Canadian discount-store giant Dollarama is best known for its cheap party supplies and household items — not as the purveyor of highly valuable portrait photography.
But the founder of the chain, Montreal's Larry Rossy, is part of the early intrigue surrounding the Art Gallery of Nova Scotia's $20-million Annie Leibovitz collection, which remains in storage under a cloud of controversy.
While Rossy never bought the photos, court records obtained by CBC News show the Toronto family who eventually did purchase and donate the collection were not the first who were interested in making a deal for the 2,000 photos.
The records also detail a discussion in November 2012 that shows Nova Scotia's gallery CEO at the time knew — from the earliest days — that the effort to bring the prints to Halifax was being structured as a tax shelter that could profit the donor.
The new details are part of an ongoing CBC News investigation into the art gallery's Leibovitz collection and how it has been caught in a four-year tax battle over its cultural significance — a battle that has jeopardized efforts to exhibit it.
In November 2012, Ray Cronin — then CEO of the Art Gallery of Nova Scotia — called a senior adviser at the Canadian Cultural Property Export Review Board and told her Rossy was buying the collection from Leibovitz and donating it to the gallery, according to notes of the conversation.
The gallery would seek to have it certified by the board for income-tax purposes, and would be providing a tax-shelter number, the notes say.
And while Cronin "intimated that not a tax shelter because only one person giving," the senior adviser told him that did not preclude it from being one.
Records show that a draft purchase agreement was drawn up between Leibovitz and a buyer in Montreal, who was not identified.
A spokesperson for Dollarama told CBC News that Rossy had never, in fact, purchased or owned the collection. She said in an email that "Mr. Rossy's office" was aware it was for sale, but declined to acquire it. She said there would be no further comment.
Cronin has declined several requests from CBC News for comment.
'Tax grab' suggestion disputed
A willing buyer was subsequently found in the Mintz family of Toronto. The family's point person on the deal was one of the siblings, Harley Mintz, a partner at accountant Deloitte LLP since 2007 following a merger with his longtime firm, Mintz & Partners.
Mintz has told CBC News his family was first approached about the collection in December 2012 by "knowledgeable art-world figures," and was asked to "facilitate" a gift of the work to the Art Gallery of Nova Scotia.
He has confirmed his family agreed to pay Leibovitz $4.75 million US. The value of the collection, however, has been appraised at $20 million. Had the cultural review board certified it at $20 million, it would have led to potential tax deductions for the family worth millions of dollars more than what they paid.
The board has only certified a fraction of it and has turned down the bulk of the collection three times. It suggested during one of its meetings that the donation was a "tax grab." Mintz has disputed the suggestion, calling it "simply unfair."
He does, however, have experience with tax shelters.
Another tax arrangement scrutinized
At the very time the purchase of the Leibovitz collection was being worked out in early 2013, Mintz was coming under the scrutiny of the Institute of Chartered Accountants of Ontario for another charitable tax arrangement.
In 2000, Mintz had been part of a group that had created a "tax structure" where investors acquired timeshares at a Caribbean resort and donated them to Canadian sports organizations in return for charity receipts for tax credits greater than what they paid.
The Canada Revenue Agency subsequently cracked down on the arrangement, reassessing those who had invested. It later became the subject of a class-action lawsuit.
Mintz agreed to pay fine
In 2014, Mintz agreed pay a fine of $30,000 to the chartered accountants institute for accepting indirect commissions related to the tax arrangement. His firm agreed to pay a fine of $100,000 and costs of $70,000.
In an email to CBC News this week, Mintz said he believed he was following the rules but decided to enter into a settlement. He said "interestingly" the institute has recently relaxed some of its restrictions on commissions.
In essence, a tax shelter is promoted as an arrangement where an investor can purchase something, donate it, and receive a charitable receipt that leads to tax deductions equal or greater than what they paid.
For several years, the Canada Revenue Agency had been in a battle with such arrangements and by July 2013 it had reassessed 182,000 Canadian taxpayers.
Some of them had been involved in so-called art flips involving paintings or photographs often valued at a few hundred of few thousand dollars.
"Usually, the CRA's view is that people engaging in these tax-shelter arrangements are doing so for the purpose of accessing tax benefits rather than necessarily benefiting the charities," said Rob Miedema, a charity lawyer in Dartmouth, N.S.
One person intimately aware of the federal government's investigations into art flips is Toronto art dealer Alan Klinkhoff. He spent nine years, beginning in 1988, doing work for the federal Department of Justice appraising paintings that were suspected of being overvalued and used in tax-shelter schemes.
But he said that in the case of the Leibovitz collection, while the agreed purchase price of $4.75 million US may seem out of whack with the appraised value of $20 million, it could well be worth the higher amount.
Klinkhoff said the larger issue is how a lack of government funding has left galleries with tiny acquisition budgets. The Art Gallery of Nova Scotia, for instance, has a total operating budget of about $4 million. Of that, just $15,000 is dedicated to acquisitions this year.
'One would be distracted'
"That will underscore the potential excitement that a curator would feel if you were in his or her position and somebody were to come to you with a $20 million donation in works of art," Klinkhoff said.
"I can see one would be distracted in a very, very positive way."
But if that work were certified at that amount, it would lead to tax deductions for the donor of up to $10 million, he said, a burden that would ultimately be put on the shoulders of Canadian taxpayers.
The question, he said, is if the art gallery were simply given that money, would it go out and buy 2,000 photos from a New York artist, even one with worldwide acclaim?
In the end, Klinkhoff said it's a shame the gallery wasn't better funded so it would put together a "shopping list that makes sense for their community," and be less reliant on donors.
Why a Nova Scotia gallery?
One thing that's perplexed some observers is why the Leibovitz collection would end up at an art gallery in Nova Scotia.
Art lawyer Aaron Milrad said he believes Leibovitz, who had financial problems when she sold the collection, needed money but wanted to avoid flooding the U.S. market with her work.
He also noted it's not just anyone who can come up with $4.75 million US. Generous Canadian tax benefits for donating certified "cultural property" would encourage a Canadian to buy it and donate it to a regional gallery outside the U.S.
"That's significant," Milrad said. "It would go into a museum in Canada — not the U.S. — would not deal with her U.S. market and would not go into the market generally.
"It wasn't a big sale to a dealer or to an auction house that would resell it."