Taxable Consequences For Grants, Payments And Loans Made To Creative Industries Organisations

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The creative arts industry has been one of those affected over the past two years by COVID-19, with countless cancellations, uncertainty and threats to the continued viability of the businesses and individuals involved within.With more than 600,000 Australians within the industry, the government aimed to ease the burden of the countless employers within.

The COVID-19 Creative Economy Support Package provides last resort funding assistance to significant Australian Government-funded performing arts and culture organisations to remain solvent, provide employment and deliver high-quality cultural and creative activities and experiences for audiences.

This support aims to ensure that the arts and entertainment sector can continue its activities by providing the necessary finance to plan a pathway for recovery from the effects of COVID-19. This funding will support employment, contribute to rebuilding Australia’s economy, and enhance community well-being and access to cultural experiences across Australia.

Have you been the beneficiary of any of the grants and payments that are within this package? You may have additional tax obligations that need to be met.

If you applied for and received a grant to support the creative economy, you must include it in the assessable income for your tax return.

Example

If you were involved in event management and had to cancel a music festival due to COVID-19 in 2020 and are looking to run it instead in 2021, you can apply for a grant through the Restart Investment to Sustain and Expand (RISE) fund. The RISE program provides finance to assist the presentation of new or re-shaped cultural and creative activities and events. To be eligible for this, you need to:

  • Provide a co-contribution for the activity
  • Have an Australian Business Number (ABN)
  • Be registered for GST

You do not enter into an agreement with the government to provide the festival, but if you choose not to hold the festival:

  • You are not under a binding legal obligation to go ahead with the festival
  • You are required to repay the funding that was received from the government

You must include the payment as assessable income and claim a deduction for the costs involved in the running of the festival, including venue and equipment hire, performers and staff.

If instead, you received a concessional loan to support your organisation within the creative economy, you do not need to include the loan as assessable income in your tax return.

Example

As the owner of a small theatre with no full-time staff and which ran few productions throughout the year, you may be able to apply through your bank for a concessional Show Starter loan.

These loans are designed to assist creative economy businesses to fund new productions and events that stimulate job creation and economic activity. A 100% Commonwealth guarantee backs the loans.

Although any income you make from the theatre productions you hold is to be included in your income tax return, the concessional loan is not included in the assessable income. Instead, you can claim a deduction for the interest payments on the loan and the costs of the theatre productions (in the usual manner).

GST does not have to be paid on the loan received.

Are you involved in the creative industries and want to know more about your potential taxable consequences, or what support might be available to you? Start a conversation with us.

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