ONGOING STRUGGLE FOR FAIR TAX TREATMENT FOR ARTISTS

Ottawa , Novem­ber 12, 2004 — The strug­gle for fair tax treat­ment for artists has been a major con­cern for the CCA for a num­ber of decades.   The play­ers and pieces shift slightly from time to time, but the end result is usu­ally much the same – Canada Rev­enue Agency increas­ingly views inde­pen­dent con­trac­tors within the cul­tural sec­tor as employees.

Ear­lier this year, the local Thun­der Bay CRA office ruled an actor at Mag­nus The­atre (on two short-term con­tracts under­taken in 2002 and 2003) to be an employee.    A sub­se­quent rul­ing deter­mined that all artists hired as inde­pen­dent con­trac­tors in that the­atre com­pany (actors, play­wrights, design­ers and direc­tors), were sim­i­larly deemed employ­ees.   The the­atre was ordered to pay retroac­tive CPP and EI ben­e­fits and the artists had their income tax returns reassessed to dis­al­low legit­i­mate busi­ness expenses.

The work­ing group on tax­a­tion issues coor­di­nated by CCA raised con­cerns dur­ing a meet­ing with CRA offi­cials in June.   The CRA rul­ing was appealed by Mag­nus The­atre, Cana­dian Actors Equity Asso­ci­a­tion, and the Pro­fes­sional Asso­ci­a­tion of Cana­dian The­atres, as well as by the indi­vid­u­als involved.

We have now learned that CRA has agreed to allow the appeal in the mat­ter of Mag­nus The­atre North­west vs. Min­is­ter of National Rev­enue, thereby over­rid­ing its ear­lier rul­ing.   It is to be hoped this rever­sal means other artists at Mag­nus who were impli­cated through the orig­i­nal rul­ing, will be sim­i­larly exon­er­ated, and returned to their proper sta­tus as self-employed individuals.

An offi­cial at CRA described the news about Mag­nus as “not exactly earth shat­ter­ing”.   CCA won­ders whether the case was dropped because it lacked merit or because the issue was begin­ning to res­onate with politi­cians.   On 8 Octo­ber, as part of the government’s response to the Speech from the Throne, MP Sar­mite Bulte, Par­lia­men­tary Sec­re­tary to the Min­is­ter of Cana­dian Her­itage, stated “For the bet­ter part of a cen­tury, Canada ‘s per­form­ing artists have pro­vided ser­vices as inde­pen­dent con­trac­tors.   This con­trac­tual rela­tion­ship between pro­duc­ers, artists and gov­ern­ments stim­u­lates a health­ier cul­tural econ­omy though a num­ber of incen­tives.   Unfor­tu­nately, this rela­tion­ship has been eroded recently.   In recent years Canada Rev­enue Agency audi­tors have increas­ingly chal­lenged the inde­pen­dent con­trac­tor sta­tus of per­form­ing artists.   This must be cor­rected as soon as pos­si­ble because the impli­ca­tions for our artists and our arts orga­ni­za­tions are huge.”

A draft strat­egy regard­ing fair tax treat­ment for artists will be pre­sented to del­e­gates attend­ing CCA’s national pol­icy con­fer­ence in Regina , Saskatchewan , on 19 and 20 Novem­ber.   CCA will con­tinue to fight in the trenches on this issue.