The creative arts and event management industry has been one of those affected over the past two years by COVID-19. Organisers had to face Countless cancellations, uncertainty and threats to the continued viability of the businesses and individuals involved. 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 recovering from COVID-19. Funding, for instance, will support employment, contribute to rebuilding Australia’s economy, and enhance community well-being and access to cultural experiences.
Have you been the beneficiary of any of the grants and payments that are within this package? You may have additional tax obligations in your tax return.
If you received a grant to support the creative economy, you must include it as 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 in presenting 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
The organiser does not enter into an agreement with the government to provide the festival. However, if you choose not to hold the festival:
- You are not under a binding legal obligation to go ahead with the festival
- Additionally, repayment of the Government funding is needed
In other words, You must include the payment as assessable income. As a result, the organiser can claim deductions for the costs involved in running the festival, including venue and equipment hire, performers and staff.
In contrast, if you received a concessional loan to support your organisation, you do not need to include the loan as income.
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 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 your income tax return will include the income made from the theatre production, the concessional loan is not. Instead, you can claim a deduction for the interest payments on the loan and the costs of the theatre productions (in the usual manner).
Your loan does not attract GST.
Do you want to know more about the potential tax consequences or what support might be available? Start a conversation with us.
