Artist’s Guide To Surviving a Tax Audit

30 Ways To Keep Your Sanity

Artist's Guide To Surviving a Tax Audit
Yeah...why would an artist need a pencil?!
  1. Determine who your real friends are. You’re going to need to lean on them for some support. It’s a good thing. You really find out who supports you in the good and bad times.
  2. Make good friends with your banker if you haven’t already. In this age of online banking, I still love having a person to person relationship with my financial institution. I always have, and I always will. They can help you track down things you never thought you would need. Like a copy of the $30.00 bank transfer that grandparents gave to your children for a special allowance or treat that went into your personal account. Seriously…they assume you sold a painting and never claimed it as income!…and the CRA won’t take your word for it.
  3. Remember there are appeal systems at every turn of the road. USE THEM! They aren’t easy to find. You have to use your time to find out how the system works.
  4. Be proactive.
  5. Document every conversation you have with them. Dates, times, what they said. What you said.
  6. Be kind to your bookkeeper – he or she is just trying to help and this will be a stressful time. They’re just delivering the message, not the message-maker. Support them when the CRA guy is nasty to them. You’re a team….but make sure they are doing their end of the job.
  7. Take yourself out for a walk every now and then.
  8. Remember that no matter how any government in power may look at the “arts”…art cannot and will not be defined by an economic system of profit and loss. The value in the arts reports to a much higher authority.
  9. Practice answering these questions and NOT blowing your top:
    “Why would an artist need a box of pencils?”
    “Why would an artist need a halogen lightbulb?”
    “Does your husband care if you lose money?” <<< I still can’t do this one, and yes…the CRA auditor actually asked me that question! He is no longer welcome in our home. The government has no business in this.
  10. Find places to vent. A pillow works well when you need to muffle those four letter words. I particularly do not recommend punching walls. You will need your painting arm when this blows itself out…although you might be able to deduct the repair bill on the next income tax year.
  11. It does blow itself out and there is an end. Remind yourself of that….constantly.
  12. Tell your local, provincial and federal art bodies how you are treated in an audit. Make them aware so they can help educate other artists on how this will go. They may even be able to help, provide support and lobbying where required.
  13. Document everything.
  14. Document everything that happens during the audit.
  15. Document the questions the auditor asks you.
  16. Document everything.
  17. Lawyers are your friend. Find ones that know the arts and tax laws. They can help you when it becomes overwhelming.
  18. Accountants are your friend. Find ones that know the arts and tax laws.
  19. Insist the auditor has experience in auditing artists and the arts industry. If they don’t, appeal it and tell them they need to get experience. They wouldn’t send a non-experienced auditor in the oil industry up to audit an oil company, would they?
  20. Let your galleries and suppliers know you are undergoing an audit and you may need them to provide additional backup from time to time above and beyond. Express your gratitude for their assistance. Tell them what you need from the get-go in your relationship: contracts, statements, cheque stubs and details of the paintings that are sold when they sell them. If they aren’t already supplying those things to you – get rid of them. I mean it. It’s not worth your time to be involved with a gallery or supplier who isn’t providing detailed statements, cheque stubs, or bouncing cheques on you. All of those things raise red flags with the auditors.
  21. Auditors are ruthless. They don’t know how to “make sense”. They will not do any work on a file. They will assume you are a criminal and hiding things from the start.
  22. Dig your heels in for the long run. Know this is going to eat up your time when you’d rather be in the studio. Budget for that….if you can.
  23. Be fair in all things. Even though the auditor might not understand….you do! Educate them on your business. Really educate them.
  24. Write down your experiences and share them with other artists as you go. It’s important to share and learn together.
  25. Vanquish negativity from all other parts of your life. You’re going to need all the positivity you can muster when dealing with these morons.
  26. Keep good mileage logs for your vehicle. I use an iPhone app – “Milebug” and it works fabulously, kicking out a very decent report when you ask it to. Now…when they question 82% use of my vehicle, I can thoroughly back it up with detailed proof. Take THAT, Stephen Harper!
  27. Tax auditors keep themselves in a job sometimes by not doing their job well. Keep that in mind. They don’t have a lot of time and don’t care if they miss something. They just pass it along the line to the next guy. Be vigilant with them.
  28. Let your clients know what you’re going through. No one likes to go through an audit, and people can be very helpful in finding things to assist you and supporting you through this.
  29. Take your kids out for ice-cream and revel in the thought that your art will outlast everything and this too…shall pass.

