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Tax Matters
Information below is for general information purposes only. Please consult your accountant, tax advisor or financial planner before you act on information in this FAQ. This material was offered by Peter Messaline (aka The TaxXman on the CanadianActor Online Discussion Boards), and is based on some of his postings. Reprinted with permission of Peter Messaline, who retains copyright.

See the TaxXman's current answers to questions on the CanadianActor Online Discussion Boards. And see Student Question and Resources, below.


Performer Expenses

What expenses can an actor claim come tax time?


Note: To avoid any descrepencies or legal tax-related questions, consult with qualified tax lawyers and they will be able to better assist you.

Claim what you've spent:

  • In the year you spent it and
  • for the running of your business.
Put the details on form T2124, from the Business & Professional Guide. (This form can be downloaded or mailed to you.) That's all you do to be treated as a self-employed actor. You don’t need to:
  • make any money.
  • register your business.
  • have an agent.
  • be a union member.

Personal Use:

Isn't deductible, so if there’s something you use personally, and in business -- like the car, your home, or a trip on which you did some business -- then you have to find a way of showing what proportion was business, so that you can deduct that.

Claim your share:

Of costs you pay with someone else. Keep a copy of the receipt with a note of your share. You don’t send in any of these receipts, but you should assume they could be called for afterwards.

Prove It!

The more evidence you have, the better. You must keep receipts and they must show the amount, the date, and the purpose. (You are allowed to write the missing information on the receipt.) If you use an accountant, he or she most likely has your important financial data stored in a software program such as QuickBooks Online Accountant Edition, so keep that in mind. Keep your income paperwork, too: the payslip, the agent's notes, as well as the T4A. Keep a diary with details of what you did, who you met and what you talked about. Arrange business trips ahead of time - get invitations to visit if possible. You have to be ready to show:

  • what you paid (with receipts) and

  • what the purpose was (diary entries, note on the receipt itself)

Types of Expenses:

This list is not complete, you may have other legitimate expenses and you may not be able to claim under a specific heading, depending on your career and your income. Each case is different, and each assessor is different, too. CCRA assessors are still ignorant about our business and likely to guess based on their own experience. I've asterisked (*) recent hot-button issues: be careful and put in explanations. You can always include extra sheets with your return.

  • Accountant: Deduct the fee in the year you pay, not the tax year of the return.

  • Advertising, Promotion: Photos, résumés, anything that tries to get you work

  • Agent Commission: Plus GST for the agent, plus any other fees you pay.

  • Business Fees: Union dues, work permits, association memberships. Read on for initiation,

  • Business Meals (plus tip)*: Meals are deductible if:

    • You had to eat out because you were between appointments,

    • you were out of town, or

    • you were treating someone else ( but only if you set it up ahead of time as a business meeting).

  • Dressing Room Supplies*: Duplicates in your on-set bag or at the theatre. Fan, humidifier, mirror, hair-dryer

  • Hair / Make-up*: Keep all your receipts, claim a proportion

  • Medical Insurance: Not medical costs. Medical coverage for a trip, or the ACTRA Frat premium.

  • Local Transportation: Cabs, transit, bicycle. Keep receipts with notes about the usage.

  • Out-of-Town Accommodation: If it’s not covered by the engager. Also for audition trips and research visits (it's best to have invitation paperwork).

  • Office Supplies & Equipment: Stationery, postage, printer stuff.

  • Research: Books, museums, a portion of cable.

  • Classes: For acting skills, saleable special skills, and business skills. Serious gym.

  • Professional Gifts*: Put the name of the recipient on the receipt.

  • Professional Tickets*: Films and theatre. And video rentals.

  • Telephone: You can claim pager, cell phone, prepaid phones, extra services, and long distance if calls are related to business. But not the basic rental of your home phone.

  • Wardrobe*: Strictly, except for short-lived dancewear, it’s all Capital Cost, and only if you couldn’t reasonably wear it personally. The rule may not be generally applied, but it's there.

  • Car*: Percentage Business Use. The ratio of your business and personal use. The only watertight way to go is with a mileage log. Deduct the business percentage of your share of costs like::
    • Gas
    • Insurance
    • Repairs & Maintenance - Get a receipt. Don’t accept the "tax-free no receipt" option.
    • Registration & License
    • Loan interest - which will be a part of your monthly payment.
    • Lease payments - Your return will need a bunch of details off the lease agreement.
    • CAA - or other association
    • Capital Cost:
      • Anything that you go on using after the year end is technically a Capital Cost. In practice CCRA doesn't worry about stuff under a couple hundred bucks. Larger items should be depreciated: you take a fraction year by year as you use it. Look at the Business and Professional Guide (or Tax Kit 2000+) for the way to calculate it. 
    • Plus - Equipment, washes, parking tickets - but NOT moving violations.
  • Business Use of Home*: Claim the percentage that your working space uses in your living space.
    Claim the percentage of your share of costs like:
    • Rent - Get a receipt from your landlord. At least keep your cheques.
    • Property Tax
    • Mortgage Interest - The bank gives you an annual statement showing how much this is.
    • Electricity and Gas
    • Insurance - Of the whole place. The whole of Home Office insurance if you have it.
    • Cleaning - General interior and exterior cleaning service and products.
    • Repairs and Maintenance - Take the whole of work done on the office itself.

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Student Question

A point was raised in a Private Message on the CanadianActor Online Discussion Boards by a full-time university student in another field. She has been taking acting classes, and is determined to be an actor,
and wonders if she can deduct her expenses. The question is:
  • Will CCRA (Canada Customs and Revenue Agency) regard her as a self-employed actress before she has made any money

You can deduct acting expenses at college, but there are two issues. CCRA looks for an indication that:

  • the business has started (getting an agent, sending out headshot and resumes, actually working), and
  • visible intent (training, time spent on the business).
It may be that a fulltime course, especially in another subject, might be a barrier to spending enough hours in a week on the business.

Then there is this question:

  • Does she actually need to deduct her expenses to reduce her tax payable?
At university, your taxable income would most likely be low. Taking deductions, so that your tax bill is reduced, or your refund increased, might trigger challenges to your professional status. However, while you might deduct résumé and picture costs, if CCRA accepts you are running the business, taking training in a second career is not deductible as an expense. You can deduct acting class fees when you're an actor, but in this case it's an investment in your future, and treated as a capital expenditure. Capital expenditures are treated like capital cost, at a fixed, low rate.

This sounds like the best route. Deducting the training over a number of years, when your income needs the reduction, is technically correct and wouldn't draw as much attention as reducing your income to impossibly low amounts, even if that is what actually happened.

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Resources:

CCRA: http://www.ccra-adrc.gc.ca. Look in your local blue pages for Taxes, Federal. For the Toronto area, the numbers are: Individual Tax Inquiries:1-800-959-8281; Business Inquiries (Self-Employed and GST)1-800-959-5525.

The Taxxman: Tax for performers, by a performer. Fifteen years of tax preparation: I've already helped someone you know. Tax preparation and free advice. Take the deductions you're owed. Country-wide service. Income tax, GST, incorporation, kids. Call Peter Messaline (416) 960-1785 taxxman@taxxman.ca

Cocopelli Turn your art into a living. Your one-stop career shop. Canadian tax and career advice from the foremost arts entrepreneur writer. Don't rely on gossip and American authorities -- play by Canadian rules!

 


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