What is a professional arts business?
A professional arts business is a business you carry on as either:
The terms 'performing artist' and 'production associate' are defined in the Income Tax Assessment Act 1997 (ITAA 1997). The term 'author' is a technical term from copyright law.
You must still consider whether your activities as an artist constitute carrying on a business.
Is an art gallery a 'professional arts business'?
In general terms, a professional arts business is a business you carry on as an author of an artistic work. This can be the artist, sculptor or photographer who created the work.
Where a person owns an art gallery but does not author or exhibit their own work, they would be unlikely to be carrying on a professional arts business.
However, a person who creates artwork and sells only their artwork at their private gallery could be carrying on a professional arts business. The art gallery also needs to be regarded as a business for taxation purposes.
Is a direct seller considered to be carrying on a 'performing artist business'?
Direct sellers are not considered to be carrying on a performing artist business and the non-commercial loss measures would not apply.
A performing artist is a person who, as part of their profession, performs within the public entertainment field. To be classified as a performing artist for tax purposes, an individual would need to be undertaking an activity as seen in the context of the performing arts industry.
A person whose activities involve elements of a 'performing artist' does not mean they are a performing artist. The overall impression must be that the activities are sufficiently substantial in themselves to constitute the carrying on of a business as a performing artist.
For example, while a direct seller carrying on a business might use their intellectual, artistic, musical, physical or other personal skills in the presence of an audience, it is unlikely that they would be considered as working in the entertainment field or performing arts industry. Their primary objective is to make sales of their products, not to entertain their audience, and they are not carrying on a performing arts business.
Author of an artistic work
Unlike 'performing artist' and 'production associate', the term 'author' is a technical term from copyright law and an individual needs to be the author of the work.
As a general rule, the author of an original literary, dramatic, musical or artistic work is the person who reduced, to a material form, the expression of an idea. An author can, for example, be a novelist, artist, sculptor, architect, composer, or photographer.
The material expression of the idea (being the 'work') must be in an original form for the person who reduced it into material form to be considered the author. 'Original' in this sense does not mean novel or inventive, nor does it require a particular standard of quality - unless that is a requirement of the work itself; for example, works of artistic craftsmanship.
The work must have originated from the author as a result of his or her own unaided efforts and they must have used some skill or labour in producing the work. This means that a person who copies another's work is not the author of that work; nor is a pure functionary, such as a typist or printer.
In order to be an author of a literary, dramatic, musical or artistic work, the individual must have created an original work in a material form. There must be an element of originality in the material expression - it cannot be a direct copy - and the material expression must be a 'work' that originated from that person. For example, the author of a musical work is its composer and the author of an artistic work is the artist, sculptor or photographer who created it.
You are a 'performing artist' if, as part of your profession, you present or perform in front of an audience:
- a play
- an entertainment
- an address
- a display
- a promotional activity
- an exhibition
- any similar activity.
You may also be a performing artist, even if you do not perform in front of an audience, if you appear in (or on) a film, tape, disc, or television or radio broadcast.
You will be a 'production associate' if you have an artistic input - as distinct from technical input - into any of the activities mentioned under performing artist. An example of technical input would be a camera operator or stagehand.
You may be a production associate if you are:
An exception to the non-commercial loss rules allows net losses from certain primary production or professional arts business activities to be claimed in the year incurred.
- an art director
- a choreographer
- a costume designer
- a director
- a director of photography
- a film editor
- a lighting designer
- a musical director
- a producer
- a production designer
- a set designer
- any person who provides similar services to the activity.