Should artists pay tax on patronage?

[settlement]

Hi all,

Was just thinking today about patronisation. Many artists and writers eg James Joyce received large sums from patrons. Technically, should they have paid tax on them?

 

[Brendan Burgess]

Was he not based in Trieste around 100 years ago?

I suspect that the tax rules in Italy 100 years ago are different from Ireland today.

If you want to patronise an artist today, there are many ways of doing it tax efficiently.

The Artists' Exemption means that they can sell up to €50,000 a year tax free. So you could buy painting or sculpture or an awful lot of books. You could also help to fund an exhibition by funding a catalogue or other costs.

If you want to patronise the arts generally, you might make your donation more tax-efficient by making a donation to a Registered Charity such as the RHA.



Tax relief on donations to charity

If you make a cash donation of €250 or more to an approved charity, they can claim a tax refund of 45% of the amount you donate.

Say you donate €1,000 to a charity.

At the end of the year, they will claim €450 from Revenue.

So your donation of €1,000 is worth €1,450 to the charity.



Brendan

 

[odyssey06]

Was the money just handed over...or was it in exchange for the rights or ownership of the artwork produced?

Presumably Revenue today would take a dim view though if my nephew puts a heap of junk together and I give him 10k for it rather than pay gift tax...

 

[MrEarl]

Hello,

I would love to see The Artists' Exemption reduced, or possibly even removed entirely. It is far too generous and for no good reason imho. Artists have to work for a living just like everyone else, so why not pay tax just like everyone else ?

 

[Brendan Burgess]

Presumably Revenue today would take a dim view though if my nephew puts a heap of junk together and I give him 10k for it rather than pay gift tax...

Revenue has to approve artists for the scheme.

But it's a very interesting tax planning idea. Bertie's autobiography qualified for the exemption. Not sure how they manage all the artists. They might have to be a member of one of the professional artists' bodies or be represented by a gallery.

Get your nephew to apply and see how he gets on.

Brendan

 

[Philip S]

The artists exemption can be an interesting one. The likes of Bertie and Co writing books and first 50k a year is free of tax is odd must try that one myself. The funnier one that I came across few years ago is that the writers of Fair City qualify for the exemption as what they do is seen as artistic and original.

 

[Páid]

Hello,

I would love to see The Artists' Exemption reduced, or possibly even removed entirely. It is far too generous and for no good reason imho. Artists have to work for a living just like everyone else, so why not pay tax just like everyone else ?

The problem is that artists could take years to produce a novel, film, album, painting etc. and the revenue from it is returned in one year rather than spread over the course of a few years.

 

[odyssey06]

The problem is that artists could take years to produce a novel, film, album, painting etc. and the revenue from it is returned in one year rather than spread over the course of a few years.

That's a very good point... should the artists' exemption not really be an exemption, but the ability to be 'averagely' taxed over a period of X years (say three to five)?

 

[Brendan Burgess]

It's interesting that the exemption was introduced to attract big international artists and writers to Ireland. At €50k, it's not worth relocating for.

The tax-relief is not worth that much to most artists as they have so little income.

If we want the taxpayer to support artists, then maybe have some scheme to buy their works with some adjustment made for ephemeral works. The Dutch had such schemes but stopped them in 2012.

https://en.wikipedia.org/wiki/Artist_subsidy_(Netherlands)

By 1992, they had over 200,000 works in storage most of which they could not give away. http://www.nytimes.com/1992/09/14/world/out-of-space-dutch-state-dumps-its-non-masters.html

But that is the nature of art. Most of the art being exhibited at the moment won't be worth very much after 50 years, but some of it will have been worth buying.

There would be huge rows and political interference in the selection of works. You would end up with state-approved art which is probably not a good thing.

The OPW buys a lot of art. Maybe increase their budget significantly and direct them to support struggling artists of merit.




Brendan

 

[huskerdu]

That's a very good point... should the artists' exemption not really be an exemption, but the ability to be 'averagely' taxed over a period of X years (say three to five)?

I think that is much better idea and is a fairer way of taxing artists and writers who are on low but sporadic income while avoiding high paid writers taking advantage of the scheme.

High profile autobiographies gave the whole thing a bad reputation

 

[MrEarl]

The problem is that artists could take years to produce a novel, film, album, painting etc. and the revenue from it is returned in one year rather than spread over the course of a few years.

That is not a problem if they agree alternative payment arrangements to spread their payments over a few years.

Anyway, most novels, films, albums, paintings don't take years to produce - it's the time spent doing unrelated things, or producing stuff that doesn't sell, that's the problem. Let them offset some of their legitimate costs on these failed ventures against future earnings on others perhaps ?

 

[Brendan Burgess]

Let them offset some of their legitimate costs on these failed ventures against future earnings on others perhaps ?

They can do that anyway. Losses can be carried forward. But the cost is a time cost, a lack of earnings in those years.

If a visual artist has a successful exhibition every 5 years, she can't really spread the payments.

Likewise an author would find it very difficult to get the sales proceeds of one good book over 5 years. They might get an advance from the publisher but that is rare enough.

