Small businesses buying art for their offices, workshops or factories will be entitled to a tax deduction for the cost if each item of art costs less than $20,000 (excluding GST). This applies to art purchased between 12th May 2015 and 30th June 2017.
Small businesses that purchase an item of art for more than $20,000 will not get an upfront deduction for the purchase price, and instead the asset will go into the general pool and be depreciated 15% in the year of purchase, and 30% per year after that.
Studies have shown that art in the workplace provides big benefits to businesses including reducing stress at the office, increased creativity and productivity, enhanced employee morale, broadened appreciation of diversity, and encourages open dialogue.
Most people connect with art as it touches a memory, or conjures up an image of a different time or place, so refreshes and re-energizes us.
Art is also an investment and can provide capital gains over time. There is great debate about the long term returns from investing in art but various studies show annual returns varying from 1%-2% to 4%-5% over the last 465 years.
If art that has been claimed as a tax deduction is sold in the future, the profit on sale will be taxable to the small business.