Part Four: Implementation of Administration Controls

Good administration and business controls are key

Regardless of your profession, the ATO takes a negative view of disorganised administration, and you may quickly find yourself categorised as a “hobby/pleasure activity” if you do not comply with ordinary commercial principles.   A businesslike manner will be demonstrated by the presence of factors such as:

·       good record keeping of sales, expenses, invoices, receipts and accounts;

·       presence of formal, written contracts to record agreements to supply art works or services;

·       a portfolio or other appropriate evidence of a body of work that demonstrates a record in the particular field;

·       use of an accountant, lawyer, business manager, agent or other appropriate source of commercial expertise;

·       membership of a recognised organisation or professional association;

·       presence of a written business plan (that is, a written description of the intended future direction of the business and how that future direction will be realised), perhaps developed in consultation with the taxpayer's accountant or manager;

·       maintaining insurance in respect of their arts products or performances for public liability where their work is being shown or performed;

·       renting exhibition space, use of publicly funded exhibition space, or use of public space for other types of public presentation (if appropriate, depending on the type of arts activity being carried on);

·       advice from professional artists who have succeeded in their industry sector;

·       keeping relevant qualifications and skills up to date (for example, through taking relevant courses, subscription to journals, attendance at conferences);

·       systematic and researched attempts to bring the art work to suitable markets; and

·       use of traditional business structures (like companies, trusts or partnerships). Lack of use of such a structure however is merely neutral in deciding whether an arts activity is being carried on as a business, as many professional arts businesses are carried on by artists individually as sole traders.

For further information please feel free to contact us at Financial Control and Management.