Overdue BAS for artists: grants, gallery sales and GST

Let 2Fin do the boring bits

Catching up is mostly sorting, and sorting is the part 2Fin takes off you. Bring in two years of bank statements at once — CSV, Excel or PDF, several files in one go — and Fin reads every line; in testing, 1,891 transactions came in in about a second on a desktop computer. Each transaction is categorised with its GST or VAT worked out, every overdue quarter is listed with its due date, and Fill all periods saves a draft of each one with a single press.

What is left for you is the decisions, not the data entry. Purchases are grouped by payee — the art supplier, the framer, the gallery commission — so you answer each payee once and the answer covers every quarter. Fin’s confident guesses (80% sure or more) can be accepted in one tap and undone one by one, and a payee can become a rule so the next import sorts itself. Every figure opens to the transactions inside it, and the finished statements export for you or your agent to check and lodge.

Grants: when they carry GST

The ATO’s ruling on grants, GSTR 2012/2, asks whether the payment is connected to something you supply. If the grant obliges you to do something in return — stage an exhibition, deliver a body of work, run workshops — it is generally payment for that supply, and if you are registered it carries GST to report in 1A. A grant with no obligation attached may not be. The test is objective, so read the grant agreement, not just the letter. This is general information. Check what applies to you with a registered tax or BAS agent, or with the tax office.

Gallery sales and commission

When a gallery sells your work as your agent — it doesn’t set the price, takes a commission and doesn’t own the work — the sale is yours. If you are registered and selling as part of your business, you report the full sale price and its GST, and the gallery charges you GST on its commission, which you can claim. Only one of you issues the tax invoice to the buyer. If the gallery buys the work, or sells on a sale-or-return basis, it sells in its own right and pays GST on the full price.

In a catch-up, the gallery’s statements show each sale and its commission; your bank only shows the net payout, so match the two.

Prizes, losses and averaging

Prizes are covered by a separate ruling, GSTR 2002/3, which names an artist’s prize for the best painting among its examples; whether a prize carries GST depends on your registration and whether what you did to win has a market value. On the income tax side, a loss from a professional arts business can be used in the year it happens if your other income is under $40,000 (excluding net capital gains); otherwise the general non-commercial loss tests apply, including the $20,000 assessable income test. Artists can also average their income across years.

Artists in the UK or New Zealand

In the UK, HMRC’s Flat Rate Scheme places artists in entertainment or journalism, at 12.5%; VAT registration starts at £90,000. In New Zealand, GST registration starts at $60,000 a year.