Supporting Creative Entrepreneurs with Fair Taxes
Actors and other creators are small business people. The only way we can make a living is to have our work protected through taxation that allows us to average our fluctuating incomes and fair copyright laws.
Cultural workers face many challenges in operating their small businesses. For example, self-employed performers, musicians and other artists do not have the full, automatic access to programs such as Employment Insurance and the Canada Pension Plan that full-time employees do.
They also face a tax system that is geared towards ‘employees’ and doesn’t address the unique needs of self-employed creative entrepreneurs whose incomes can fluctuate wildly from year-to-year. For example, a performer’s sudden emergence as a lead in a television series may have followed many lean years of training, intermittent work, tireless self-promotion and attendance at hundreds of auditions. But if the series doesn’t catch on, they may soon return to more challenging times. Yet, they will be taxed in their successful year as if that was their normal annual income.
Tax averaging and an exemption on copyright and residual income will result in fair and equitable tax laws that will encourage creativity and value cultural productivity. Income averaging is not a new concept in Canada. For decades, our federal tax laws recognized the volatile nature of artists’ incomes and contained provisions for income averaging. Unfortunately these provisions were abolished in 1988. It’s time to bring income averaging back. Income averaging will allow self-employed entrepreneurs to better-predict their tax burden and make a fair contribution based on their ability to do so.
We also recommend that the government follow the lead of Quebec and grant professional artists a $15,000 exemption from taxes on revenues earned on copyright and residual payments.