The CPERB vs. Annie Leibovitz

Leah Sandals in Canadian Art.

Merryl Streep by Annie Leibovitz

Reports this week of the latest financial problem for American photographer Annie Leibovitz—who in 2009 nearly had to file for bankruptcy and in 2010 was sued by a company who says it was unpaid for helping to restructure her debt—have unexpectedly placed a spotlight on a little-known Canadian group called the Canadian Cultural Property Export Review Board.

Three times now, the members of the Canadian Cultural Property Review Board (or CPERB) have denied an application by the Art Gallery of Nova Scotia to certify a collection of more than 2,000 Annie Leibovitz photos as “cultural property…of outstanding significance or national importance.”

As the CBC explained in a fulsome investigative report, Leibovitz has only been paid half of the $4.75 million sale price of the prints, since the second half of the payment was only contractually due when the certification of “outstanding significance or national importance” came through.

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As a recent appointment notice for CPERB suggested, one of the key functions of CPERB is to control not only certifications of cultural property, but the outlay of tax incentives to donors of such property (like private collectors and art dealers)—incentives which are only available when CPERB makes a certification of “outstanding significance and national importance.”

As the appointment notice states, CPERB “certifies cultural property as being of outstanding significance and national importance. The certification of cultural property offers tax incentives to donors and vendors of cultural property. The certification process encourages the transfer of significant examples of Canada’s artistic, historic, and scientific heritage from private hands to public collections.”

This detail around tax incentives is especially important in the Annie Leibovitz case, as the Canada Revenue Agency has flagged the donor of the Leibovitz collection, Harold Mintz—himself a tax expert and partner at accounting firm Deloitte LLP—with attempting to inappropriately access a tax shelter in this donation arrangement.

CPERB also has another main function: “It reviews applications for export permits of objects refused by the Canada Border Services Agency. Export delays provide designated organizations with an opportunity to acquire culturally significant objects or collections that might otherwise be permanently lost to Canada.”

Also, in rare cases, CPERB “also determines what constitutes a fair cash offer to purchase an object, the export of which has been delayed when an exporter and an interested institution cannot agree on a fair purchase price.”

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Some of the reasons that CPERB, in consultation with the Canada Revenue Agency, gave as specific issues against the initial 2013 Leibovitz request mirror general guidelines that the board later announced in 2014 for all applicants.

In an advisory CPERB issued in June 2014 about tax-shelter gifting arrangements, the board stated that tax-shelter gifting arrangements involving cultural property “may be distinguished by one or more of the following characteristics”:

• large collections, often photographic, by non-Canadian creators (Annie Leibovitz is American)
• property acquired by the donor(s) shortly before the donation (Mintz acquired the property two days before donating)
• purchase price difficult to ascertain or subject to later adjustment (part of the issue involved has been adjustments to Leibovitz’s sale price)