Guide for art centre managers and coordinators
How tax applies to
Indigenous artwork
Explains how pay as you go (PAYG) withholding, the goods and
services tax (GST) and the Australian business number (ABN)
apply to Indigenous artworks sold at art centres
NAT 12066-05.2012

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you can seek further assistance from us.
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© AUSTRALIAN TAXATION OFFICE FOR THE
PUBLISHED BY
COMMONWEALTH OF AUSTRALIA, 2012
Australian Taxation Office
You are free to copy, adapt, modify, transmit and distribute this material as
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JS 23990

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ABOUT THIS GUIDE
2
INDIGENOUS ARTWORK SOLD AT
ART CENTRES
2
THE BUY AND SELL ARRANGEMENT
2
THE ACTING AS AN AGENT ARRANGEMENT
4
STATEMENT BY A SUPPLIER
5
GST CREDITS
5
KEEPING RECORDS
6
SUMMARY 6
MORE INFORMATION
6
HOW TAx ApplIes TO IndIgenOus ArTWOrk 1

ABOUT THIS GUIDE
Does an artist charge GST?
This guide explains how pay as you go (PAYG) withholding,
If an artist is not registered for GST, they will not include GST in
the goods and services tax (gsT) and the Australian business
the price when selling an artwork to you the art centre operator.
number (ABN) apply to Indigenous artworks sold at art centres.
If an artist is registered for GST, they will include GST in the
price when selling an artwork to you the art centre operator.
  TerMs We use
When we say
Do you charge GST when you sell an artwork?
GST credit, we mean the GST term
input tax credit.
If you are registered for GST, you must include GST on the full
sale price of an artwork.
When are you required to withhold amounts from
INDIGENOUS ARTWORK SOLD AT ART CENTRES
an artist?
We have identified two ways Indigenous artworks are sold at
art centres.
1 The buy and sell arrangement – you the art centre operator
  explAnATIOns
buy the artwork from the artist and then sell the artwork to
Special or Ordinary Zone A includes most of the Northern
a buyer.
Territory (including darwin and Alice springs), northern
2 Acting as an agent arrangement – you the art centre operator
Western Australia and far west and far north Queensland.
acts as an agent for the artist and sells the artwork on behalf
of the artist.
Artistic works includes graphic works, painting, sculpture,
collage, craftsmanship and some performance art.
depending on how your art centre is set up, artwork can be
For example, an artistic work would include handcrafting
sold using only one arrangement or both arrangements.
a traditional spear.
THE BUY AND SELL ARRANGEMENT
According to the PAYG withholding system, you must withhold
There are two ways the buy and sell arrangement arises.
46.5% of the payment for an artwork if all of the following apply:
You can buy artwork either:
n an artist does not quote an ABN
n immediately on delivery from an artist
n that artist is in business.
n from an artist later, at the time of sale to an art centre buyer.
In a buy and sell arrangement, there are two supplies.
  You must send the amount withheld to us.
1 A supply between an artist and an art centre.
Indigenous artist
sell
$
Art centre
2 A supply between the art centre and the buyer.
Art centre
sell
$
Buyer
The GST implications are the same for both supply situations.
2
HOW TAx ApplIes TO IndIgenOus ArTWOrk

When are you not required to withhold amounts
Buy and sell arrangement process
from an artist?
Is the artist in business?
You are not required to withhold amounts in the following
two circumstances:
Check to see if an exception applies.
1 Artist works or lives in Special or Ordinary Zone A
  We have varied to nil the amount to be withheld from a
payment to an Indigenous artist for artistic works if an
does the artist work or live in special or Ordinary Zone A?
Indigenous artist works or lives in Special or Ordinary
Zone A and does not quote an ABN.
YES
nO
  The variation applies to payments made from 1 July 2004.
  In summary, where an art centre makes a payment to an
do not withhold
Indigenous artist for artistic works, the art centre is not
required to withhold amounts where that artist works or
lives in special or Ordinary Zone A.
If you are unsure whether the artist is carrying on a business
or a hobby you may ask the artist for a Statement by a
supplier indicating the supply is in connection with a hobby
  Although this variation will reduce the amount to be
or recreational activity.
withheld to nil in some circumstances where artists are in
business, if their turnover exceeds $75,000 the artist will be
Statement by a supplier provided?
required to register for GST.
YES
nO
2 Statement by a supplier
  Often it is difficult to work out if an artist is in business or just
do not withhold
creating artworks as a hobby or recreational activity. However,
where an artist does not live in Special or Ordinary Zone A,
If you believe the artist is in business, ask them to quote
an art centre may seek a Statement by a supplier from the
an ABn.
artist. This indicates that an artist is creating artwork as a
hobby or recreational activity and is not in business.
ABN quoted?
  Art centres do not need to seek a new statement for each
YES
nO
supply. We recommend that the details be confirmed with
the artist every 6–12 months.
do not withhold
Withhold 46.5%
Send withheld amount
to us
HOW TAx ApplIes TO IndIgenOus ArTWOrk 3

