Tax Tips for Artists and Musicians: Handling Grants, Royalties, and Tour Expenses — CPA Firm Near You, Montreal

Introduction

Artists and musicians in Quebec often earn income from many different sources — grants, royalties, performances, commissions, teaching, streaming platforms, and touring. This mix creates complex tax obligations that frequently lead to CRA and Revenu Québec audits. Understanding which income must be declared, which expenses are deductible, and how to structure your practice as a business is essential. This guide explains how artists and musicians should report income, manage expenses, and stay fully compliant — with support from a CPA firm near you in Montreal.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, artists and musicians must report:
• Performance income (gigs, concerts, shows)
• Streaming and digital royalties
• Society royalties (SOCAN, SODRAC, etc.)
• Grants (Canada Council, CALQ, etc.)
• Teaching or workshop income
• Merchandise sales
• Commissions and project fees

Certain grants may be partially or fully tax-exempt when used for specific artistic purposes, but documentation is required.

Deductible expenses include:
• Instruments and repairs
• Travel and accommodations
• Studio rental
• Sound equipment and software
• Stage clothing and costumes
• Marketing and promotion
• Website and streaming costs
• Coaching and production fees
• Home studio expenses (with proper calculation)

GST/QST applies to most artistic services once income exceeds the small-supplier threshold.

Key Court Decisions

Courts have ruled that:
• Artistic grants not used for their intended purpose are taxable
• Costumes and stage clothing are deductible only when not suitable for everyday wear
• Musicians must document travel, hotels, and tour expenses clearly
• Incomplete or estimated records of royalties lead to reassessments
• Mixing personal and artistic expenses undermines claims

Judges emphasize proper receipts, contracts, grant agreements, and travel logs.

Why CRA and Revenu Québec Target Artists and Musicians

Audits are common because many artists:
• Receive income from multiple sources (some without slips)
• Fail to report streaming or digital royalties
• Do not track tour expenses properly
• Treat personal clothing as deductible stagewear
• Receive grants without documenting their use
• Exceed GST/QST thresholds unintentionally
• Mix personal and artistic travel
• Lack written contracts for commissions

Auditors compare bank deposits, platform payouts, SOCAN records, grant applications, and travel logs.

Mackisen Strategy

At Mackisen CPA Montreal, we help artists and musicians establish audit-proof systems. We:
• Track all revenue streams (royalties, grants, performances, merchandise)
• Optimize deductions for equipment, travel, studio space, and marketing
• Apply GST/QST rules correctly
• Build proper home-studio expense calculations
• Document the usage of grants for compliance
• Categorize allowable vs non-allowable expenses
• Prepare year-end filings and audit defense packages

Real Client Experience

A Montreal musician was audited after claiming excessive clothing and tour expenses with no logs. We reconstructed travel schedules using booking records, corrected deductions, and prevented penalties. Another artist failed to declare digital royalties from international platforms; we rebuilt the royalty history and filed adjusted returns to avoid a full reassessment.

Common Questions

Are artist grants taxable?

Sometimes. Grants used strictly for artistic projects may be exempt when properly documented.

Can costumes be deducted?

Yes, if they are exclusively for performances and not suitable as everyday clothing.

Are royalties taxable?

Yes — including streaming, licensing, and society royalties.

Do artists need to register for GST/QST?

Yes, once they exceed the small-supplier threshold.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps artists and musicians understand and manage their taxes with clarity. Whether touring internationally or working from a home studio, our expert team ensures precision, transparency, and full audit protection.