Report #3: A Survey of Potential Reforms for Australia and Recommendations (Series: Tax: Contributing to a Sustainable Arts Industry)

Abstract

This 3rd Report details the results of a survey conducted to ascertain opinions about potential tax reforms to assist the Australian arts sector. Also the survey considered awareness and attitude of participants towards taxation. This is the 3rd Report commissioned by Arts Queensland and builds upon the 1st Report that outlined Australia’s current tax treatment of the arts, and the 2nd Report detailing an international comparative study of the tax concessions provided to the arts in a number of selected jurisdictions.In terms of accessing tax information, the top three sources for artists are accountants and tax agents, the Australian Tax Office (Tax Office) and a friend or relative. Indeed, for artists earning less than $50,000 in artistic income there is a greater reliance on informal measures to access tax information, and a greater reliance on the Tax Office in obtaining ‘free’ advice via the internet. In contrast, advisors thought that they would be who their clients would initially source tax information from, with little reliance on the Tax Office.Those artists with greater financial resources accessed tax information more frequently, with a corresponding improved ranking of their skills in complying with their tax obligations. However, advisors ranked their clients’ skills in complying with their tax obligations lower compared to survey participants. Also there was an emphasis by participants on the importance of paying their fair share of tax. It is evident from this survey that a number of the potential tax reforms have greater support, which has resulted in the recommendation to proceed with a number of reforms.There are a total of 47 recommendations, some suggesting tax reforms, with others outlining more practical strategies to assist the arts. The recommendations include tailoring tax information for artists (in conjunction with the Tax Office), allowing volunteers to claim a tax deduction for expenses incurred in volunteering for an organisation that is a deductible gift recipient (DGR), introducing a tax rebate system to encourage organisations to support local artists and broadening tax incentives to those who leave goods in their will or while alive. The full list of recommended actions is detailed at the end of this summary. The reasoning underlying these recommendations is detailed in sections 6.1 and 6.2 of this report.Also evident is that a number of reforms are not seen as viable, which has resulted in recommendations that they not be pursued. These non-recommended reforms include artists not having to pay income tax (whether subject to cap or not), reducing the rate of goods and services tax (GST) on artistic supplies and the re-introduction of an estate tax. The full list of reforms not to be pursued is detailed in sections 6.3 to 0 of this report.The structure of this report is as follows: after providing an overview of the arts sector, the methodology for the survey is provided, followed by the descriptive statistics. Next, the results and discussion are outlined in terms of ‘awareness’, ‘attitude’ and ‘potential tax reforms’. The report then outlines the recommendations, followed by the limitations of the survey and the potential for future research and conclusion.