Evidence of meeting #14 for Canadian Heritage in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was artist.
A recording is available from Parliament.
5:10 p.m.
Liberal
Anthony Housefather Liberal Mount Royal, QC
Thank you.
Mr. Chair, do I have any time left or am I done?
5:10 p.m.
Liberal
Anthony Housefather Liberal Mount Royal, QC
I'll just say that I appreciate the witnesses being here.
Thank you so much, Mr. Chair.
5:10 p.m.
Conservative
The Vice-Chair Conservative John Nater
Thank you, Mr. Housefather.
Mr. Champoux, you have the floor for six minutes.
5:10 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Thank you, Mr. Chair.
Mr. Dimitrakopoulos and Mr. Beaulieu, thank you for being with us today to help us understand.
Mr. Beaulieu, at the beginning of your opening remarks, you said that the CRA had questioned the status of the artist, and that surprised me a bit. Mr. Dimitrakopoulos then said that artists were considered to be small businesses for federal tax purposes.
By a process of deduction, I understand from this that the Canada Revenue Agency is not particularly sensitive to artists. Is that correct?
5:10 p.m.
Chartered Professional Accountant, As an Individual
Yes, I think the tax authorities are under a misapprehension as to artistic practice. Any professional artist's income from art is extremely variable. Often, artists invest a lot in their practice, especially at the beginning of their career. As a result, they incur a lot of expenses that will unfortunately not be covered by income. Often, they incur expenses to produce a series of works to be sold in a different tax year. So artists often record operating losses, which may be recurring. That raises questions in the eyes of the tax authorities, that is, whether...
5:10 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Forgive me for interrupting you, but two questions come to mind.
First, you have said a lot about income averaging. I think buying an income-averaging annuity is something that does Quebec artists a great service. The ACTRA representatives our committee recently heard from believed that averaging income over a four-year period was an option very much worth considering. It was in effect for artists up to 1989.
Is that a good idea to consider, rather than an income-averaging annuity?
If we put that in place at the federal level and kept the income-averaging annuity in its present form in Quebec, would that be compatible, from the perspective of an accountant like yourself?
5:15 p.m.
Chartered Professional Accountant, As an Individual
In Quebec, the income-averaging annuity allows artists to spread their income over a period of up to seven years, which is actually rather long. Take the example of a director who directs one film every two years. Thanks to this measure, they can spread their income over several years, and this enables them to receive a fixed income each year and set their budget better.
Nothing like this exists elsewhere in Canada at present. It is not recognized by the Canada Revenue Agency. So that makes Quebec's measure a bit less attractive. If there were harmonization between the levels of government and the federal government also offered this, it would certainly become more attractive for professional artists in Quebec.
5:15 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Suppose that the measure adopted by the federal government allowed for income to be averaged over four years, while the averaging can be over seven years in Quebec. Will that not become a mishmash or an incomprehensible hodgepodge for artists when they go to do their tax return?
5:15 p.m.
Chartered Professional Accountant, As an Individual
I think so, yes. When the rules being applied are not necessarily the same, it leads to a lot of confusion, particularly when it is often the case that artists have somewhat limited knowledge of tax law, given that they are, quite rightly, focused on creating. After all, that is the field in which they studied and that is their vocation.
If the two measures don't provide for exactly the same averaging periods, it could certainly create some form of confusion when it comes to tax matters.
5:15 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
Earlier, you said something else that completely blew me away: when artists receive grants for projects that are spread over more than one year, the portions of those grants that have not yet been spent are still subject to tax. Is that right?
5:15 p.m.
Chartered Professional Accountant, As an Individual
Maybe three or four years ago, the Canada Council for the Arts, whose representatives you heard just before me, allowed artists to spread their fellowships over a maximum of two years, based on progress on their projects. For example, if they receive a fellowship of $40,000, they can decide to receive an initial payment of $10,000 in the first year and a second of $30,000 in the second year.
5:15 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
An artist may decide that the entirety of their fellowship be paid in the first year, but any number of unknowns may still arise. For example, a supplier may fail to deliver products on time, or a project may be delayed for some reason. In those cases, the artist is penalized. So we agree that this needs to be fixed.
5:15 p.m.
Bloc
Martin Champoux Bloc Drummond, QC
I'm going to ask you one last question quickly, since I have barely a minute left.
You suggested that Quebec businesses dedicate 1% of their revenue to art. That would be fine if the same rule applied to all Canadian businesses.
What types of art would be covered by that measure?
5:15 p.m.
Chartered Professional Accountant, As an Individual
That is actually in connection with the construction of government and municipal buildings. It would affect all types of art, whether digital or visual, but it's primarily forms of art that people can see when they visit the sites. So we're talking about sculptures, paintings or permanent installations. These works could liven up otherwise austere premises, like courthouses, and bring culture alive for all visitors. The art would thus introduce a bit of colour into those sites and would become accessible to the general public. This is really a very important measure.
5:15 p.m.
Conservative
The Vice-Chair Conservative John Nater
Thank you.
Mr. Julian, the next round is yours for six minutes.
5:15 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you, Mr. Chair.
I would like to thank the witnesses for their testimony today. We hope they are safe and healthy in spite of this sixth wave of the pandemic that is currently hitting the eastern part of Canada.
I would like to start, Mr. Dimitrakopoulos, with you. Thank you for your presentation.
Could you provide to the committee, either now or later, figures from the last completed tax year—that would be 2020—on the total value of grants declared by artists and the total value of the grant exemptions that were provided by all artists?
5:20 p.m.
Director General, Income Tax Rulings Directorate, Legislative Policy and Regulatory Affairs, Canada Revenue Agency
I don't have those figures offhand, but I can get that information for you.
5:20 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Okay. Thank you.
My next question may have the same result. You've been very careful—and thank you for that—to explain to us the definition between “contract of services” and “contract for services”, which is an employee or the self-employed.
Does the Canada Revenue Agency keep, statistically, the number of artists who file income tax returns and the percentage of those who file under “contract of services”—in other words, those who are considered employees—and those who are considered self-employed?
5:20 p.m.
Director General, Income Tax Rulings Directorate, Legislative Policy and Regulatory Affairs, Canada Revenue Agency
Once again, I don't have the statistics, but I will try to get them for you.
5:20 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
This has been a problem systematically in other sectors. One example that hits me is people with disabilities across this country. If you file with the CRA from a provincial disability program, you're actually not treated differently by the CRA. That became a major problem when we were looking at pandemic relief and supports going to people with disabilities. Most people with disabilities aren't even counted in the CRA system.
Are artists tagged in the CRA database, so that we know who they are and can identify the answers to these kinds of questions?