Minister for the Arts Mitch Fifield said in a contempo interview that 'office of the role of the arts is to button boundaries'.

The Federal Authorities could aid artists push those boundaries by being pro-active virtually the tax of art and by because reforms to assist the livelihood of artists.

Arts revenue enhancement policy has lacked clarity and purpose since the GFC. Initially the Federal Government applied harsh laws to prevent SMSFs from acquiring artworks. The super fine art laws have connected to have a detrimental outcome on the art market place, especially the Aboriginal art market. So, mistakenly, tax concessions were introduced for small businesses to purchase art as part of the 2015 Small Business Measures. Finally, these concessions were made available to more businesses for ane year but when the government redefined what a 'small business' is.

A good starting point to reform arts tax policy would exist to revisit the 2010 Henry Report findings into the capital gains taxation treatment of fine art. It was constitute that just 0.07% of the national CGT tax take came from fine art sales. The Henry Study recommended that, if CGT on art was worth the administrative bother, it should only employ to artworks sold for $10,000 or more.

For consistency of policy – looking at income revenue enhancement law and superannuation legislation together and not as split up systems – information technology could be argued that art bought privately non be subject field to CGT at all.

A useful way of because how to tax fine art is to analyse the reasons why people buy art in the kickoff place, and then to consider the concessions that employ in each case.

There are 3 main reasons that fine art is bought or acquired:
1. Individual reasons, including inheritance;
2. Business organization and work-related reasons; and
three. Investment.

People ownership art privately are non seeking tax concessions at acquisition, but they may receive benefits at a time to come time if they are able to donate their collections through the Cultural Gifts Program. Currently, fine art bought privately for $500 or more than and disposed of at a profit will be subject to CGT. The rules surrounding these measures are complex. For example, capital losses on the sale of art cannot be used to reduce the majuscule profits on the sale of property. Many SMSFs that were forced to liquidate their fine art holdings did so at a loss, which ultimately will not take whatsoever tax do good at all in the future.

Art may be bought for business or for work-related reasons, and concessions claimed for depreciation. When art is bought this way, the CGT concession that reduces the taxable turn a profit past 50% for assets held for a yr or more, no longer applies. This would seem to counteract the Small Business Measures concession where tax deductions of 100% on the buy of art costing less than $twenty,000 are allowed.

Finally, art may be bought for investment. Currently, if a SMSF buys artwork, it must satisfy the related political party, insurance and storage requirements. It will non be allowed to display its artwork investments in the residence of a member nor the boardroom of its trustee visitor. The boosted costs of complying with the super art laws have been calculated equally adding ii% to 5% to the capital letter costs of purchasing fine art. They effectively operate in the aforementioned mode that 'sin taxes' discourage people from smoking, drinking and gambling!

In this century, in contract to the period when the original laws regarding super were legislated, investment outcomes are non only measured in financial terms. Ethical investment is condign a norm, illustrated by the recent decision of American firm BlackRock to demand that the companies information technology invests in need to do more than brand profits. 'Society is demanding that companies…serve a social purpose', its chairman said. In a similar way, SMSFs investing in art support the power of artists to earn a livelihood.

A consistent and purposeful arts tax policy that sought to incentivize artists who 'utilise their talents to create something from nothing', to quote Minister Fifield, would eliminate capital gains tax on privately acquired art and reform the super art laws.

Delight experience free to contact me about this article to continue the conversation – or you could send this post to your local Federal member of parliament.

Featured Artwork:
Bec Juniper
A 24-hour interval Early Colourfield (2016)
Run into more at Fob Galleries