university/original
owner
Historical Precedence
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1.3 Million was paid to purchase a
portion of the Sovfoto collection and
was held for 3 years by a famous
BC millionaire: In 2001, Canada's
Cultural Property Export Review
board was asked to judge the
valuation of the Sovfoto collection.
Its ruling, $15,391,589, entitled the
donor to related tax credits. This
collection was donated to MacLaren
University in Ontario.
http://urbantoronto.ca/showthread.p
hp?838-Globe-on-MacLarenGallery-in-Barrie
Several years later..
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The Black Star Photo collection: was
purchased for 12.5-15 Million also by the
famous BC millionaire and held for 3
years. In 2005, the Cultural Property
Export Review board ruled his Black Star
archive had a valuation of $100-million. The
Donor decided to donate the Black Star
archive to Ryerson. Black Star is a historical
black-and-white picture archive which
contains some 291,049 black and white
photographs that document world events
and personalities from the 20th century.
http://www.pdnonline.com/pdn/esearch/articl
e_display.jsp?vnu_content_id=1000883702#
VIA Simply Stated:
One Participant
Two Collections
Four years apart
How it Works: Current
Year
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A partial payment is made for DeLeon White
photos which will be held for 3 years to
obtain future significant tax benefits
These photos are used as collateral to get a
full recourse loan, along with a cash
payment, to acquire Moos Collection photos
The Moos photos are donated in the current
year of acquisition for a large tax benefit
The recipient organization issues receipt for
the eligible amount of gift (adjusted cost
base)
Net rates of return for BC range from 141%
in January to 53% in December
How it Works: Year 4
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after a smaller additional payment to
fully acquire the While collection,
about one-third of the White
Collection photos will be sold to pay
off the loan from year 1
The remaining two thirds will be
donated to a recipient organization
who will issue tax receipts after
CCPERB determines value of the
cultural property
Only CCPERB has right to determine
what is cultural property and what
the value is
CRA is not able to question
CCPEPRB decisions
Rate of return exceeds year 1
Full recourse loans have
specific requirements:
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Terms of 10 years
Annual interest paid (VIA:5 years
prepaid)
Interest rate of 1% or greater (VIA:
1.23%)
The loan is fully secured (VIA:
against White Collection : 2/3 of the
White collection is used as
collateral…1/3 will be sold to pay off
loan)
Photos are monitored annually to
ensure that their current FMV is
enough to cover loan obligations
So, the question is…..
Do You want to retrieve
tax you have paid or
currently owe?
There are 3 actions you
can take:
Action 1: Do the VIA Project
Pros:
 Significant tax relief and net return
 Multi year tax planning
 There are special tax incentives for Canadian
Cultural Property donations
 Proven historical precedence: A famous BC
millionaire successfully donated vintage
photographs in 2001 and 2005
 Program is currently donating from the same
photograph collection that the famous BC
millionaire donated in 2001
 CRA is not able to challenge Canadian Cultural
Property designations and valuations
Cons:
 no 100% certainty that CRA won’t find a creative
way to reassess that doesn’t involve cultural
property and valuations
Action 2: Don’t do the VIA Project
Pros:
 100% safe – no brown envelopes
from CRA
Cons:
 no tax relief
 CRA keeps your all money
 You can never get that money back
How much is not seeing a
brown envelope worth to you?
There is a 3rd Action:
Absolutely minimize any risk
by doing the program but not
spending the money. Invest
the refund received from
participating in the VIA
program into a safe place and
leave it for 3 years. Delay
spending your financial
windfall as an insurance
against CRA bully tactics.