Taxes for musicians and artists in Ontario: what to know

Employee or self-employed: start here

Most of the rules depend on this first question. An employee works under the payer’s control, while a self-employed artist is engaged to deliver a result and keeps the freedom to decide how. The CRA looks at the intention of the parties and then at the facts: who controls the work, who supplies tools and equipment, whether you can send someone in your place, how much financial risk you take and whether you have a chance of profit.

You can be both in one year, under different contracts, such as playing with an orchestra on a contract of employment and performing at private events on your own. You cannot be both under the same arrangement. If you cannot tell, either you or the payer can ask the CRA for a CPP/EI ruling. The answer matters because employees can claim only the deductions the law specifically allows, while self-employed people can deduct ordinary business costs.

Is your art a business or a hobby?

A self-employed artist is generally treated as running a business if the activity is undertaken in pursuit of profit and there is objective evidence of business-like behaviour. The CRA does not require a profit every year, and it notes that an artist may not make a profit in a lifetime. What matters is whether the work is carried on in a sufficiently commercial way.

The factors it lists include the time you put in, how often you show or perform your work publicly, whether you have an agent or dealer, the effort you spend promoting your work, your training and recognition, professional association membership, and the history and trend of revenue. No single factor decides it. Keep evidence as you go: contracts, booking confirmations, a website, promotion costs and a note of your goals. If you consistently claim losses against other income, expect questions and read our article on claiming a business loss against other income.

What counts as income

Gig fees, commissions, teaching income that is not employment, and sales of your work are generally business income. The CRA also treats grants received in the course of operating a business as business income, and says payments for works bought from a self-employed artist, such as under an art bank program, are ordinary business income. Public lending rights payments are taxable as business income.

Royalties are generally income from property, but they are treated as business income when you are in the business of creating the work, for example a composer earning royalties from their own music. Salary and tips from employment, including a wage from an organization that was itself funded by a grant, are employment income regardless of how the funding was arranged.

Some money is neither. A grant for a specific project that is neither business nor employment income is included in income as other income, but you may exclude reasonable expenses you incurred to fulfil its conditions, up to the amount of the grant, plus an additional $500 under the basic scholarship exemption. A prescribed prize recognized by the public for meritorious achievement in the arts, such as the Governor General’s Literary Award, is not included in income.

Costs a self-employed artist can usually claim

The CRA’s examples for self-employed artists and writers are specific. They include insurance on instruments and equipment, repairs and small accessories such as strings or reeds, union and professional dues, agent commissions, payments to a substitute or assistant, publicity such as photos and advertising, and transport to an engagement in defined situations, for example when a large instrument must be carried or the engagement is out of town.

The list continues with telephone costs, filming or recording a performance when it is needed to prepare or present it, equipment rental, specialized training and lessons in your field, industry periodicals, art shipping, and studio rent. Wardrobe used only for performances and cleaning or repairs to it can also qualify. General guidance on business expenses and records is in our articles on categorizing expenses and on keeping business records.

Costs that benefit both a self-employed period and an employed period are shared. As a simple illustration, suppose $4,500 of costs relate to 250 working days, of which 150 days were self-employed. Time is the usual basis, so 150 divided by 250 is 60%, or $2,700 against self-employment income. The CRA will consider another justifiable basis, and the numbers here are illustrative only.

Instruments, equipment and CCA

The purchase price of an instrument or equipment is a capital cost, so it is not deducted in the year you buy it. Instead, capital cost allowance can be claimed. The CRA’s folio puts instruments, sheet music, scores, scripts and equipment in Class 8 for this purpose. Our article on claiming CCA on business equipment explains the mechanics.

If an instrument you owned personally begins to earn income, the change-in-use rules treat it as acquired at its fair market value at that time, and a loss on the switch is generally not available. A later sale can produce a gain or recapture of CCA already claimed. Keep the bill of sale, the date and cost, and note how much of the instrument’s use is for income and how much is personal.

If you are an employed artist

Employed artists can claim expenses only under specific provisions. A musician who must supply an instrument under their employment can deduct maintenance, rental and insurance costs and CCA on an owned instrument, but the total cannot exceed the income from that employment, so it cannot create a loss. These go on Form T777, the Statement of Employment Expenses.

A separate artists’ employment expense deduction covers qualifying activity, such as composing, performing as a musician, actor, dancer or singer, or creating certain visual works. It is limited to the lesser of $1,000 and 20% of employment income from artistic activities, reduced by any instrument and vehicle interest or CCA already deducted. The $1,000 figure is the one in the CRA’s employment expenses guide for 2025, so confirm the 2026 figure when you file. Illustratively, $15,000 of artistic employment income gives a $1,000 cap, and a $300 instrument claim leaves $700 of room. Amounts above the cap carry forward.

CPP, EI, instalments and GST/HST

Self-employed artists pay both halves of CPP on their return and do not pay EI unless they opt in for special benefits such as maternity, parental or sickness benefits. Our article on CPP on self-employment income explains the 2026 figures. If you owe significant tax each year, read about instalments so a large balance in April does not surprise you.

GST/HST registration is required once revenue from taxable supplies exceeds the small supplier threshold of $30,000 over four consecutive calendar quarters, or in a single quarter. Registration is voluntary below that. Whether a particular fee or sale is taxable depends on what you provide, so ask before assuming it is not.

A working home studio and what to bring

A work space at home is deductible only if it is your principal place of business or used only to earn business income and regularly to meet clients, and the expenses cannot create or increase a loss, although unused amounts carry forward. Our home office article covers the calculation.

Bring contracts and payment summaries, any T4 or T4A slips, grant letters with their conditions, royalty statements, receipts for gear, lessons and promotion, and records of your instruments’ cost and use. Ask your accountant how each grant is characterized, whether you are carrying on a business, and whether any visual artwork you hold should be handled through the inventory election the CRA describes, which is available only to individuals who create certain works themselves and is difficult to reverse.