NAVA keeps a watching brief on the impact of the tax system on art and artists. NAVA promotes the adoption of tax incentives to encourage investment in the purchase of work by living Australian artists and seeks tax exemptions on government grants and major prizes to artists.
Photo Joan Cameron-Smith
For income tax purposes, artists who can demonstrate that they are 'in business' as a professional rather than a hobbyist, are usually able to claim their art practice expenses against all forms of income.
While most professional artists are eligible to claim their art enterprise expenses for income tax purposes, there is a section of the law which will apply 5 eligibility tests: the Non-Commercial Losses section of the New Business Tax System (Integrity Measures) Act 2000
Whether you should have an ABN or not depends on how your practice operates. If you do not have an ABN then you would be considered to be operating your practice as a hobby. There are advantages and disadvantages that you will need to take into consideration when deciding to register for an ABN as well as whether the Australian Taxation Office (ATO) would consider you to be ‘in business’.
As a primary producer, tax averaging evens out your income and tax payable over a maximum of five years to allow for fluctuations in production, artwork sales, commissions and prize winnings. This ensures that you do not pay more tax over a number of years than taxpayers on comparable but steady incomes.
NAVA offers artists a range of resources on taxation to help them manage their professional obligations.
Click on the NAVA Guides link below to access the following factsheets:
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