Canada has a generous tax credit system for donors to charities and public organizations, says the website Turbo Tax Canada. For donors who donate to charity in Canada, the system can give you tax credit up to 29 percent of the amount you donated at the federal level. You may also be entitled to an additional amount reaching up to 24 percent of your donation depending on your province of residence.

Previously, only the following rules determined if a person was qualified for this tax credit:

Eligible Donations

To be eligible, the donation had to be a gift for which nothing was given in return. If a donor received compensation in return for his gift, then whatever he received is subtracted from the amount he donated.

Eligible Organisation

The donations had to be made to a registered charity or one of several other public organizations, such as an amateur athletic association, which can issue tax receipts. A donor needs a tax receipt to receive tax credit. Due to the fact that most public museums and galleries in the country are run on little or no budgets, the average Canadian public gallery depends on the donations from individuals and philanthropists to stay open. Most of these individuals who donate to the public museums do so because of the promise of tax credit. It is a win-win for both the donor and the receiver.

However, all that is has changed as a June court ruling has mandated that art works to receive tax credit must be of some national significance to be country. Donations of art valued at no national significance to the country are rejected.

The Globe and Mail reports that this latest development emanated from the unrelated case  of the 1892 Gustave Caillebotte painting Iris bleus, jardin du Petit Gennevilliers, which was ruled in a Federal Court in June. The painting had been sold to a British gallery and was not allowed to be taken away from the country. In June, Federal Court Judge Michael Manson ruled the Canadian Cultural Property Export Review Board was unreasonable in deciding not to grant a permit for as the art had no demonstrable link to Canadian heritage. He said that for an art work to be denied removal for the country, it must hold some cultural significance in the country. This judgement was also made to apply to the area of tax credits. The case has since been taken to the appeal court.

These new developments have set public gallery workers in a panic. Donations were their main source of acquisition.

Hilliard Goldfarb, a senior curator at the Montreal Museum of Fine Arts, cited in the Globe and Mail, said the new rules have had an immediate impact on his institution. "We are very dependent on donations,” he said. For instance, in the 2016-17 year, the Montreal museum acquired 380 works of art valued at $10.6-mIllion – of which $9.9-million worth was donated.

"At this very moment, we have had several major works that have been suspended from donation,” Mr. Goldfarb said. “Works by major European masters. And I know this is true at other nationally recognized museums and a library.”