CIBC Private Wealth managing director explains how Canadian tax laws apply to Taylor Swift ticket resale profits
Jamie Golombek, managing director of Tax and Estate Planning at CIBC Private Wealth in Toronto, explores the tax implications of reselling Taylor Swift tickets in Canada in an article for Financial Post.
Golombek states, “Is the profit from the sale of concert tickets really taxable, and, if so, how should it be reported on your Canadian tax return?”
Swift’s 149-show Eras Tour concluded with a sold-out concert in Vancouver, attended by 60,000 fans. While millions worldwide enjoyed the shows, others earned significant profits reselling tickets.
Golombek provided examples, including one person who sold three floor-level tickets for a Toronto concert, making a $10,000 profit, and another who resold tickets for a Vancouver show to avoid high travel and accommodation costs.
Golombek suggests that for most Canadians, concert tickets are considered capital property. Profits from resale are treated as capital gains, calculated as the sale proceeds minus the adjusted cost base (ACB).
He explained that for annual capital gains under $250,000, only 50 percent is taxable.
For top earners in provinces like Ontario and British Columbia, the effective tax rate on such gains is about 26 percent.
Golombek noted that proposed changes to the law, effective June 25, 2024, would raise the inclusion rate for gains exceeding $250,000 to 66.67 percent, potentially increasing the top rate to 35 percent.
He also discussed how tickets could qualify as “personal-use property” (PUP), which includes assets like furniture or automobiles. Under PUP rules, if the ACB and sale proceeds are both under $1,000, they are deemed $1,000, meaning no gain or loss needs reporting.
However, when tickets are considered a set, the $1,000 minimum applies to the set as a whole. Golombek illustrated this with an example where two tickets bought for $500 total and sold for $5,500 yielded a $4,500 taxable gain due to the set rules.
For those purchasing tickets solely for resale, Golombek clarified that profits might be classified as taxable self-employment income. The CRA assesses intent, considering factors like how soon tickets were listed after purchase.
Golombek cautioned against failing to report resale profits, reminding readers of penalties for unreported income.
He added that the CRA has used the “unnamed persons” rule to access transaction data from ticket resale platforms with judicial approval.
Golombek closed by addressing the risks of non-compliance: “If you fail to report your Taylor Swift profits on your 2024 tax return next spring, and you get reassessed for unreported income, you could be in for a cruel summer.”
