Taxation Questions For Artists
The Canada Council for the Arts has its own criteria and definitions to determine if an artist is eligible to receive funding.
We understand that for taxation purposes, a grant or other assistance received by an artist may be considered income from a business, employment, a scholarship, artist’s project grant or other grant, prize or other income.
In order to be able to deduct business expenses incurred by an artist (or any other individual) in a particular year, it must first be concluded that a business exists in that year. Generally, a business is an activity that an individual intends to carry on for a profit and there is evidence to support that intention. To determine whether a business exists, the CRA looks to whether the activity is undertaken in pursuit of profit, in a commercial manner, or if it is a personal endeavor.
The factors that the CRA considers for artists when determining if a business exists were developed many years ago with extensive input from the arts community, Canadian Heritage and the Canada Council. A few of these factors include representation by a dealer or agent; qualifications through education and public recognition; revenue from sales, commissions, royalties, fees and grants etc. No particular criteria (such as receipt of a grant) is more important than another, and all relevant criteria are considered together, along with all the other information the artist provides. More information about income tax and grants from the Canada Council is available on our website at http://canadacouncil.ca/funding/grants/guide/if-you-receive-a-grant/income-taxes.
The Canada Council will be re-entering into conversations with the CRA on this matter, and will convey the realities of professional artists relating to taxation so they may be better understood and reflected in future guidance.
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