Misuse of Artists exemption (Hypothetical)

mountainyman

2 hypotheticals
Geoff McG is a businessman. He is the beneficial owner of a publishing company. The publishing company buys a set of short stories written by Geoff McG for 1 million euro.

Is this income taxable?


Gervaise G-deG-G owns an art gallery. He displays set of video installations made by Gary O'G. These are purchased over the course of several months for a total of 100,000 euro.

Gary O'G is a purported medium scale Dublin cocaine dealer. All purchases were in cash.


Advise Geoff McG, Gervaise G-deG-G and Gary O'G as to tax liability and compliance with money laundering laws and laws relating to CAB.

MM

Tom Young

Income is taxable, yes. Geoff McG is a businessman rather than an artist.

G-deG-G may be liable under the proceeds of crime legislation, or indeed some money laundering legislation.

Gary O'G is a purported criminal, as we have no evidence to suggest he is an actual criminal then we are unsure.

I don't have time to address the minute of the loaded questions at the end, but suffice to say all items are covered in that legislation.

mountainyman

Would it be correct therefore to say that the artist's exemption as it commonly called is an exemption for artists and not an exemption on the proceeds of producing art?

After all the legislation recognises that artists may have income not related to the production of art. This income is taxable.

Wallace Stephens ran an insurance company. Who determines that someone is or is not an artist?

MM

Tom Young

There are lots of artists around the place, many are government artists who 'draw the dole' .....

Victor

mountainyman wrote: »

Geoff McG is a businessman. He is the beneficial owner of a publishing company. The publishing company buys a set of short stories written by Geoff McG for 1 million euro. Is this income taxable?

It would depend on the stories complying with legislation and being considered of artistic merit. Thats for the accountancy guys to agree with the Revenue as an exemption is required.

mountainyman wrote: »

Gervaise G-deG-G owns an art gallery. He displays set of video installations made by Gary O'G. These are purchased over the course of several months for a total of 100,000 euro.

Gary O'G is a purported medium scale Dublin cocaine dealer. All purchases were in cash.

Advise Geoff McG, Gervaise G-deG-G and Gary O'G as to tax liability and compliance with money laundering laws and laws relating to CAB.

I suspect Gary O'G is in the clear (regarding the above events), assuming he makes income tax returns and keeps proper books of account.

There may be an obligation on Gervaise G-deG-G to list people he has paid more than €3,000 in any given year, retain VAT receipts, etc. While I suspect art galleries and auction houses and others dealing in antiques may have an obligation under money laundering legislation, one might need to check if this extends to video and if it extends to money paid by them.

If either Gervaise G-deG-G sees anything suspicious in the transaction Gary O'G (both dealing in art) they may be obliged to report the transactions.

mountainyman

Sorry chaps didn't mean to be rude just haven't been boarding for a while.

Have there been any instances where an attempted misuse of the exemption has taken place? After all some of us (Me) think Marina Abramovic is the woman of the century is it really appropriate for tax collectors to purport to judge art?

MM

rubadub

Tom Young wrote: »

Income is taxable, yes. Geoff McG is a businessman rather than an artist..

How is this defined?

I know a guy who has had a few books of poetry published. I think he stays in some writers society just to get these "artists perks", while he has a normal job where his main money really comes from.

If it is a certain % of your earnings does this leave loopholes in the law. e.g. a used car salesman could take up painting, selling pictures for €20k each and throwing in a free car with each one. Similar to how DIY stores sold apples for £30 and threw in a free drill, back in the 80's when sunday trading or DIY stuff was illegal yet you could sell apples.

Who decides on the value of the paintings? I could be selling really good gold frames with doodles and claim the value is for the doodle.

Victor

mountainyman wrote: »

Have there been any instances where an attempted misuse of the exemption has taken place?

People will attempt anything, the Revenue allowing it is another thing.

After all some of us (Me) think Marina Abramovic is the woman of the century is it really appropriate for tax collectors to purport to judge art?

They don't purport to judge art - they have a panel (or arists, writers, etc.) that decides on these things.

rubadub wrote: »

I know a guy who has had a few books of poetry published. I think he stays in some writers society just to get these "artists perks", while he has a normal job where his main money really comes from.

Anyone can avail of it once they comply with the conditions.

If it is a certain % of your earnings does this leave loopholes in the law. e.g. a used car salesman could take up painting, selling pictures for €20k each and throwing in a free car with each one. Similar to how DIY stores sold apples for £30 and threw in a free drill, back in the 80's when sunday trading or DIY stuff was illegal yet you could sell apples.

It is unlimited and is not related to your other earnings. However, some related transactions may be more complicated - for example when one buys a music CD, there may be

(a) original work in the songwriting - tax exempt.
(b) performance of the song - not sure.
(c) the production and copying and distribution / sale of the CD - not exempt.

Who decides on the value of the paintings? I could be selling really good gold frames with doodles and claim the value is for the doodle.

The panel.