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Fall off in artists following the footsteps of tax-break Bertie

Bertie Ahern famously got the artist's tax break for his autobiography a few years ago – however, he might not be so lucky today.

While only one out of 10 people who applied for the artist's tax break in 2010 were turned down by the tax man, three out of 10 people were turned down last year.

The number of people applying for the artist's tax break has also fallen by a fifth.

The tax break – known as the artist's tax exemption – allows selected writers, composers, painters and sculptors to earn a certain amount of money tax-free.

Last year, 347 people applied for the artist's tax exemption, according to the latest figures from the Revenue Commissioners. However, in 2010, just before the then Minister for Finance Brian Lenihan, tightened up the rules for the tax break, 445 people applied.

Lenihan's clampdown on the tax break in 2010 – which limited the amount of earnings that artists could earn tax-free to €40,000 a year – is thought to be one of the main reasons for the fall-off.

"People who are established artists will usually earn more than €40,000," said Aidan Byrne, lead tax partner in Baker Tilly Ryan Glennon. "And established artists or authors, who produce new works may be paid significant sums upfront for production of these works – which means the exemption is of limited use to them."

Byrne said that a lot of artists were not bothering to claim the tax break any more because they often pay less tax if they set themselves up as employees of a company – rather than as a self-employed person claiming the exemption.

The higher rejection rate could possibly be a sign that struggling artists are trying to claim the tax break for art work which is beyond the scope of the tax exemption.

"The type of artistic output which is eligible for the tax relief is relatively narrow," said Brian Keegan, director of taxation with Chartered Accountants Ireland. "It could just be the case that in these difficult times, people are submitting claims for the tax break where the artistic work involved could at best be described as borderline in terms of eligibility. Music which is written for a television ad for example would not be eligible."

Despite the drop-off in numbers applying for the tax break, more artists were struggling to make ends meet, according to Orlaith McBride, director of the Arts Council.

"A lot of artists are earning less than €25,000," said McBride. "We have seen an increase in applications for financial support, such as bursaries and project awards."

Last week, it emerged that the Arts Council feels the artist's exemption is being undermined by politicians and sports personalities who receive tax breaks for their autobiographies.

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