Claiming your Artworks as a Tax Deduction in 2024

If you’re asking yourself whether this is possible, then you’ve come to the right place. With June 30 just around the corner, it’s a good time to assess how your assets can work for you. We’re going to break down what you need to know to claim a tax deduction on your artwork acquisitions.

Who can claim art as a tax deduction?

The good news is, regardless of why you bought your latest artwork, in the Australian Taxation Office’s eyes, artwork is both an investment and a depreciating asset. This means it may be claimed as a deduction. The amount you can claim will be determined by the size of your business and whether you are an employee.

If you work from home as an employee, you may claim a deduction for your artwork up to the value of $300 as part of your home office expenditure. Any value greater than $300 must be claimed using the usual decline in value rules.

However, if you are a small to medium-sized business owner (turning over less than $500million annually) the amount you can claim is much greater. It won’t matter if your office is a home office or something else, the Australian Taxation Office (ATO) classifies artwork as both an investment and a depreciating asset. This means it makes any artwork purchases eligible for the instant asset write-off measure.

is art tax deductible

How much can I claim?

As a depreciating asset, artwork is normally subject to a very low rate of depreciation. This is because their useful life is assessed as 100 years. So the depreciation rate for artworks will be around 1% per year. Being able to claim 1% of the cost of an artwork as a deduction is not very enticing. It is also not likely to influence your decision about whether to purchase art for your office.

The good news is, being classified as a depreciating asset qualifies art for the instant asset write-off measure. The threshold for this was raised in 2020 from $30,000 to $150,000. This means business owners can now claim up to $150,000 per painting or sculpture. And, there is no limit to how many pieces of art you can make this claim for. That’s a much better side perk to buying artwork!

art tax deduction australia

What is the criteria for the artwork?

In order to claim a tax deduction on artwork purchased for your office, the artwork has to meet four criteria to be eligible for the instant asset write-off. It must be:

  1. Tangible;
  2. Capable of being moved;
  3. Purchased with the dominant purpose of display in a business premise; and
  4. Not be trading stock.

It won’t matter if your artwork is bought new or second hand. But it is important to note that the above criteria does not include NFTs (non-fungible tokens) to be claimed as an art tax deduction.

What about art transfers from super funds?

In circumstances where artworks are transferred from super funds to members, a tax deduction can also be gained if the member or trustee is an eligible business. A market valuation would need to be obtained and a tax deduction equal to that value can be applied. The ATO has provided a specific valuation instruction form for this purpose and it is important the valuation methodology in this form is followed correctly.

painting depreciation rate ato

What sort of art should I purchase?

Now that you know how you can claim significant deductions for artwork in the workplace, the challenge is to decide what you want to buy. Art preferences are obviously very subjective, but it’s also good to consider where you will put the artwork and what its purpose will be.

Art can be such a wonderful representation of your organisation’s vision and purpose. It’s also a great opportunity to create a connection with both your employees and your clients or customers. You may wish to feature a local artist, or up-and-coming artists from a reputable gallery such as one of these contemporary artists.

Would you want an abstract painting to stimulate discussion? Or perhaps a minimalist artwork to relax anxious patients in a waiting room? Or inspire colleagues in a boardroom with a modern work? With employees now often working in a hybrid model, can your artwork bring a bit of home to people in the office? Or provide uplifting imagery to inspire higher achievement? There is so much to consider.

If you’re unsure about what might work best in your workplace, we can help. We can provide you with mock-ups of your preferred artworks from our stockroom in your office space. If you’re an interior designer or architect, all trade and industry professionals receive a 10% discount on any artwork purchased from .M Contemporary.

Browse tax deductible artwork from M Contemporary

Information provided by Michael Fox – Specialist Art Accountant

Consult your personal accountant for further details.

Visit us at 37 Ocean St, Woollahra, to discuss with us your vision for your space.

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Claiming your Artworks as a Tax Deduction in 2024

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