The taxpayer (Mr. X) accumulated over 35 years a collection of objects from an era out of a passion for objects from that era. Over the years, he exchanged and sold certain objects with the aim of obtaining new items for his collection. He then made a decision to dispose of the items in his collection, and sold the items one by one to different buyers on an auction website.
After indicating that the objects likely were acquired as capital property, and that they likely were personal-use property given that “where a taxpayer holds property because of the taxpayer’s passion for a particular epoch, the taxpayer holds it for personal enjoyment,” CRA went on to state:
[W]e do not have enough information to determine whether some or all of the items in Mr. X's collection are property that would normally be disposed of as a set. As noted in paragraph 14 of Interpretation Bulletin IT-332R, a set is a number of properties belonging together and relating to each other. Furthermore, for subsection 46(3) to apply, it is necessary, inter alia, that where a number of personal-use properties which would ordinarily be disposed of in one disposition as a set are disposed of in more than one disposition, they be acquired by one person or a group of persons not dealing with each other at arm's length. In this situation, if the property was sold to different purchasers who dealt with each other at arm's length, subsection 46(3) would not apply.