 

[MrEarl]

Hello Mr. Burgess,

I struggle to believe that the likes of a publishing house would not be happy to delay payments and stagger them over a few years - why not, it's to their advantage to have the use of the funds in the interim period. Same principal applies elsewhere I would think.

As for the point about the lack of earnings and time cost, if I decide to do nothing other than daydream for months on end (or dabble with poetry, drawing etc. and ultimately find it's worth nothing other than perhaps for the recycling company) then I don't get paid, so I see no difference here to be honest. What about inventors, do they get recognition for their time cost when they don't earn for a number of years, while trying to invent the next big thing ? We don't pay students to study for years as they aspire to get qualifications (which may or may not be achieved, may or may not result in future income generation for them here in Ireland etc.). I probably could go on, but I hope you take my point.

 

[Delboy]

The problem is that artists could take years to produce a novel, film, album, painting etc. and the revenue from it is returned in one year rather than spread over the course of a few years.

But they now have this to help tide them over
http://www.thejournal.ie/artists-social-welfare-3439602-Jun2017/

ARTISTS AND WRITERS will find it a lot easier to access social welfare payments under a new government pilot scheme launched today.
The new plan will allow self-employed professional artists apply for Jobseekers Allowance.
Under the new initiative, such artists would not be subject to the activation process for 12 months. The normal checks and balances will apply to ensure the system is not open to abuse, but the process will be much more accessible for professional artists to access welfare payments when they need them.

So dole for 12 months without the hassle of being called in by those pesky Dept types wondering are you ever going to at least start looking for a job!

 

[Brendan Burgess]

I struggle to believe that the likes of a publishing house would not be happy to delay payments and stagger them over a few years

A few problems here

1) I would not like to delay receiving money. If the publishing house goes bust, I would be in trouble.
2) You are taxed on the income earned in the year and not on what you have received.

Brendan

 

[Brendan Burgess]

if I decide to do nothing other than daydream for months on end (or dabble with poetry, drawing etc. and ultimately find it's worth nothing other than perhaps for the recycling company) then I don't get paid,

It's very different for artists.

They can produce critically successful work for years but no one buys it. Then it takes off.

But you raise a valid point. Maybe we should all be able to smooth out our income for tax purposes over a period of years?

If a school leaver starts working immediately and earns €20,000 a year for 7 years, he will pay little or no tax.

If a doctor studies for 7 years and then earns €50,000, he will pay a lot of tax.

Maybe tax credits should be cumulative? Start accruing them from the age of 18 and if you don't use them, carry them forward.

Great idea Mr Earl. Well done!

Brendan

 

[torblednam]

It's very different for artists.

They can produce critically successful work for years but no one buys it. Then it takes off.

But you raise a valid point. Maybe we should all be able to smooth out our income for tax purposes over a period of years?

If a school leaver starts working immediately and earns €20,000 a year for 7 years, he will pay little or no tax.

If a doctor studies for 7 years and then earns €50,000, he will pay a lot of tax.

Maybe tax credits should be cumulative? Start accruing them from the age of 18 and if you don't use them, carry them forward.

Great idea Mr Earl. Well done!

Brendan

Would that mean that when you get an audit, it's a cumulative one, all the way back...?!

 

[cremeegg]

Was he not based in Trieste around 100 years ago?

Really Brendan !

Like the free travel for the elderly, the Artist's exemption scheme, is another brilliant initiate of our late and much lamented friend CJH which has been misunderstood and abused over the years.

One of the brilliant aspects of the scheme is that it does not involve the government in picking artists to benefit. They have to sell their work to benefit. There is a process to prevent abuse in that an Artist has to convince the Revenue that their work is creative, so text books or instruction manuals do not qualify, as to autobiography, maybe Bertie's got in as a work of fiction.

Before the scheme was chopped up by subsequent ministers Charlie's initial scheme put no limit on the amount that could be earned. Ireland in the 1960's was a very different place from today. Now there are artists on every street corner, back then art was frowned upon as suspicious. As Robert Ballaghs aid, "the Irishman does not give a fart in his corduroy trousers about Art" Fredrick Forsythe was one of the first international artists to come to Ireland as a consequence. I have no doubt the scheme played its part in the cultural transformation of Ireland since the 60s.

I would love to see other artists emerge with international commercial success on the scale of U2. How likely is it that they will pay tax in Ireland if they do.

 

[MrEarl]

A few problems here

1) I would not like to delay receiving money. If the publishing house goes bust, I would be in trouble.
2) You are taxed on the income earned in the year and not on what you have received.

Brendan

Hello Mr. Burgress,

Yes, you are obviously correct about the potential risk of the publishing house going bust, but that's the same commercial risk many others have to take when they await payment from customers, albeit rarely for a couple of years. But there are ways of dealing with that - insurance companies and banks might guarantee future payment streams for example.

As for the point about being taxed on income the year you earn it, it's a good one. That said, I am sure a contract could be drawn up in such a way as to manage how payments are made, with tax planning in mind.

Clearly, I have not thought all of this out from beginning to end, but what I do know is that the current arrangements are not equitable and I see them giving a clear favorable bias towards artists.

 

[Leper]

Pressed Enter before finished.