If you’re asking yourself whether this is possible, then you’ve come to the right place to read more about. With June just starting tomorrow 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.
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!
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:
- Tangible;
- Capable of being moved;
- Purchased with the dominant purpose of display in a business premise; and
- Not be trading stock.
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.
Let's discover some amazing artists here
Let us help you find the right artworks to your office space whether it is at home or in your company.
PS: *Please speak to your accountant to confirm the amount you can claim.
