Lowensteins Arts Management CPAs has received advice from The Australian Taxation Office confirming that businesses are eligible to receive an investment allowance of up to 50% on the purchase of artworks in certain circumstances.
In response to client enquiries, Lowensteins wrote to the ATO in June putting forward a number of guidelines that would enable artworks to be claimed under the new allowance.
One of the most important guidelines was that the allowance should only apply to new artworks created by professional artists registered with an Australian Business Number (or the equivalent registration pre-GST). As artworks have a lifetime of up to 100 years according to depreciation tables issued by the ATO, "new" artworks could also include those purchased from artist estates which had not previously been sold.
Other factors put forward by Lowensteins and accepted by the ATO included: a dominant business purpose existing in purchasing artworks for the allowance; artworks not containing a material component as commonly understood would not qualify; artworks should be portable; and artworks bought as trading stock would be excluded.
Lowensteins argued and the ATO accepted that an "art-enhanced work environment" can generate greater productivity and that there is a causal relationship between businesses displaying artwork and the income of their clients.
