Q – Debs from Donegal wonders if winnings in talent contests, sponsorship or grants from arts bodies must be declared to the tax man.

A – Firstly I would say that all income you receive should be declared to the Revenue, but then I’m an accountant and I would say that. Seriously though, you are obliged under our tax laws to declare all earnings to the Revenue. What you really need to know is if it's taxable once you’ve declared it. Well, sponsorship is certainly taxable and should be treated as normal income such as performance fees or recording income. The same unfortunately applies to talent show winnings. In fact the only income that is exempt from income tax is your winnings from betting and lotteries. Of course if you are lucky enough to have received Artists Exemption then your income from publishing will also be exempt from income tax.

Grants from arts bodies are a little more confusing and I have recently got conflicting opinions from the same arts body about a grant they gave to a client of mine. So if they don’t know for sure how are we to know? From what I can gather it depends on who gave the grant and the purpose for which the grant was given – what they call capital or revenue grants. If it was given for buying much needed equipment (a capital grant) then only a portion of it will be deemed taxable in any one year. That portion is based on the life of the asset purchased. If it is for normal day-to-day expenses (eg. travel and accommodation) then it is considered a revenue grant and will be taxable.

Answers supplied by O.J. Kilkenny and Co. Chartered Accountants, specialists in the entertainment industry. Contact: [email protected] or call Alan Duffy (01) 661 1588.