From: AlanBaggett@volcanomail.com   
      
   Canada Revenue Agency demotes Halifax sculptor to 'hobby artist' and gives him   
   $14K tax bill :CRA SOTW   
      
   Denial of income tax expense deductions chills other working Canadian artists   
       
   Paul Withers • CBC News    
      
   An established Halifax sculptor says he was shocked and insulted by a Canada   
   Revenue Agency ruling demoting him to the status of "hobby artist" and giving   
   him a $14,500 tax bill.   
      
   Installation artist Steve Higgins, also a part-time instructor at the Nova   
   Scotia College of Art and Design, was notified his expense claims from a 2013   
   art project were rejected because the work was funded by public grants and not   
   sold for profit.   
      
   The basis of the ruling has some Canadian arts groups concerned about what   
   they see as a dangerous precedent.   
      
   Higgins said he received the reassessment from the CRA in January. His expense   
   claims were rejected and he was informed he owed $14,495.37 in back taxes.   
   Those taxes are due today, the April 30 deadline for Canadians to file their   
   income tax returns.   
      
   'A slap in the face'   
   "When I received the declaration that I was a hobbyist, I was at first   
   disgusted by that and insulted by it. It just seemed like a slap in the face   
   after how many decades of exhibiting that I've been involved with," Higgins   
   said.   
      
   "To have to pay the government $14,500 on my limited income is indeed a   
   terrible hardship."   
      
   The artist's troubles started with a CRA audit of his 2013 tax return.   
      
   At the time, he was not worried.   
      
   Higgins said his deductions were routine expenses.   
      
   "I've been exhibiting since 1974 in North America, South America, Europe,   
   Japan, Australia. And all of the grant money I received to sponsor those   
   exhibitions are considered income and when I declare expenses against that,   
   then it cancels out the amount    
   of money I received."   
      
   Award-winning sculpture project   
   In 2013, Higgins received more than $20,000 in public grants for a large   
   sculptural installation called Beyond the Terminating Vista, which he   
   exhibited at the Mount Saint Vincent University Art Gallery in the spring of   
   2013.   
      
   The lion's share of the grant money came from the Canada Council for the Arts,   
   which gave Higgins $13,600.   
      
   The Arts Council of Nova Scotia and the City of Halifax contributed the rest,   
   including $4,500 for a residency at the art gallery.   
      
   The installation work was recognized later that year when Higgins won a   
   $25,000 Lieutenant Governor of Nova Scotia Masterworks Arts Award in   
   recognition of "outstanding artistic contribution."   
      
   'Not a business'   
   However, the CRA rejected his claim that the grant money was business income   
   and denied his claim for expenses against the grants.   
      
   "It is the determination of this audit that the taxpayer operates as a   
   personal endeavour (a hobby), not a business," CRA said in its Jan. 26, 2018,   
   reassessment letter to Higgins.   
      
   "Most of the income generated is from grants, honorariums and awards, and not   
   the sales of artwork. Therefore, all income and expenses related to the   
   business has been removed."   
      
   The CRA declined to answer questions about this case.   
      
   Spokesperson Etienne Biram said confidentiality provisions in the Income Tax   
   Act prevent the agency from commenting on specific taxpayers.   
      
   Arts groups blast bean-counters    
   Some observers say the Higgins reassessment reveals a profound m   
   sunderstanding about contemporary art in Canada.   
      
   "For me, that definition of sale as a key to artwork misses the vast majority   
   of artistic practice in the country, particularly contemporary art, media art,   
   performance art where people rent works," said Ben Donoghue, executive   
   director of the Media Arts    
   Network of Ontario.   
      
   "Works are shown in public centres, in artist-run centres and theatres.   
   Artists are paid a contracted fee for that time. That's actually where we see   
   professional arts in Canada."   
      
   Donoghue is not alone in his concerns.   
      
   "I'm very concerned about CRA's ruling and certainly worried it could set a   
   precedent," said April Britski, executive director of Canadian Artists   
   Representation, a national lobby group for artists.   
      
   "Many people don't necessarily have a lot of sales from year to year, but do   
   get money from different public sources, and so then not to be able to write   
   off the expenses would be catastrophic."   
      
   CRA at odds with Canada Council   
   Britski said that in light of the Higgins case, her organization, along with   
   the Media Arts Network and the Canadian Dance Assembly, are collecting the   
   stories of other artists who have been audited in order to lobby the federal   
   government to overturn    
   the CRA interpretation.   
      
   Donoghue said he has heard of more and more cases like this in recent years,   
   but the information is anecdotal.   
      
   The CRA ruling that Higgins is a hobbyist is an awkward contrast to the   
   assessment of the Canada Council, a primary source of public funding for   
   artists in Canada.   
      
   Spokesperson Joly-Anne Ricard said "for artists to be eligible for our   
   funding, they need to meet the Council's definition of a professional artist."   
      
   The criteria are: specialized training, recognition from peers, time   
   commitment and a history of presentation or publication.   
      
   "Therefore, the Canada Council considers him a professional artist," Ricard   
   said in an email.   
      
   Higgins caught in middle   
   The Canada Council declined to discuss the implications of Higgins's dispute   
   with the CRA.   
      
   "We can't comment on their criteria related to business incomes and   
   deductions," Ricard said.   
      
   But Donoghue said the CRA should accept the awarding of a Canada Council grant   
   as an arbiter of professional status for an artist or make all grants tax-free.   
      
   The situation frustrates Higgins.   
      
   "I think what is required is the Canada Council and the Canada Revenue Agency   
   to sit down and have a conversation about what one arm of the government's   
   doing and what one arm of the government is destroying. That's it in a   
   nutshell."   
      
   The sculptor has until later this spring to appeal the CRA ruling.   
      
   Interest on the back taxes would start to accrue Tuesday.   
      
      
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