Be a Vigilant Artist. Fight For Your Profession.

In Canada, we are currently under the thumbs of one of the least “artist-friendly” governments since Confederation. There’s a reason for that. Artists are not afraid of speaking out, acting as catalysts for change, observing change in the larger society and finding unique and expressive ways to shine light into dark corners of corrupt governments. That frightens those in power – it always has. They are frightened of what they do not understand.

One of the only ways to silence the voice of the artist in a democratic society is to persecute and prosecute and to use the law to slow down those voices. One of those tools governments use is an audit. Artists owe it to themselves and to humankind to know the laws as well as they can, be prepared and continue to make art, voice concerns and work within the law to effect positive change. In the past year, I have heard of not one…not two…but four separate audits on artists and art galleries in our small community. Call me Oliver Stone, but I think those stats are a bit much, don’t you? We won’t know about that in the future, though, because Harper’s government has cut back on Stats Canada and readily available hard data on the status of the artist won’t be available. Oliver Stone. I’m telling you.

While we may think that countries that are less democratic than Canada are more cruel and censor their artists brutally through imprisonment, confinement or persecution. (e.g. – Al WeiWei), Canada is in many ways, no different and can act in very quiet, subversive ways by cutting funding, compartmentalizing and attempting a pure commodification of the artist.

We are in a frightening, changing country with the current government and we all need to be vigilant at every turn to advocate for and defend our freedoms, for this is how change occurs and freedoms disappear….not through violent rebellious military coups but ….quietly, silently and in the night in the disguise of a tax auditor that sucks the life out of you by stealing the only thing you can never regain – your time.

Your time to create.


Audits are something as artists, we don’t seem to talk a lot about. Let’s do that. Have you had an experience with an audit? Post your comment here on this blog, and let’s start shining some light into those dark corners.

This Post Has 5 Comments

  1. Becky Joy

    I haven’t been thru an audit since working professionally as an artist . But have experience in the US with audit from another business. Not fun. I feel for you.

    1. Janice Tanton

      One of the most important things that we, as artists need to remember – it to keep educating the government on what it is we do, the value we provide beyond a commodified entity, and that humanity is disappearing in our society. The loaders and more firmly we continue to voice our concerns and define ourselves, rather than letting others define us, the better we shall all be…together. Thank you for checking in, Becky.

  2. Franziska San Pedro

    Hi Janice,

    you are so right about what you said. I have never gone through an audit but the ignorance in our “free” societies can kill us slowly this way. Most people are craving meaning in their lives, are looking for things that last, something to pass on, a piece of culture, a change in politics, etc but the exact same people shake their heads when someone speaks up, camps at Wall Street, creates a masterpiece, criticizes and reveals problems in our society whether it’s in speaking, writing or any other form of creating. Our work consists of a great deal of sacrifice (most of the times it’s money but also time) to contribute to the higher good and all.
    While movements, strikes and protest is generally not liked by the public, art is often not even seen as exactly that which makes it even harder for them to understand what we do. Many times, I have thought, how much freer are we, the artists in the Western world, than Wei Wei?

    In the end, I think about people like Monet, Picasso, van Gogh and all the other awesome people who have made a change and outlasted time, any temporal doubt and criticism.
    I have never seen an auditor creating timeless work that changed the world. Have you? Can’t think of one.

    Art is a contribution -no, it is an integral part of freedom and if it is not seen as this, we are no longer living in a democracy and free world. Let’s speak up more often and louder because when we lose our rights everyone else already has.

    Last week, I turned some of my paintings into a competition and I was disqualified by a one-man-jury (really?) because I was not using “traditional” canvas for my artwork. Are the sponsors the ones who determine what is art and what isn’t and where is my freedom of choosing the material I like? I’d called this censorship. And didn’t you understand that my material is THE major part of my message? Can’t these people who initiate projects like this donate to something else rather using us artists in order to have their names appear in local newspapers? You people are so civilized and cultured, it makes me sick! Print your name on a shopping cart but not on art.

    Sorry, I got carried away here… But the ignorance runs much deeper and makes me ask, where did our freedom go?

    Excellent post, it screams for more discussion in public!
    Franziska San Pedro
    Flavor Designs

    1. Janice Tanton

      Franziska – Thank you so much for taking the time to so eloquently respond to this post. I value your comments and insight. As I commented below to Becky, taking the time to educate, on the record – what it is that we do and how it is done takes that step towards defining ourselves within the society and systems that we live.

      Simply put – it’s important.

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