TORONTO, CANADA.- Canadians who participated in the controversial ‘Art for Education’ scheme in the late 1990s likely will not be able to realize millions of dollars in tax breaks following a federal tax court decision announced this week. This Affects close to 700 people. In a decision dated February 13 and released Monday, Associate Chief Justice D.G.H. Bowman of the Tax Court of Canada said he couldn’t allow Toronto brokerage executive Frank Klotz to claim that 250 original prints he purchased for about $75,000 on December 28, 1999, increased in value by 300 %; 48 hours later when he made a charitable donation of the prints to Florida State University in Tallahassee. Klotz, senior vice-president of capital markets for Prebon Yamane (Canada), was appealing an earlier ruling by federal tax officials that denied him his "fair-market-value" claim of about $260,000. They said the prints, most of them multiples by 30 artists, most of them of U.S. origin, were worth at most $300 each, and penalized the business executive for declaring that the prints, which he never saw, chose or kept, were "personal-use property."

The Toronto financial executive was one of about 660 individual Canadians who, starting in 1997, bought about 65,000 fine-art prints in bulk by artists such as Keiko Saito and Larry Zox, then donated them to an estimated 25 U.S. colleges and universities (and one in Israel) for charitable gift tax credits after securing appraised values generally much higher than the original purchase price. It is estimated that the scheme resulted in tax-credit claims of more than $65-million. In December last year, Canada Customs and Revenue announced it was eliminating the tax shelter, saying that henceforth, purchase price would be considered for donations being made for tax purposes.