THE ACTING AS AN AGENT ARRANGEMENT
Do you charge GST on your commission?
When you act as an agent for an artist, you essentially take the
If you are registered for GST, you include GST in the
role of the artist.
commission fee. The artist can claim a GST credit if they
are registered for gsT.
There are two separate supplies made, one from the artist to
the buyer for the sale of the artwork, and the second from the
If you are providing a service to the artist, you agree to sell the
art centre to the artist for agency services.
artwork and pay the proceeds to the artist in return for a fee
(usually deducted from the sale proceeds).
1 The transactions between the artist, the buyer and you for the
sale of artwork.
  For more information about agency relationships,
Indigenous artist
refer to GSTR 2000/37 Goods and services tax: agency
supplY
ArT
relationships and the application of the law.
$ less
COMMIssIOn
When is a buyer required to withhold amounts from
Art centre
an artist?
According to the PAYG withholding system, the buyer
ArT
must withhold 46.5% of the payment for the artwork if the
$
$
following apply:
n an artist fails to quote an ABN
Buyer
n an artist is in business and the buyer purchases their artwork
   Physical/practical flow
in the course of their business (for example, a purchase made
   Actual contract
by a commercial gallery).
2 The transaction between you and the artist for
agency services.
  The buyer must send the withheld amount to us.
Indigenous artist
$
When is a buyer not required to withhold amounts
from an artist?
AgenCY
A buyer is not required to withhold in the three circumstances
serVICe
below:
Art centre
1 Agent may quote its ABN instead of the artist’s ABN
  There is a specific exception in the law enabling the agent of a
supplier to quote their ABN instead of the ABN of the supplier.
Buyer
If an art centre has quoted its ABN on an invoice or some
other document relating to the supply there is no need for the
buyer to withhold.
  In practice, the commission will generally be deducted
2 Artist resides in Special or Ordinary Zone A
from the sale proceeds due to the artist.
3 Statement by a supplier
Does the artist (you acting as an agent) charge GST
on the sale price of the artwork?
If an artist is not required to be registered for GST, the artist will
not include GST in the sale price of the artwork.
If the artist is registered, the artist will include GST in the
sale price.
4
HOW TAx ApplIes TO IndIgenOus ArTWOrk

Acting as an agent arrangement process
STATEMENT BY A SUPPLIER
A payer must withhold an amount from a payment it makes to
Is the artist in business?
another entity if the payment is for a supply that the other entity
Check to see if an exception applies.
has made, or proposes to make, to the payer in the course or
furtherance of an enterprise carried on in Australia.
does the artist work or live in special or Ordinary Zone A?
  The primary exception is that the supplier has quoted
an ABN on an invoice or some other document relating to
YES
nO
the supply.
Where payers are unsure if the supplier is carrying on an
do not withhold
enterprise they may want to make a further inquiry with
the supplier. The payer may ask the supplier to provide a
Has the art centre (the agent of the artist) quoted its ABn?
Statement by a supplier (nAT 3346).
The supplier can either use the form Statement by a supplier
YES
nO
(nAT 3346) or they can create their own form.
If a supplier chooses to create their own ‘Statement by
do not withhold
a supplier’ it should contain the following:
n the supplier’s name and address
n why it was not necessary to withhold (for example, the supply
does the artist wish to provide a Statement by a supplier
is part of a hobby or private recreational pursuit)
indicating the supply is part of a cultural pursuit?
n the supplier’s signature.
Or
If the artist believes they are in business, have they quoted
GST CREDITS
an ABn?
If an artist is required to be registered for GST and has issued
a tax invoice, you can claim a gsT credit.
YES
nO
If an artist is registered for GST, they can claim a GST credit
where you include GST in the commission fee and issues a
tax invoice to the artist.
do not withhold
Withhold 46.5%
You claim your GST credits when you lodge your
Send withheld amount
activity statement.
to us
  There is a four-year time limit in claiming GST credits.
  For more information, refer to:
n Time limits on GST refunds (NAT 11645).
HOW TAx ApplIes TO IndIgenOus ArTWOrk 5

MOre InFOrMATIOn
KEEPING RECORDS
For more information, refer to:
You should keep records relating to when an artwork was
n Statement by a supplier (nAT 3346)
purchased from an artist. This should include the following:
n PAYG withholding (nAT 8075)
n the date of purchase
n GST for small business (nAT 3014)
n the name and address of the artist
n ABN registration for individuals (sole traders) (nAT 2938)
n the purchase price.
n ABN registration for companies, partnerships, trusts and
other organisations (nAT 2939)
  You can also include this information in your cash
If you want to obtain a copy of our publications or for more
payment book.
information, you can:
n visit our website at www.ato.gov.au
n phone General business on 13 28 66 for most small business
tax issues, including GST rulings, ABN and PAYG withholding
SUMMARY
n phone Individuals on 13 28 61 for individual income tax and
n If the artist is not registered for GST, do not include the GST
general personal enquiries
on the sale price of the work.
n write to us at
n If the artist is registered for GST, include the GST on the sale
Australian Taxation Office
price of the work. You issue a tax invoice showing the artist’s
PO Box 3524
ABN on behalf of the artist to the buyer. The artist will need to
ALBURY  NSW  2640
send any GST collected to us.
n If you are registered for GST, you include GST in the
If you do not speak english well and need help from the ATO,
commission fee and issue a tax invoice to the artist. You send
phone the Translating and Interpreting Service on 13 14 50.
the collected GST to us. Where the artist is registered for GST  If you are deaf, or have a hearing or speech impairment, phone
they can claim a GST credit.
the ATO through the national relay service (nrs) on the
n A buyer, who is making a purchase in the course of their own
numbers listed below:
business, is not required to withhold where either:
n TTY users, phone 13 36 77 and ask for the ATO number
– you have quoted your ABN on an invoice or some other
you need
document relating to the supply
n speak and listen (speech-to-speech relay) users, phone
– the artist works or lives in special or ordinary zone A and
1300 555 727 and ask for the ATO number you need
does not quote an ABN
n internet relay users, connect to the nrs on
– the artist has provided a Statement by a supplier (you can
www.relayservice.com.au and ask for the
also include this information in your cash payment book).
ATO number you need.
6
HOW TAx ApplIes TO IndIgenOus ArTWOrk

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