Accountant Dianne Steller offers her top tips for making the most of your tax return as an artist.

30 June 2016: probably not a date that many have circled on their calendar, but for us accountants, it has huge significance. It’s the date marking the start of the new financial year, and that means it’s that time of the year again: Tax Time.

For freelance workers, such as musicians, artists and other freelance creative professionals, getting your finances in order for the annual tax submission can be stressful, but it needn’t be. Here are some simple tips to help you in the lead up to the end of the financial year, and completing your Income Tax Return.

DO keep accurate records of your income and expenses. If possible, summarise this information into categories.

DON’T give your accountant an unsorted shoe box full of receipts (unless you want to pay the cost of having the accountant summarise it for you!)

DO keep all relevant invoices. If you are selected by the ATO for an audit, they will want to see the original invoices and documentation which support your deduction claims.

DO keep a record of your travel between workplaces – a kilometre allowance may be available when you travel between jobs (but not between work and home).

DO Remember that the following expenses are likely to be tax deductible for artists:

• Purchase of equipment including musical instruments, artists materials, studio equipment (although this may need to be claimed, or ‘depreciated’ over a number of years).
• Repairs to equipment used in your profession.
• Insurance of equipment.
• Purchase of plays, scores, professional materials and other instrumental expenses such as reeds/strings, cd’s, dvd’s, stage make up, costumes, dance shoes etc.
• Professional development including language courses for singers, masterclasses etc.

DON’T forget to declare your bank interest. The ATO uses data matching processes to ensure that what you declare in your return agrees with what the banks have told them.

DO lodge and pay by the deadline. If you are planning on lodging your own tax return then it needs to be lodged by 31 October 2016. 

DON’T put off lodging your tax for multiple years. It only gets harder to remember all your financial transactions and makes you far more likely to be selected for a review or audit.

DO consider the rules relating to non-commercial losses and income averaging, for which artists receive certain concessions. A tax agent will definitely assist here although the ATO website is a good source of information.

DON’T expect a tax refund it you haven’t paid any tax! The tax return process seeks to make sure that a taxpayer has paid the correct amount of tax, based on their level of income.

DO seek advice. Prior to any significant event or transaction (a large equipment purchase, a tour overseas, setting up of band or business), seek appropriate advice. It may save you considerable expense in the long run.

If you have any queries, or would like some assistance in preparing your 2016 tax (or prior years), contact Dianne Steller.