Annual report on the administration of the Cultural Property Export and Import Act: 2015-2016

Overview

Duties

Section 20 of the Cultural Property Export and Import Act (Act) stipulates that the duties of the Review Board are as follows:

1. pursuant to Section 29, to review applications for export permits that have been refused, when requested
2. pursuant to Section 30, with regard to objects for which the issuing of export permits has been delayed by the Review Board, to make determinations respecting fair cash offers to purchase cultural property, when requested
3. pursuant to Section 32, to certify cultural property for income-tax purposes by making determinations of outstanding significance and national importance and of fair market value.

The Review Board’s main decision-making responsibility is the certification of cultural property for the purposes of issuing Cultural Property Income Tax Certificates (Canada Revenue Agency form T871) to individual or corporate donors and vendors. Designated organizations across Canada have enriched their collections through tax incentives available to Canadians under the Income Tax Act^{Footnote 1}.

As the first line of defence in preventing the permanent export of cultural property that is of outstanding significance and national importance, a vigorous donations program also has the virtue of involving Canadian individuals and corporations in the important role of preserving the nation’s heritage.

The second line of defence in keeping cultural property in Canada is the export-control system. The export-control mechanisms established by the Act are instrumental in safeguarding significant cultural property that would otherwise be exported from Canada. The export-control system is administered primarily by the Department of Canadian Heritage in collaboration with the Canada Border Services Agency (CBSA). The Canadian Cultural Property Export Control List (Control List) describes the classes of cultural property that require an export permit. (See Appendix 1-1 for a summary of the eight groups on this list.)

The Review Board’s role is to consider whether an export-delay period should be established for cultural property that comes before it as a result of a refused export permit. Export-delay periods provide Canadian collecting organizations with the opportunity to purchase cultural property of outstanding significance and national importance for their collections, potentially with the assistance of a Movable Cultural Property grant. Subject to certain restrictions, if a permit applicant has not received a purchase offer before the export-delay period expires, an export permit will be issued upon request.

Membership

Members of the Review Board are normally appointed for three-year terms by the Governor in Council on the recommendation of the Minister of Canadian Heritage. Section 18 of the Act requires that the Review Board include no more than ten residents of Canada composed as follows:

• the chairperson and one other member chosen from the general public
• up to four members who are or have been officers, members, or employees of art galleries, museums, archives, libraries, or other collecting institutions in Canada
• up to four members who are or have been dealers in or collectors of art, antiques, or other cultural property that forms a part of the national heritage.

Three members, at least one of whom belongs to the institutional category and one who belongs to the dealer/collector category, constitute a quorum.

For a complete list of Review Board members in 2015–16, please refer to Appendix 1-2.

Meetings

The Review Board holds four meetings per year. In 2015–16, all meetings were held in Ottawa. For a complete schedule of Review Board meetings in 2015–16, please refer to Appendix 1-3.

Expert advice

Section 22 of the Act enables the Review Board to call upon any person with professional, technical, or other specialized knowledge to assist in an advisory capacity. The Review Board may also seek expert appraisals in making determinations of fair market value for income tax purposes or to determine fair cash offers relating to refused export permits

Secretariat to the Review Board

Since it was created in 1977 by the Cultural Property Export and Import Act, the Review Board has been supported by a secretariat that functions as its administrative arm, receiving and processing case files for review and determination by Board members, preparing and issuing decision letters, and working closely with Board members to develop guidelines and procedures.

On November 1, 2014, the Administrative Tribunals Support Service of Canada Act came into force. Under this legislation, the responsibility for providing secretariat services to the Review Board was transferred from the Department of Canadian Heritage to a newly established federal organization in the Department of Justice portfolio, the Administrative Tribunals Support Service of Canada (ATSSC).

The ATSSC is now responsible for providing the Review Board and ten other administrative tribunals with the support services and facilities they need to exercise their powers and perform their duties and functions in accordance with the rules that apply to their work.

This administrative change does not affect the mandate of Canadian Cultural Property Export Review Board. Case matters will continue to be filed, managed, and safeguarded in accordance with existing Canadian Cultural Property Export Review Board procedures.

The certification process

In order for cultural property to be considered for certification, a donor or vendor must either dispose of it to an organization designated by the Minister of Canadian Heritage or else reach a tentative disposition agreement with a designated organization. Designated organizations then apply to the Review Board for certification on behalf of donors and vendors.

Certification applicants are required to provide evidence and arguments that demonstrate to the satisfaction of the Review Board that the cultural property in question meets the criteria of outstanding significance and national importance.

Pursuant to Section 32 of the Act, in order to certify cultural property the Review Board must first determine:

1. whether that object is of outstanding significance by reason of its close association with Canadian history or national life, its aesthetic qualities, or its value in the study of the arts or sciences; and
2. whether the object is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage.

In addition to making determinations with respect to outstanding significance and national importance, the Review Board must also determine the fair market value of cultural property for income-tax purposes. Where the Review Board concludes that a given cultural property does not meet the criteria of outstanding significance and national importance, it will not determine fair market value or issue a tax certificate.

For an overview of certification applications considered in 2015–16, please refer to Appendix 1-4.

