Canadian Tax: Art Division

July 15, 2015 1:09 PM

As an artist who makes very little money from art, so can I write off a portion of my rent because I use my apartment as a working art studio?

I haven't done my taxes in 4 years and am finally doing them with the help of a sibling.

I am an artist, but rarely make much money from art and work full time to support my art making.
The book keeper that used to do my taxes would write off a third of my rent because I use my apartment as an art studio.
My brother feels that this isn't allowed anymore.
I'm not incorporated as a business. The Canadian Taxman never had a problem with my returns before.

I am no longer in contact with the book keeper, hence the post here.

posted by Phlegmco(tm) to Work & Money (5 answers total)

You need to spend $100 and talk to an accountant. However, the deductions you "write off" have to be based on the revenue your "art business" actually generates. You also do not need to incorporate; rather, you need to establish yourself as a sole proprietor.

I think your old bookkeeper was probably wrong to make those deductions, especially if most of your income comes from your actual paid work.

Don't talk to CRA, but contact an accountant (not a bookkeeper or H&R Block) instead.
posted by Nevin at 1:21 PM on July 15, 2015

You'll need professional advice .

However, if it helps, the space in your home has to be dedicated exclusively to your art. ( or business)
For example in a 2 bedroom apartment, 1 bedroom is your studio and business office..
No guest bedroom etc.
There's no mixed use.
So having an easel in your living room won't count.

Trickier is that the expense incurred cannot exceed income earned.
You can carry the loss forward a year, but you can't reduce income to a minus level.

The real question is can you deduct the studio expense against your total income, or just against your art income?

You'll need advice on that.
posted by yyz at 3:52 PM on July 15, 2015

Best answer: TurboTax does a reasonable job explaining this stuff here in relatively normal English, with links to actual CRA documents.

Paraphrasing: You can only deduct a portion of your housing expenses, relative to the part of our house you actually use to conduct business. The CRA recommends that you “use a reasonable basis such as the area of the work space divided by the total area of your home.” Do you actually use 1/3 of your home for making art?

Also, the portion you deduct needs to account for the time you spend actually working at your business if you use part of your home for both business and personal living. The CRA explains: “If you use part of your home for both your business and personal living, calculate how many hours in the day you use the rooms for your business, and then divide that amount by 24 hours. Multiply the result by the business part of your total home expenses. This will give you the household cost you can deduct. If you run the business for only part of the week or year, reduce your claim accordingly.”

So this comes in to play if you're not using that 1/3 of your apartment (that you've been claiming) exclusively for your art business. If the 1/3 space is your living room, but you only make art in there the equivalent of one full day a week, then you're already down to 1/21 of your rent that you can claim.
posted by Kabanos at 6:55 PM on July 15, 2015

Response by poster: Thanks folks, that's extremely useful and I guess my returns will be somewhat smaller from here on in.
posted by Phlegmco(tm) at 8:42 PM on July 15, 2015

This has been generally covered above, but bear in mind also that you need to have a reasonable expectation of profit to be able to consider your art a business rather than a hobby. So you may want to consider if you are indeed running a business at all (depending if by make very little money you mean have very little total income and spend more on expenses or you mean make a small net income).

The CRA has an interpretation bulletin for this issue in relation to artists (but it is quite vague).
posted by ssg at 12:28 PM on July 16, 2015