Are you a performing artist, composer or producer in Canada? Listen up! It may seem like tax season is a long way off, but there is no time like the present to start planning.
Here are 6 tax planning questions for Canadian musicians to consider.
The music and entertainment industries are competitive, diverse, constantly changing and unpredictable. We get it. That’s why we have created a niche group with specialized experience and developed services that cater to those industries addressing today’s most complex issues. Focus on your craft while we handle business.
Learn more about the Crowe Soberman team here: Transcription:
The music industry in Canada has never been stronger with increased digital consumption, growing live music attendance and a new class of emerging artists. If you're a performing artist, composer or producer in Canada, do you know about all of the tax deductions available to you?
Here are six important questions you need to ask yourself before next tax season.
If you write, compose, perform or create your own original works, guess what? You're considered an employed artist. For many of you, tax write-offs and expenses from your income may even be deductible depending on the type of work you do.
Let's determine whether you're considered a self-employed or a salaried employee. Self-employed artists generally control their own work and schedule while earning income from a variety of different sources. Working as your own boss you are entitled to deduct most reasonable business expenses as long as they are related to your earned business income. On the other hand, salaried employees work for an organization or a company - which unfortunately means that you are more limited in the number of expenses you can deduct.
Now luckily for self-employed artists, many of the business expenses you acquire can be deducted. Everything from your equipment, rentals and repairs, performance wardrobes, hair and makeup for public appearances, to your union dues, agent fees and publicity expenses. Even your legal and accounting fees could potentially be subtracted.
If you have decided to turn your musical or artistic activities into a business venture, consider registering to collect federal and provincial sales taxes if you earn more than $30,000 in worldwide taxable sales over four consecutive calendar year quarters. Registering to collect GST and HST can allow you to recover some, if not all, of the sales tax incurred on your business expenses. If you have a significant amount of business expenses, you should absolutely consider registering.
The Canada Revenue Agency generally considers grants and bursaries to be taxable income, however, some exemptions exist. Certain scholarships, fellowships, bursaries or similar prizes to be used in the production of musical or artistic work, are all considered exempt.These are commonly known as art production grant exceptions. Funds from other qualifying awards are tax exempt as well.
In Canada, creative professionals are expected to pay income taxes if they earn a profit from their activities but smart and accurate record-keeping can help minimize the burden. Planning ahead and speaking to a tax professional will relieve your financial stresses and ease your mind.
Crowe Soberman's Sports and Entertainment team has the specialized experience to help with even the most complex tax and business issues for artists and musicians. We're always ready to provide smart decisions that leave you with lasting value. For more information please visit our website or contact a member of our team today.