Redetermination requests

Where donors or vendors are not satisfied with determinations of fair market value, they may make a request for redetermination within 12 months of the day on which notice of the determination was given.

Where donors or vendors are not satisfied with a redetermination of fair market value made by the Review Board, they may file an appeal with the Tax Court of Canada within 90 days of the day on which the Cultural Property Income Tax Certificate was issued.

In 2015-16, four new appeals were filed with the Tax Court of Canada. One appeal filed in 2013-14 remained active.

Finally, where donors or vendors are not satisfied that the review process has been conducted fairly, they may file an application for judicial review with the Federal Court of Canada.

Review of refused export permits

The review process

The export-control system is administered by the Minister of Canadian Heritage in collaboration with the Canada Border Services Agency (CBSA). The Review Board’s role is to review applications for permanent export permits that have been refused.

The Canadian Cultural Property Export Control List describes the classes of cultural property that require an export permit. (See Appendix 1-1 for a summary of the eight groups on this list.) Export-permit applicants who receive a notice of refusal from a permit officer on the advice of an expert examiner may, within 30 days, appeal the expert examiner’s decision to the Review Board.

Using the same criteria applied by the expert examiner, the Review Board must determine, pursuant to subsection 29(3) of the Act, whether the object in question is included on the Control List and, pursuant to paragraphs 11(1) (a) and (b):

1. whether that object is of outstanding significance by reason of its close association with Canadian history or national life, its aesthetic qualities, or its value in the study of the arts or sciences; and
2. whether the object is of such a degree of national importance that its loss to Canada would significantly diminish the national heritage.

If the Review Board determines that the cultural property fails to meet these criteria, it will direct Canada Border Services Agency to issue the permit. If the Review Board determines that the property does meet these criteria, and if it further determines that a designated Canadian organization might come forward with an offer to purchase the property, it establishes a delay period of two to six months, during which time the permit may not be issued.

When advised of the Review Board’s decision, the Minister of Canadian Heritage makes the delay period known to designated organizations so that they may consider purchasing the property. Financial assistance is available from the Department of Canadian Heritage in the form of a Movable Cultural Property grant, which can facilitate the acquisition.

For a complete list of refused export permits that were reviewed by the Board in 2015-16, please refer to Appendix 1-5.

Determinations of fair cash offers to purchase

If an offer to purchase cultural property during a delay period is refused, the applicant or the organization making the offer may request that the Review Board determine what would constitute a fair cash offer to purchase the property. This request must be made in writing at least 30 days before the end of the delay period.

When the Review Board receives such a request, it determines the fair cash offer after considering relevant information and then advises the applicant and the organization of its decision. If no organization offers to purchase the property for an amount equal to or greater than that determined by the Review Board, the permit applicant may request the export permit, at which point the Review Board will direct the permit officer to issue the permit at the end of the delay period.

If an organization offers to purchase the property for an amount equal to or greater than that determined by the Review Board but the offer is rejected by the applicant, the export permit will not be issued. In such cases, an export permit may not be sought for a period of two years from the date that the notice of refusal was first issued by the permit officer. Once that period has elapsed, a new permit application must be submitted and the process begins again.

In 2015–16, there were no requests for determinations of fair cash offers.

Overview

The Movable Cultural Property Program (MCP) within the Department of Canadian Heritage is responsible for:

• assessing organizations for the purpose of designation
• assessing applications for Movable Cultural Property grants
• export control
• import control

Designation of organizations

Organizations such as museums, art galleries, libraries, archives, municipalities, and public authorities must be designated in order to be eligible to apply for the certification of cultural property or for a Movable Cultural Property grant. Designation is a ministerial responsibility and a means of ensuring that cultural property certified by the Review Board or acquired with the assistance of a Movable Cultural Property grant is housed in organizations that have the capacity to ensure its long-term preservation and to make it accessible to the public through research, exhibitions, publications, and the Internet.

Organizations may be designated as Category A or B. Under Category A, organizations are designated in relation to any cultural property that falls within their collecting mandate. Under Category B, organizations are designated only in relation to a specific cultural property or collection for which a preservation strategy has been provided.

For an overview of organizations designated in 2015–16, please refer to Appendix 2-3.

For a complete list of Category A organizations, please refer to the corresponding page of the Movable Cultural Property website.

Review of category A designated organizations

In September 2013, the Movable Cultural Property Program began a survey of all organizations designated as Category A by the Minister to ensure that they continue to have the capacity to collect, preserve, exhibit, and make cultural property accessible to the public over the long term. In 2015-16, the final steps of the project were undertaken. In all, 238 surveys were reviewed (a response rate of 98%). Analysis of data provided by designated institutions generally yielded positive findings or identification of low risks in the immediate term. Through the review, the designation of four organizations has been revoked (either because of changes in mandate or because of the absence of administrative units responsible for the preservation of certified cultural property) and only four organizations, or 1.2%, were identified as “at-risk” and will require a more in-depth review.

Movable Cultural Property grants

Under Section 35 of the Act, the Minister may make grants to designated organizations to assist with the purchase of cultural property that has been denied an export permit or that is outside of Canada but available on the international market and related to the national heritage.

