Report #2: An International Comparative Study of Tax Concessions for the Arts (Series: Tax: Contributing to a Sustainable Arts Industry)

Abstract

This 2nd Report is an international comparative study of the tax concessions provided to the arts in a number of selected jurisdictions. Given the prominence of its level of giving, the United States of America (United States) is one of the studied jurisdictions, as well as the United Kingdom, Canada and Ireland. Reference is also made to concessions provided for in Germany, the Netherlands, Mexico, Japan and Singapore. This is the 2nd Report commissioned by Arts Queensland and builds upon the 1st Report which outlined Australia’s current tax treatment of the arts.To assist with this analysis, the art sector is divided into three broad categories: artists, art bodies and contributors. Rather than providing a detailed analysis of each jurisdiction’s tax system, this Report focuses on particular tax concessions that have been introduced to assist the arts. The aim is to identify models or mechanisms from these international comparisons that could be informative for Australia. It is important to appreciate that, with any international tax comparison, characteristics unique to a jurisdiction may fundamentally influence the effectiveness of a tax concession. These unique characteristics may relate to features of the tax system overall, or to the jurisdiction’s taxpayers themselves. Where relevant this Report highlights some of these nuances.Table 1 summarises the tax concessions provided to the arts in the jurisdictions studied, outlining such things as deferred gifts to charities and testamentary gifts. Reference is also given to the current Australian tax treatment, as discussed in the 1st Report.It is evident from this comparison that jurisdictions around the world implement a number of tax strategies similar to those in Australia. Indeed, a number of strategies recently introduced in Australia, such as Workplace Giving, have their origin overseas. However, there are a number of overseas strategies that are not widely utilised or present in Australia. For example, exempt income for artists, tax credits for artists to reduce tax payable, goods and services tax (GST) concessions for artists or art bodies, transfer of art in lieu of payments of tax and deferred gifts. It is these alternative mechanisms that form the initial focus of this Report as they may be more informative for any future tax reform for Australia’s arts industry.After providing an overview of the level of giving in various jurisdictions and highlighting some unique features of the jurisdictions studied, this Report analyses the tax treatment of artists, art bodies and contributors in the selected jurisdictions. The Report will consider such tax mechanisms as exempt income for artists, tax credits, GST concessions, transfer of art in lieu, deferred gifts and other concessions. The Report then outlines some concluding observations about potential reforms that will be further developed in Report #4.