Art Centre Issues

We audit many Aboriginal Art Centres in the Northern Territory, South Australia and Western Australia, and are collating statistics on revenue and costs on a year-to-year basis. Any Art Centre wishing to receive the results of these surveys (participants) or to participate in the survey, should contact us. Art Centres are not identified and information supplied by non-client Art Centres is destroyed once the data has been entered.

GST on Sale, or GST on Commission?

A work (painting, carving or weaving) may be sold either by the artist, or by the next entity in the transaction chain. The seller at each point in the chain will determine where the GST liability arises:

Dora is a painter working at an Art Centre in a remote community. She is not required to have an ABN (because of her circumstances) and is, naturally, not registered for GST. Her paintings may be sold by either method

GST on Sale

Dora sells the painting to the Art Centre for $1000, which means, conversely, that the Art Centre has bought the work for $1000 with no GST.

The Art Centre sells the painting to Aboriginal Art Galleries Pty Ltd for $1650, plus GST as the Art Centre is registered for GST. The Art Centre pays $165 GST to the ATO and it earns $650.

Aboriginal Art Galleries sells the painting to Angie Buyer for $3025 including $275 GST. Aboriginal Art Galleries sends $110 GST to the ATO, being the $275 it has collected from Angie less the $165 GST it has paid to the Art Centre. Aboriginal Art Galleries has made $1100.

The net result is that the GST paid to the ATO is $275, the GST on the selling price, the artist has collected $1000, the Art Centre $650 and the gallery $1100.

GST on Commission

Dora is considered to be the seller of the work, with the Art Centre and Aboriginal Art Galleries charging a commission for their respective activities. We’ll suppose that the retail price is not price sensitive, that a sticker price of $3025 is marketable, and both the Art Centre and the gallery are comfortable with the dollars earned.

Aboriginal Art Galleries sells the work, on behalf of Dora for $3025 (no GST) and charges the Art Centre a $1210 commission including $110 GST, and sends the Art Centre a cheque for $1925 which includes the $110 GST.

The Art Centre collects the $1925, deducts the $110 GST, charges the artist a commission of $650 plus GST, and gives the artist $1100.

The net result is that the GST paid to the ATO is $175 ($110 paid by the gallery and $65 paid by the Art Centre), and Dora has been paid $1100. That is, the GST paid is $100 less and the amount paid to the artist is $100 more.

See also Deductible Gift Recipient
See also Public Benevolent Institutions
See also Fringe Benefits Tax
See also Salary Sacrificing
See also Audit
See also Submission to Senate Inquiry