Saturday, November 17, 2012

Theatre For Thought, November 17, 2012

joel fishbane

Both the Conservative government and a slew of Canadian artists each got a chance to enjoy their favourite hobby this week. The Conservatives got to provoke the anger of the artists and the artists had a good time getting angered. This time around, the issue was the unglamorous Bill C-427,  a private members bill introduced by Tyrone Benskin, the former artistic director of Montreal’s Black Theatre Workshop. The bill was an attempt to rewrite the Income Tax Act to allow for income averaging for artists.

In layman’s terms, income averaging allows individuals who have a varied annual income to spread out their tax liability over a period of time. I won't bore you with the math – which, I assure you, is really boring – but the point is the bill was defeated and, as always, a few artists got their undergarments in a twist. I have a hard time taking it seriously whenever artists come down hard on the Conservatives. It strikes me as a Pavlovian reaction: at some point, artists were trained to think that the Conservatives don’t support culture and so whenever they ring the bell, the arts community begins to froth at the mouth. 

Bill C-427 wasn’t very well written

With apologies to Tyrone Benskin, I’m siding with the Conservatives on this one. Bill C-427 wasn’t very well written – read it for yourself and you’ll see what I mean. Not only that, but it ignored the fact that artists are not the only people out there with a varied annual income. Look at farmers, salespeople, restaurant workers, or practically any entrepreneur. If Bill C-427 had been more inclusive – more applicable to all Canadians – then perhaps it would have fared slightly better.

Income averaging is a fine idea and perhaps one day it will come to Canada. But in the meantime, there are plenty of things the Canadian artist can do if they want to lessen their tax burden. First, all artists like to complain about the tax breaks the government gives to corporations. So why not go out there and become a corporation. It’s completely legal and, paperwork aside, relatively painless. As an incorporated entity, you can elect to pay yourself a salary and have the rest of your profits taxed at the corporate rate rather than the individual one.

Another suggestion is to familiarize yourself with the expenses you are allowed to claim. In Quebec, for instance, artists can deduct income derived from royalties. Federally, all artists can deduct the cost of business-related supplies, travel, commissions and so forth. As a self-employed person, an artist who works out of the home can also deduct a portion of their rent, mortgage, property tax and insurance. The government even allows you to carry-forward this amount, a fact which is very helpful for those of us who have a varied annual income. 

In the end, all artists need to conduct themselves like any small business and make sure that they put money aside for taxes over the course of the year. The best thing to do is open a TFSA (Tax Free Savings Account) and dump some money in there. It will accrue tax free interest and will be sitting there waiting when the government comes calling. 

But most of all, artists may just have to accept that a volatile financial life is all part of the business. Enjoy the good years when you have them and use the profits and reinvest it in your company - which is yourself. And the next time the Conservatives ring the bell, don’t be so quick to froth at the mouth. Stephen Harper’s government is very much like a stopped clock: they’re always right at least twice a day.

1 comment:

  1. Hi Joel,

    This is an interesting debate currently. As I have written in favour of income averaging for artists I am not in agreement with you on this one.

    I think your comments allude to an intellectual divide about whether a European or American approach to supporting the arts should prevail.

    In the European camp, the arts are seen as a public benefit outside the realm of profit , receive greater public investment and many of them have also allowed for a tax code that considers artist income over a longer period than a single fiscal year.

    In the American camp, art is intimately connected to profit. Artists are corporations or small businesses and their legitimacy and ability to survive in a societal context is intimately related to their ability to create a profit. See NEA Chair Rocco Landesman's now infamous statement, "If there were fewer theaters, they'd have the resources to pay their artists more."

    Personally, I side with the Europeans on this one. I think government should work to encourage and integrate art into society, instead of leaving artists to figure out how to make their non-profit-driven activities profitable.


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