The most popular commodity in Toronto this Halloween weekend wasn’t a Labubu costume however coveted
World Collection tickets. That is the primary time the Jays have made it to the World Collection since 1993.
As I write this column, the most affordable seats within the Rogers Centre for Friday’s Sport Six, manner up within the 500 degree, in deep, deep proper discipline, had been happening on-line vendor StubHub for just below $3,000 a bit, with costs anticipated to climb as gametime approaches. The face worth on these tickets, nevertheless, is considerably much less, that means that fortunate ticketholders who secured tickets to the autumn basic can probably promote their tickets for a considerable revenue.
Which begs the query: How is the revenue on the sale of Jays tickets taxed? For me, this query shouldn’t be merely educational, however private as I’ve World Collection tickets. Let me clarify.
As a lifelong Blue Jays fan, I’ve fond reminiscences of attending video games as a teen at Toronto’s Exhibition Stadium, sitting within the $2 bleachers’ benches on a Sunday afternoon, the place our seats, which confronted the mistaken path, had been so far-off we might barely see the diamond.
In 1992, when the Jays first received the World Collection, I used to be a budding younger accountant, contemporary out of college and beginning my first job at a big worldwide accounting agency on
Neither I nor any of my associates might afford playoff tickets, so we gathered across the 20-inch color TV in my bachelor pad to look at the Jays win the World Collection. We did the identical factor in 1993.
Quick ahead to 2015, after I determined to make the leap and purchased Jays season tickets within the higher deck. It allowed me to take my children to the legendary 2015 Bautista bat flip recreation and attend the Jays’ playoff run once more in 2016. I’ve held on to my season tickets ever since, upgrading my seat places a number of occasions over the previous decade. So, when the Jays lastly made the World Collection this yr for the primary time in 32 years, the chance to attend a World Collection recreation in particular person, slightly than promote my tickets, was, as Mastercard put it, “Priceless.”
However, what if I did promote my tickets for a revenue, how would it not finally be taxed?
Readers might recall I first tackled this topic final yr within the context of
, so right here’s a fast refresher. For most individuals, apart from skilled ticket-resellers who make it their enterprise to purchase and promote tickets at a revenue, Jays tickets are more likely to be thought of capital property, that means that the revenue from a resale of tickets could be handled as a capital achieve. That’s, the proceeds obtained from the sale, much less the price of the tickets (the adjusted value base or ACB) could be a capital achieve. Capital good points are 50 per cent taxable, that means that even somebody within the high tax bracket of 53 per cent in Ontario would pay a most high fee of about 26 per cent capital good points tax on their Jays ticket income.
However there are some particular guidelines for the sale of what’s often called “personal-use property” (PUP). PUP refers to gadgets that you simply personal primarily on your or your loved ones’s private use or enjoyment, reminiscent of private and home goods together with furnishings, automobiles, boats, a cottage and different related belongings. One might make the case that Jays tickets are PUP since they’re for the purchaser’s private use.
Underneath the PUP guidelines, if the quantity you paid (your ACB) is lower than $1,000, it’s deemed to be $1,000 for tax functions. Equally, if the money you obtain whenever you promote PUP is lower than $1,000, your proceeds from the sale for tax functions are additionally handled as being $1,000. The sensible results of these guidelines is that if each the ACB and the money you obtain on your PUP are each below $1,000, you don’t must report any achieve or loss in your tax return. Observe that below the Earnings Tax Act, you can’t have a capital loss from the sale of most PUP.
In my case, the price of my World Collection tickets, as a season ticketholder, was $250 every or $500 for the pair. If I might resell them on StubHub for $5,500 whole (after charges), I’d web a $5,000 revenue. For tax functions, the ACB of my tickets could be deemed to be $1,000, and I’d notice a capital achieve for tax functions of $4,500. Whereas it could be tempting to say that every ticket is its personal PUP and thus ought to have its personal ACB of $1,000, particular guidelines apply the place the PUP you personal is taken into account to be a part of a set, and also you eliminate the set to at least one particular person. If these guidelines apply, the ACB of the 2 tickets collectively are deemed to be $1,000.
A bunch of things is handled as a set the place the gadgets would ordinarily be disposed of collectively, and are typically considered belonging collectively. Usually their worth as a set is larger than the overall worth of the person items. The set is deemed to be one single PUP, and the $1,000 minimal value and proceeds shall be shared by the entire properties within the set. This rule is in place to stop somebody from promoting components of a set in a collection of transactions to the identical purchaser, after which utilizing the $1,000 minimal value for every transaction to cut back the general achieve for tax functions.
Now, let’s say I had purchased my Jays tickets with no intention of ever going. In case your objective from day one was to revenue from the ticket resale, then your achieve is more likely to be thought of absolutely taxable self-employment enterprise revenue. Whereas it could be exhausting for the Canada Income Company to find out your authentic intent retroactively, the CRA might look to see how quickly you listed the tickets for resale after buy, the frequency with which you purchase and promote tickets and whether or not the revenue realized from such gross sales is a major a part of your annual revenue.
Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Non-public Wealth in Toronto.
Jamie.Golombek@cibc.com
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