Three Impactful Reforms

1. Remove taxation on prizemoney to celebrate Australia’s most successful artists

It can take many years – or even decades – as an established artist to win a prize such as the coveted $100,000 Archibald. And yet, while prizemoney donors receive a tax concession, artists carry a tax burden. In the words of past Archibald Prize winners:

• “If you place a bet on who will win the Archibald, you don’t have to declare those winnings in your next tax return.” – Mitch Cairns, 2017 winner 
• “It’s completely insane inequality.” – Ben Quilty, 2011 winner
• “It is unfair and irrational that artists have to pay tax on prizes. How can this be justified?” – Wendy Sharpe, 1996 winner

The average income received by Australian artists for their creative work alone is less than the poverty line: just $18,100 according to Australia Council research. Winning awards and prizes is a rare achievement, earned after many years of self-funded labour.

• Introduce a tax exemption for all artist prizes, fellowships, scholarships, awards and government grants.

2. Harmonise income averaging arrangements between the ATO and Centrelink

Artists find it almost impossible to get their professional status as an artist recognised by Centrelink when they require assistance. If they do receive benefits, they risk losing them when they receive an artist fee, materials or production fee, a grant or scholarship, or when they win an art prize. However, these types of payments are likely to be a ‘one-off’ for the creation or presentation of artwork, rather than a contribution to living expenses.

• Centrelink should adopt an annual averaging process for income from artists’ fees and awards similar to ways this type of income is handled by the ATO under the Tax Ruling:carrying on business as a professional artist.

3. Restore artwork investment for self-managed super

In the 12mo following the 2011 changes to SMSFs, the commercial art market was decimated and artists’ careers have suffered – with a disproportionate impact on First Nations artists. The majority of commercial galleries in Perth and Adelaide closed and some $200m left the market nationally in that year. The downward trend continues. While classed together, artworks are different to collectibles and exhibition is different to “display”; unlike mint condition coins, locking an artwork away won’t increase its value.

• Add an “exhibition” provision to SMSF legislation so that investment artworks can be seen, kickstarting the commercial market and propelling artists’ careers. 

Tax law advice is in the following document, prepared by Arnold Block Leibler as pro bono legal advisers to NAVA. 

Each of these reforms will have significant stimulatory effect at this time – most notably, for professional artists accessing JobSeeker: ensuring that Centrelink acts on the ATO’s ruling.