We were lucky enough to have Lynda Parsons from Entertainment Accounting come and speak to members at a free seminar this month, and while we can't possibly capture all the detailed and in-depth information she was able to impart, we do have a few key tips and pieces of advice for Lynda that we can share here.
The first question you need to ask yourself: are you running a business, or is this a hobby at the moment (and you’re hoping one day it may become a business for you)?
If you’re running a business, good records will always be needed (and even if it’s a hobby right now, good records might be useful in the future).
Some key tips:
Practical information:
Don’t set up a company until it is necessary, as you can trade as a Sole Trader or Partnership.
Why? A company is more expensive to run, and there are more compliance costs. But they have their place and when set up correctly can be helpful once you have reached a certain point in your career.
If you’re in a band, you made need a partnership agreement which covers issues such as assets, royalty splits, and what happens when someone leaves the band.
Don’t rush into a management agreement – make sure you can work together first! And make sure your lawyer is different from your manager’s lawyer.
Make sure you have an entertainment lawyer check over any publishing and record deals before you sign them.
And when in doubt, consult an accountant.
Want to know about what expenses you can claim?
Want to find out more about registering for GST?
Want to find out about how Kiwisaver can work even though you're self-employed?
If a band from anywhere in the world tours Australia they should be applying for an ABN (Australian Business Number) and a TFN (Tax File Number) otherwise the promoter/booking agent is required to deduct withholding tax at the top rate, which can be up to 45% without an ABN. With an ABN it’s normally 30% withholding tax.
It they are wanting to reduce this amount of tax then they should be applying for a reduction in tax with the Australia Taxation Office depending on the expenses for Australia before they complete the tour and receive a payout.
As they will need to declare the Australian income in NZ they can then claim the tax deducted as a credit, they will not receive it back but if paying tax in NZ, it will reduce the amount payable.
If they want to apply for a refund in Australia they will need to apply for an ABN/TFN and lodge a tax return over there.
If you would like to speak with Lynda, or have further questions, please head over to www.entertainmentaccounting.co.nz, and make an appointment.