moved that Bill C-93, an act to amend the Cultural Property Export and Import Act, the Income Tax Act and the Tax Court of Canada Act, be read the second time and referred to a committee.
Mr. Speaker, I am pleased to introduce, at second reading, a bill which seeks to allow appeals of decisions made by the Canadian Cultural Property Export Review Board.
The Cultural Property Export and Import Act was proclaimed in 1977 to ensure the conservation, in Canada, of important objects which are part of our movable cultural heritage. To that end, the act provides export controls, as well as tax incentives to encourage the donation of cultural objects to designated museums, archives and libraries in Canada.
Moreover, the act established the Canadian Cultural Property Export Review Board, whose mandate includes three major responsibilities: to hear appeals filed when an application for an export permit is rejected; to determine whether cultural property given or sold to a designated Canadian institution is of outstanding significance or of national importance; and, to determine the fair market value of certified cultural property.
The fair market value of certified cultural property can be eligible for a tax credit, just like a charitable gift. However, unlike in the case of a charitable gift, the eligible amount is not limited to 20 per cent of the net income. Moreover, any capital gain realized following such a gift is exempt from the capital gain tax.
From 1977 to 1991, the board only had a mandate to hear appeals related to the rejection of an application for an export permit, and to determine whether cultural property was of outstanding significance or of national importance.
In 1991 responsibility for determining fair market value of cultural property was transferred from Revenue Canada Taxation to the Board. At that time, there was no provision for appealing Board decisions in this connection. Thus the right of appeal provided by the Income Tax Act was inadvertently lost.
The number of gifts of cultural property has increased constantly since 1991 and the Board received a record number of requests for the 1994-1995 fiscal year.
In performing this new function, the Board carefully examines the fair market value proposed for a gift. In the majority of cases, it accepts as the fair market value the amount indicated in evaluations made in good faith by at least two independent assessors and obtained by the recipient institution.
If the Board requires additional information, the recipient institution may seek another opinion, or in certain cases the Board itself may have an assessment done by Canadian or foreign experts. After it receives this information and approves the proposed amount, the Board issues a tax certificate for the cultural property in question for the amount established.
In approximately 10 per cent of cases between 1991 and 1994, or some 150 cases annually, the Board determined that the monetary value of the gift was lower than the evaluations accompanying the application.
In conformity with the current provisions of the Act, if additional information becomes available, the applicant may request that the Board redetermine the fair market value of the gift. If the Board does not change its initial assessment, the applicant will then have no further avenue of appeal.
Donors in custodial institutions have complained about the lack of an appeal process. In the interest of natural justice, they have suggested that donations to institutions might decline if it is not possible to appeal review board decisions.
In 1993 the former department of communications hired KPMG Peat Marwick Thorne to undertake an independent assessment of the needs for an appeal of determinations of the review board. During this study using professionals, art dealers, donors, collectors of cultural property and members of the review board were interviewed about the need for an appeal. Agreement was unanimous: an appeal process should be established.
As a result in June 1993 it was announced that the Cultural Property Export and Import Act would be amended to allow donors of cultural property to appeal determinations of the review board to the Tax Court of Canada, a right that had been in place before 1990.
At the same time it was announced that amendments would also be included to extend the circumstances under which donors would be able to request determinations by the review board. Donors, institutions and some professional associations such as the Canadian Museums Association have advised me that they continue to believe it is essential that there be an appeal of the review board's determinations.
It is expected that the expanded circumstances whereby the review board can redetermine fair market value will mean that the donor and the review board will be able to come to an agreement about value. It is expected that this will significantly limit the number of appeals to the Tax Court of Canada.
The question of who is eligible to request a redetermination of fair market value has been the subject of some discussion with the Department of Finance. The legislation states that either the donor or the applicant can request a redetermination while only the donor can appeal to the tax court.
These proposed amendments will benefit donors, museums, archives, libraries and art galleries throughout Canada. While donors do receive a tax credit, their donations enrich public collections for the enjoyment and education of all Canadians. This program is open to all. Many important objects of Canadiana have been donated by individuals from every sector of society, gems of
history, heritage and culture that may have been in their families for generations.
In conclusion, the tax incentives for donations of cultural property continue to enrich public collections. They ensure that objects which might otherwise be lost to Canada are retained here for the benefit of all Canadians.
I also believe that the establishment of an appeal process is sufficiently important that we will be reallocating resources within the department of heritage to ensure that it will function effectively. The establishment of an appeal of determinations by the Canadian cultural property export review board is in fact only the reinstatement of the right of appeal that was lost in 1990.
This legislation will help to ensure that Canadians do not lose the evidence of their heritage. I would ask for support of this initiative which will strengthen legislation that has been instrumental in preserving our national heritage.