The Tax Court has ruled the show business industry, while challenging and unpredictable, is still entitled to legitimate deductions for business expenses..According to Blacklock’s Reporter, this decision was made in the case of Chantal Preston, who is a singer and songwriter. The Canada Revenue Agency (CRA) rejected her manager's deductions..“Putting aside the unpredictability of the music industry in terms of whether an artist achieves success, the radio play of Chantal’s songs, royalties received and the ongoing interest of music producers to work with her demonstrates the activity is capable of showing a profit,” wrote Justice Susan Wong. .Management of her career was “sufficiently commercial” to qualify for business deductions, the Court said..Preston, who is from Newmarket, ON, enlisted her father Randall as her manager. In his 2017 tax return, Mr. Preston reported total expenses amounting to $52,046, with a net business loss of $53,196..The CRA denied the write-offs. Under the Income Tax Act, a tax filer may only claim business deductions if the venture “appears to be clearly commercial, contains no personal or hobby element” and “is conducted for profit,” noted the Court..“It is clear there was a personal element because the artist in question was his daughter,” wrote Justice Wong. .However, the Court called Chantal “musically talented” and said it was understandable her father “might decide to support Chantal in pursuing a musical career in earnest.”.Records indicated that Chantal had taken several significant steps in her music career. .She hired an accountant, established a network of industry contacts, engaged in discussions with producers and publishers in Toronto, New York and Nashville, signed a contract with an Ontario record label, and organized numerous studio recording sessions..“He described the process as labour intensive and almost cost prohibitive at the beginning because it took one to two years to produce and master an album which would then be launched into the market,” wrote the Court..“The minister of National Revenue did not agree the appellant was in the business of artist management and therefore disallowed his business expense deductions,” said Justice Wrong, adding she said the decision was incorrect..In a 2022 interview with Nashville Voyager, Chantal stated her music had received radio airplay, appeared on television in Toronto, and collaborated with a Music City producer..“My dad said to me, ‘Write in the basement for a year and let’s see what happens,’” the Voyager quoted Chantal. .“He knew how much music meant to me.”.“Growing up, I first started playing the guitar around a campfire,” said Chantal. .“My dad especially loved listening to me play the guitar and sing my songs.”
The Tax Court has ruled the show business industry, while challenging and unpredictable, is still entitled to legitimate deductions for business expenses..According to Blacklock’s Reporter, this decision was made in the case of Chantal Preston, who is a singer and songwriter. The Canada Revenue Agency (CRA) rejected her manager's deductions..“Putting aside the unpredictability of the music industry in terms of whether an artist achieves success, the radio play of Chantal’s songs, royalties received and the ongoing interest of music producers to work with her demonstrates the activity is capable of showing a profit,” wrote Justice Susan Wong. .Management of her career was “sufficiently commercial” to qualify for business deductions, the Court said..Preston, who is from Newmarket, ON, enlisted her father Randall as her manager. In his 2017 tax return, Mr. Preston reported total expenses amounting to $52,046, with a net business loss of $53,196..The CRA denied the write-offs. Under the Income Tax Act, a tax filer may only claim business deductions if the venture “appears to be clearly commercial, contains no personal or hobby element” and “is conducted for profit,” noted the Court..“It is clear there was a personal element because the artist in question was his daughter,” wrote Justice Wong. .However, the Court called Chantal “musically talented” and said it was understandable her father “might decide to support Chantal in pursuing a musical career in earnest.”.Records indicated that Chantal had taken several significant steps in her music career. .She hired an accountant, established a network of industry contacts, engaged in discussions with producers and publishers in Toronto, New York and Nashville, signed a contract with an Ontario record label, and organized numerous studio recording sessions..“He described the process as labour intensive and almost cost prohibitive at the beginning because it took one to two years to produce and master an album which would then be launched into the market,” wrote the Court..“The minister of National Revenue did not agree the appellant was in the business of artist management and therefore disallowed his business expense deductions,” said Justice Wrong, adding she said the decision was incorrect..In a 2022 interview with Nashville Voyager, Chantal stated her music had received radio airplay, appeared on television in Toronto, and collaborated with a Music City producer..“My dad said to me, ‘Write in the basement for a year and let’s see what happens,’” the Voyager quoted Chantal. .“He knew how much music meant to me.”.“Growing up, I first started playing the guitar around a campfire,” said Chantal. .“My dad especially loved listening to me play the guitar and sing my songs.”