For an overview of the Movable Cultural Property grants issued in 2015–16, please refer to Appendix 2-2.

Import control

International cooperation under the 1970 UNESCO Convention

In 1978, Canada became a signatory to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. This Convention places the onus on each signatory state to develop its own legislation to protect and preserve its cultural heritage and to establish measures to facilitate the return of illegally exported cultural property to its country of origin. The Act contains provisions making it a criminal offence to import into Canada cultural property that has been illegally exported from a state that is a fellow signatory to an international cultural property agreement. Penalties upon conviction of an offence under the Act include a fine, imprisonment, or both.

In 2015-16, the Movable Cultural Property Program responded to approximately 83 enquiries from the general public, the Canada Border Services Agency and other government departments concerning the import of cultural property into Canada. Ninety-nine percent of these enquiries received a response within the five-day service standard. In addition, the Program reviewed 31 imports detained by the Canada Border Services Agency. Eighty-one percent of these cases were resolved in less than 90 days.

Illegal imports

In 2015–2016, there were three returns of cultural property to States Parties of the 1970 Convention. In April 2015, Canada returned a 12th century sculpture of a Parrot Lady to the Republic of India. This was the first time that Canada returned cultural property to India, and the return coincided with the visit of Indian Prime Minister Narendra Modi to Canada. In July 2015, Canada returned a Phoenician glass antiquity dating to the 6th century BC to the Republic of Lebanon. This was also the first return of cultural property by Canada to Lebanon. Lastly, in January 2016, Canada returned a 19th century curved sword and dagger to the Republic of Bulgaria at an informal event at the Canadian Conservation Institute. This was Canada’s third return of cultural property to Bulgaria.

Canada has made 21 cultural property returns to 12 different states since the 1970 UNESCO Convention came into force in Canada in 1978.

Export control

Archaeological, ethnographic, historical, cultural, artistic, and scientific objects are all considered movable cultural property, but only certain types of cultural property are subject to export control under the Act. The Canadian Cultural Property Export Control List defines classes of property that are subject to export control based on age and value (see Appendix 1-1 for a summary of the groups on this list).

If cultural property is included on the Control List, an export permit is required for its temporary or permanent removal from the country. The Movable Cultural Property Program liaises with and responds to questions from Canada Border Services Agency permit-issuing offices, expert examiners, and members of the public to ensure that the export-control system works effectively. Movable Cultural Property also interprets the Control List for stakeholders and supports the Review Board in its consideration of export appeals.

Export permits

Export permits are issued by permit officers in 16 Canada Border Services Agency permit offices located throughout Canada. There are more than 350 academics, curators, archivists, and librarians who work in organizations across the country that have been named expert examiners by the Minister of Canadian Heritage. The role of expert examiners is to advise Canada Border Services Agency as to whether cultural property faced with export meets the criteria of outstanding significance and national importance as set out in the Act.

If the permit officer determines that an object faced with permanent export is included on the Control List and has been in the country for more than 35 years, the officer must forward a copy of the application to an expert examiner for a recommendation as to whether that object is of outstanding significance and national importance. If the expert examiner deems this to be the case, the permit officer will refuse the permit; otherwise, the permit will be issued.

In 2015-16 the Movable Cultural Property program responded to approximately 350 enquires from the general public, expert examiners and the Canada Border Services Agency with respect to the export of cultural property from Canada. Over 95% of enquiries were answered within one business day, which far exceeds the service standard of five business days.

For an overview of export-permit applications in 2015–16, please refer to Appendix 2-1.

Illegal exports

Pursuant to Article 1 of the 1970 UNESCO Convention, Section 38 of the Act states that any cultural property included on the Control List is designated by Canada to be of importance for archaeology, ethnography, history, culture, art, or science. The Act contains provisions making it a criminal offence to export or attempt to export from Canada any property included on the Control List except under the authority of and in accordance with a temporary or permanent permit issued under the Act. Penalties upon conviction of an offence under the Act include a fine, imprisonment, or both. Under the terms of the 1970 UNESCO Convention, if illegally exported cultural property is imported into a fellow signatory state, Canada may be afforded the opportunity to request its return.

In 2015–16, there were no convictions under the Act related to the illegal export of cultural property.

Appendix 1-1: Canadian cultural property export control list

The following list describes the groups of cultural property controlled under the Cultural Property Export and Import Act.

Group I

objects recovered from the soil or waters of Canada

Group II

objects of ethnographic material culture

Group III

military objects

Group IV

objects of applied and decorative art

Group V

objects of fine art

Group VI

scientific or technological objects

Group VII

textual records, graphic records, and sound recordings

Group VIII

musical instruments

Appendix 1-2: Review Board membership

Appendix 1-3: Review Board meetings

Appendix 1-4: Overview of applications for certification

Appendix 1-5: Refused export permits reviewed by the Board

Appendix 2-1: Export-permit applications

Appendix 2-2: Movable Cultural Property grants issued

Appendix 2-3: Category A and B designations

For a complete list of Category A organizations, please refer to the corresponding page of the Movable Cultural Property website.