Pro Tax Tips for Musicians
Bows down! Pens in hand and sheet music off the table. This stuff can be dry so we’ve made it as simple as possible and done most of the groundwork.
Tax time can be a stressful and anxious time for many of us working in the music industry. We’ve put this handy guide together to help you prepare for your next tax agent meeting or return.
Unlike many careers, most musicians source their livelihood from numerous incomes including private teaching, performing, and permanent positions. This often means that a musician cannot solely identify as an employee, self-employed, contractor, or sub-contractor making gathering correct tax information difficult.
The importance of finding a good tax agent cannot be stressed. As musicians, it is important we find an agent who has knowledge of the intricacies of our industry as well as the types of claims applicable to us. For example, a musician who performs may be able to declare under a different scheme to a musician who only teaches and for those of us falling into both categories, we may wish to fall into one or the other in order to make the most effective deductions.
In 2004 the ATO released this list regarding types of deductions applicable to “Performing Artists”. In brackets, we have provided an easy musician’s translation
- Car expenses
- Travel expenses
- Self-education (Personal development, AUSTA workshops, masterclasses)
- Agent fees
- Equipment which has a cost of $300 or less (teaching resources, strings, bows, rosins, sheet music, music books, cds and music recordings)
- Place of business (studio rent whether outsources or part studio situation)
- Private study/Office (internet, computers and printers, rent, telephone bills, electricity)
- Equipment/liability insurance (on instruments, home studio, other equipment used for income)
- Professional library (sheet music, references, dictionaries)
- Seminars, conferences and Training Courses
- Technical or Professional Publications
- Telephone calls
- Theatre and films tickets
- Tools and equipment
- Union and professional association fees
In addition to these, it is always worthwhile discussing with your tax agent how your particulars can be applied.
Equipment and purchases made over $300, for example, can fall into another category of depreciating assets which can be claimed over a span of usually 3 years. For most musicians, instruments and bows may fall into this category and so it is important to discuss with your tax agent the how depreciation or appreciation of your instrument may affect your claim.
Teachers will always want to consider what they can claim as teaching resources and personal development whereas all musicians can make considerable claims on things such as concert tickets, musical recordings, sheet music, accessories (including strings), cases and bows as well as maintenance costs of re-hairing and luthier work.
An area of considerable claims and often overlooked by musicians is the home office. How much time do you spend practicing or teaching at home? You may be able to claim a percentage of home electricity, rent and insurance as home office expenses. Home internet, mobile phone bills, computers, and printers, stationary and many other items also fall into the category. If you are using any of these for work purposes including emails, downloads, home research or calls to clients and students then you may be able to claim against these.
These are just some of the types of deductions which may be applicable to you. It is important to think about all aspects of your income. Having the right tax agent who understands the industry will always be the best start and remember that tax services are also deductible in the following year. With a little forethought and planning tax time can be a breeze and hopefully save you thousands on your next deduction.