Listed Personal Property Tax Rules

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PUP of a taxpayer is broadly defined to include property owned by the taxpayer and used primarily for the personal use and enjoyment of the taxpayer.

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

  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

    $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.