Taxes can be daunting for anyone and when you’re an artist or creative professional, things can seem even more complicated and confusing.
I asked the team at Artbooks to give us their expertise as tax specialists that specifically work with artists and creative professionals. Artbooks was “launched over 20 years ago as Canada’s first organization dedicated to financial management in the arts.”
Check out the great information and advice they give us below regarding what Canadian artists and creative professionals need to know about taxes.
Why do you offer tax services specifically for artists?
All the people working in our office have arts backgrounds and we have 25 years of experience and expertise to draw upon in preparing artists’ tax returns. Most accounting firms and generic tax preparation companies have little or no experience in working with artists. Artbooks understands and respects the work that artists do.
We work with a wide variety of arts professionals in just about every area of the arts – from circus performers to broadcasters to theatre shoemakers as well as a number of people who are simply self-employed and appreciate the personal touch we provide.
How are taxes different for creative professionals?
An artist’s tax situation can be unique in a number of ways. They may have government grants to declare, in-kind donations to deal with, claimable expenses other professionals can’t claim, or personal circumstances that complicate their tax situation. We meet with our clients to get to know them and often find information they may not have thought had tax implications.
What are common tax mistakes you see creative professionals make?
Artists are considered self-employed by Canada Revenue Agency. Because artists are usually very passionate about their practices, it is often tricky for them to distinguish where their business ends and their personal life beings. Artists err on both sides, so it’s beneficial to keep track of all expenses over the year, which allows us to help in deciding whether or not an expense could be claimed against income.
In short, keep all your receipts and decide later if this is or isn’t a business expense.
What ways can creative professionals be more proactive with their taxes and/or handle their taxes better?
There are 2 ways you can be more proactive. The first is to keep an accurate record of your income and expenses. The second is to gather information on how to improve your situation. RSPs, donations and political contributions are tax deductible for everyone, but only an artist can use a new CD, a solo exhibition, or a Canadian tour as a means of reducing the tax they owe.
The current federal government has little interest in the arts as seen from an artist’s perspective. The new legislation that’s been passed may have an indirect impact on their income, but not on their tax return.
There have been some developments in the way the Canada Revenue Agency interprets grant income that may complicate an artist’s return. We’re currently conducting research and working towards political change on this issue.
As in previous years, we are very concerned to make sure that artists are recognized as professionals, particularly since the CRA continues to make the hobbyism issue a priority.
Artbooks is “the cosy tax office for artists and entrepreneurs” located in downtown Toronto. You can find them online at artbooks.to.