SYSTEMS LEVERS FOR
CREATIVE
PRACTITIONERS
We have been working on a tax exemption model that would better support a thriving arts sector and enable greater financial stability for creative practitioners.
However we are still in the early stages of this proposal and we need to know from you whether this idea will actually make a difference in your life and career.
CONTENTS:
1. THE IDEA
Sustainable creative careers based on liveable incomes are essential for a thriving arts, culture and creative sector. There are multiple ways that New Zealand’s arts, culture and creative practitioners could be supported to enable financial sustainability and, more optimistically, to thrive.
One of these ways is through a Tax Exemption scheme. This option has been internationally proven to increase the sustainability of arts, culture and creative careers, as well as elevating society as a whole.
We are proposing a Tax Exemption model for creative practitioners in New Zealand along with a couple of supplementary options that include KiwiSaver.
This model has been designed to keep administration as simple as possible and to enable participation to occur within a single tax return scenario. This model uses processes that are currently part of completing either a tax return or tax registration.
In short - the changes proposed in this model will operate within the existing framework. No new elements will need to be funded or built.
2. THE MODEL
Tax Exemption
Personal income tax exemption for qualifying revenue of $60,000 or below, as a per annum ceiling.
Available to self-employed creative professionals. Other activity within annual earnings that is not creative will be taxable under standard frameworks.
This ceiling of $60,000 is also the annual earnings ceiling whereby a person must register for GST. Under current tax rates the maximum annual exemption, depending on circumstances, will be approximately $8,500.
Tax Exemption with Compulsory Contribution to KiwiSaver
In the KiwiSaver Opportunities for Improvement report released this year by the Retirement Commission it was recognised that there must be opportunities for self-employed people to accumulate savings for their retirement. This is a significant issue for the arts and creative sector.
Option 1:
Ability through tax frameworks to directly contribute a portion of an individual’s tax exemption to their KiwiSaver. Contribution in any given year must be at least baseline annual contribution – currently $1042, which activates the annual government contribution of $500.
Option 2:
Ability through tax frameworks to directly contribute a portion of an individual’s tax exemption to their KiwiSaver with 50% of the annual exemption amount allocated to KiwiSaver each year.
Qualifying Criteria – BIC Codes
Business Industry Classification (BIC) codes are a way of classifying a self-employed person by their main activity. Activity means the service or product the self-employed person provides to others. It is selected by a self-employed taxpayer when completing a tax return declaring revenue. If self-employed and involved in more than one activity at the same time people must choose the BIC code that relates to their predominant activity.
We propose that a person qualifies for the tax exemption if they select one of the BIC codes that covers creative work as part of their tax return.
3. THE BENEFITS
Benefits of this model range from economic development to generating tax revenue, to recognising the value of the creative sector. Key benefits include:
Retains talent
Increases wellbeing
for creatives
Strengthens cultural identity
Enables Indigenous Creativity
If you would like to know more about the benefits of this model, check out the links in Further Reading below.
4. THE EVIDENCE
We reviewed examples from Ireland, Australia and the USA in order to get a better understanding of the way a creative tax exemption model could operate, and to review the potential impacts on both individual artists and the wider society.
Overall, we found significant benefits in these models - as examples, in Ireland and Rhode Island there is professional opinion and demonstrable data (especially in the case of Rhode Island) that their programmes have had a positive economic effect.
It is also important to note that in the jurisdictions researched the introduction of tax exemption programmes has not resulted in a simultaneous reduction of funding and services for the arts and creative sector.
Read our full analysis here, including interviews and sector insights with international creative leaders.
5. YOUR FEEDBACK
This is where you come into it! We have undergone a consultation and collaboration phase with sector professionals around viability, practicality and outcome modelling. However, before we continue to advocate for this model to be adopted in Government, we need to know if this will actually make a difference to you: the artists working in the sector.
So…what do you think? Does this idea make sense? What works and what doesn’t work? What are the blindspots we perhaps may not have considered? Will this actually make a difference to your career and life?
If you have any comments, opinions, concerns or feedback at all - we would love for you to share them with us via our short survey below! Your thoughts on our proposed model will help us to refine this idea.
Advocacy is a collective action and we not only want to collect perspective from the sector, but we also want to open up our research to involve more people in this conversation.
6. FURTHER READING
If you’d like to really deep dive into our research, literature reviews, and findings - check out our reports here:
YOU CAN MAKE
CHANGE
HAPPEN!
If enough people like this idea, we will advocate and lobby for this to happen! Change is only made through public opinion, discourse and feedback - so we need to know from you whether this idea will have a real impact on your life and career as a creative practitioner.