# Any tax breaks on spending on gear/recording/band expenses?



## LowWatt (Jun 27, 2007)

I figure this is a long-shot, but I should ask in case I'm missing out. My drummer is taking some cash out of his RRSPs in the new year for recording studio/production/gear expenses. This will raise his income and become taxable. Anything he can do to minimize the hit since that the money is technically being invested into the arts and Canadian culture?


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## Guest (Dec 3, 2010)

He could register the studio as a business and try to write down the cost of the construction and equipment and what not, but he'd have to show income for the business.

He should talk to an accountant. He'll need one any way to file the corporate taxes if he registers as a business.


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## LowWatt (Jun 27, 2007)

iaresee said:


> He could register the studio as a business and try to write down the cost of the construction and equipment and what not, but he'd have to show income for the business.
> 
> He should talk to an accountant. He'll need one any way to file the corporate taxes if he registers as a business.


Thanks Ian, but he's not building a studio. I'm just wondering if there were any known breaks for investing cash into any of the parts of making an album at all. If we report all the income from the album, does that make us elligible in writing off any part of the expenses acrued in making it? 

Long shot, but i figured I might as well ask.


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## Guest (Dec 3, 2010)

LowWatt said:


> Thanks Ian, but he's not building a studio. I'm just wondering if there were any known breaks for investing cash into any of the parts of making an album at all.


Talk to an accountant. You might be able to expense it if the band is registered as a business. I don't know if you get a personal tax break if you use your money to seed a business. And there's an 'Employed Artist' category in the CRA rule book you can make claims under:

Employed artists

You should seek proper CSA advice.


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## LowWatt (Jun 27, 2007)

iaresee said:


> Talk to an accountant. You might be able to expense it if the band is registered as a business. I don't know if you get a personal tax break if you use your money to seed a business. And there's an 'Employed Artist' category in the CRA rule book you can make claims under:
> 
> Employed artists
> 
> You should seek proper CSA advice.


Interesting. Thanks Ian.


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## Andy (Sep 23, 2007)

The Foundation to Assist Canadian Talent on Recordings


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## Guest (Dec 4, 2010)

Andy said:


> The Foundation to Assist Canadian Talent on Recordings


You're my hero if you can get a FACTOR grant. Check out the list of people who get those.


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## LowWatt (Jun 27, 2007)

iaresee said:


> You're my hero if you can get a FACTOR grant. Check out the list of people who get those.


Yep. I know one of the people there and that is a very tight ship with rigid standards. Our band seems to be climbing fast, but were a ways away from being in that game.


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## Mooh (Mar 7, 2007)

Declare all money in and out and an accountant should be able to find a break or two. Since I teach from my home studio, everything is declared and a lot of expenses are claimed. In any event, having a reputable accountant between us and Revenue Canada is a good idea.

Peace, Mooh.


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## Guest (Dec 6, 2010)

LowWatt said:


> Yep. I know one of the people there and that is a very tight ship with rigid standards. Our band seems to be climbing fast, but were a ways away from being in that game.


I understand why they're hard to get: they're given out first as loans and it converts to a grant if you can't pay it back in time. They do want to recoup the money whenever possible. That makes sense. Doesn't make it any less frustrating getting turned down year after year though.


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## gtone (Nov 1, 2009)

Your friend may be able to deduct the cost of these expenses to the extent that they are used for creating business income. As a general rule of thumb, capital-based expenditures such as equipment purchases would be depreciated over a number of years through the _Capital Cost Allowance _system while general service type expenses would be deductible in whole for the year they are incurred.

There are two caveats that apply. First, he has to operate a business (doesn't have to be incorporated, btw) with a reasonable expectation of profit at some point in time. This doesn't mean he has to create a profit right away, but the CRA doesn't take kindly to flimsy arrangements used to help write-off business losses against non-business income. Second, keeping all receipts and proper records is key.

By day, I'm a CFP with 21 yrs experience, BTW...


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## bluesmostly (Feb 10, 2006)

gtone said:


> Your friend may be able to deduct the cost of these expenses to the extent that they are used for creating business income. As a general rule of thumb, capital-based expenditures such as equipment purchases would be depreciated over a number of years through the _Capital Cost Allowance _system while general service type expenses would be deductible in whole for the year they are incurred.
> 
> There are two caveats that apply. First, he has to operate a business (doesn't have to be incorporated, btw) with a reasonable expectation of income at some point in time. This doesn't mean he has to create a profit right away, but the CRA doesn't take kindly to flimsy arrangements used to help write-off business losses against non-business income. Second, keeping all receipts and proper records is key.
> 
> By day, I'm a CFP with 21 yrs experience, BTW...


gtone obviously knows of what he speaks. I have been making my living in the arts for many years and I can tell you that the 'reasonable expectation of profit' clause is alot more lenient for the arts than it is for other professions, as most artists/musicians never to so well. Still, most artists don't take advantage of the tax stuff - you can get money back in taxes. Declare everything, keep good records and write off as much as you can, there are good tax benefits to be had for sure.


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