An erratic income is the norm in unconventional professions, writes Laura Slattery

Never knowing where the next cheque is coming from or when it is coming makes building up financial stability something of a challenge for people who work in industries where fluctuating, erratic income is the norm.

Artists, actors, musicians, dancers, freelance designers, freelance journalists, comedians and models may all find it difficult to get credit, put aside money for a pension and manage their day-to-day finances, even if the lump sums they receive from time to time are handsome enough to convince them that their talent will get them by.

"We often hear people saying: 'I had a good year last year but I'm having a bad year this year'," says Mr Arthur Duignan, finance director of arts support body Create.

Many people who categorise themselves as artists or entertainers feel like it is their vocation and don't tend to see euro signs flashing in front of their eyes at every turn.

But it is one thing not being in it for the money and quite another when they are forced out of their profession because they cannot make a living from it.

The "bitter reality", according to Create, is that most artists struggle to make a living from their profession and must turn to other sources of income to survive.

The image of the artist starving in the garret may seem romantic, according to Mr Duignan, but people usually cannot cope indefinitely with erratic and often derisory payments.

A recent poll of Create's members revealed that almost one-fifth were earning on average less than €5,000 a year from their arts practice, with only one-sixth earning more than €20,000.

"Few survive exclusively on their arts earnings and the majority have to find other ways to supplement their earnings. They find work as teachers, facilitators, event managers, youth workers and decorators in an effort to continue their arts practice.

"It's part of what we call the 'hidden subsidy'," Mr Duignan says.

Some artists, writers and composers can qualify for a tax break on any income that they do earn from original artistic works, such as a book, a play, a musical composition, a painting "or other like picture" or a sculpture.

In order to claim the exemption, people must obtain approval from the Revenue Commissioners.

The work must be recognised as having cultural or artistic merit and the artist must register as being self-employed.

The scheme, however, is currently under review and it is expected that the Government will at least cap the amount of the tax relief available.

"People like U2 can make millions from it, but they're very much in the minority," says Ms Niamh Looney, research and information officer at the Sculptors' Society of Ireland, a support group representing all visual artists, not just sculptors.

Only 59 of those who qualify for the exemption have sales incomes above €200,000, according to Ms Looney. Just fewer than 700 people have sales incomes of less than €10,000, while 456 have sales incomes of €10,000-€50,000 and 114 have sales incomes of €50,000-€200,000.

The Sculptors' Society is to make a submission to the review by the deadline of March 31st and will lobby for the exemption to remain as it is.

The body, which has just announced a €100,000 professional development programme, held workshops on how to apply for the tax exemption last year and it hopes to do so again.

"Sometimes, artists think that when they have applied for the tax exemption status, that's all they have to do, but they still have to do a tax return and they still have to pay PRSI," says Ms Looney.

"Artists are often very much confined to their studios, but there are things they need to be aware of as part of their professional practice," she continues.

The exemption only applies to individuals, not companies, which can have implications for artists who want to set themselves up as a company, perhaps to convince lenders that they are the worthy recipient of a small-business loan.

Credit, in general, can be hard to come by for people on fluctuating incomes.

Mortgage lenders assess applicants who have irregular incomes on a case-by-case basis, according to Mr Tice O'Sullivan, a mortgage broker at online intermediary Primafinance.ie.

"Obviously, it helps the more established you are," he says.

The higher the artist's profile, the higher the possibility that the lender will take its chances on them.

However, Mr O'Sullivan has heard of one case where a performer in the long-running hit show Riverdance was turned down for a mortgage.

"The lender took the view that, if the show stopped tomorrow, the dancer wouldn't have any income," Mr O'Sullivan says.

If people on fluctuating incomes do succeed in getting a mortgage - perhaps on a joint basis with a partner with a permanent job - their priorities can change.

Eventually any part-time work they had been doing as a sideline moves centre stage as the financial demands posed by a six-figure mortgage kick in.

Create is hoping to develop a finance scheme tailored especially for artists - "something akin to a credit union or, alternatively, something along the lines of a social finance fund," explains Mr Duignan.

"Artists sometimes have difficulties in establishing credit records if they need to borrow to pay for a particular piece of equipment that they need to do their work," he says.

Meanwhile, there are grants available from the Arts Council, the Government's agency for developing the arts. But there isn't enough money in the kitty to go round, Mr Duignan says.

Most actors, performers, artists and, by definition, all freelances are self-employed and so won't have the security of a company pension scheme to prop them up during old age.

Since 2003, self-employed people, and indeed anyone who is excluded from a company pension scheme, can contribute to a flexible type of pension called a Personal Retirement Savings Account (PRSA).

Unlike many old-style personal pensions, PRSAs facilitate people on fluctuating incomes by allowing them to stop, start or adjust the level of their contributions at any point.These can be offset against income tax.

For any artist or writer who qualifies for a tax break on his artistic or literary work but still has an income tax liability on his part-time employment, a PRSA is one way of reducing that liability while also making financially sensible provision for the future.