Hon. Jim Flaherty
Minister of Finance
House of Commons
October 30th, 2012
I am writing to urge you to recognize the reality of the inconsistent nature of artists’ incomes and adopt income averaging and tax exemption on royalty and residual income for artists. To do so will help create a financially stable artistic community that can better contribute to Canadian culture and the economy.
Canadian artists are financially vulnerable because artistic employment and income are often unpredictable. An artist may find him or herself with many contracts and a reasonable income one year and very limited income the next year. As well, artists do not have automatic access to programs such as Employment Insurance and the Canada Pension Plan to help them during periods of unemployment or retirement. Artists would be assisted in surviving this financial instability if they could save a decent amount of income from their successful years to provide for them during their unsuccessful years. However, artists are currently taxed in a financially successful year as if that was their normal annual income. This causes artists to have little savings to support them during financially difficult periods.
To end this financial vulnerability, I believe that artists should be permitted to average their income over several years during periods of spiked income earnings. If this takes place, artists will be taxed more realistically and fairly on the actual income they make over a period of several years. Additionally, artists should not be taxed on a certain amount of their residual or royalty earnings in a tax year. For example, artists could be exempt from taxation on the first $10 000 of their residual or royalty earnings. If these two tax measures take place, then the financial vulnerability of artists will be greatly reduced since they will be able to have enough savings to carry them through financially difficult periods.
Providing artists financial stability will have benefits for all Canadians. By providing opportunities to successfully support themselves through artistic employment alone, artists can concentrate more fully on their artistic activities and new individuals will be drawn to the artistic field. This will give rise to a larger, more creative and culturally productive artistic community that will enrich the lives of all Canadians.
During a recent meeting with the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), they explained that income averaging is not a new concept in Canada. For decades, federal tax laws contained provisions for income averaging for artists. These provisions were abolished in 1988.
Minister, I urge you to move forward and have the federal government support financial stability for artists. Not only will you be enriching the lives of all Canadian artists and the greater public, you will also be enriching the Canadian economy through thriving cultural industries.
Libby Davies, MP (Vancouver East)