Working artists are among the few groups who count the taxman as a friend.This is because many artists have benefited from a tax-free working life since the artists' exemption was introduced in the 1969 Finance Act.

The then Minister for Finance, Mr Charlie Haughey, introduced an exemption for certain earnings of writers, composers and artists, whose original and creative work was generally recognised as having "cultural or artistic merit".

The scheme has been associated with a handful of big-business music acts, most notably U2, but if you take into account the numbers availing of the exemption, the average income of qualifying artists is relatively low. The most recent figures available from the Revenue Commissioners show that 4,314 artists have been approved for the exemption, with 538 applications outstanding.

The largest group qualifying for the exemption in 1999/2000 was visual artists. Painters and sculptors made up 291 of the 480 approved in that tax year.

Writers and playwrights comprised just over one-quarter of the 1999/2000 total, with 59 people in the musical composition category. The Artists Association of Ireland (AAI) recommends that all working artists apply for tax exemption, even if their income is very low.

The exemption is not automatic and must be applied for. According to the AAI, exemptions are usually granted quite quickly - in contrast to long delays in the past. An application must include evidence that the artist has sold work in the tax year in which they are applying. All claims are backdated to the date of application.

In 1994, new guidelines were issued for the implementation of the scheme by the Minister for Arts, Culture and the Gaeltacht, Mr Higgins. The guidelines expanded on the definition of "original and creative work" but did not extend the scope of the scheme to cover interpretive artists, such as actors and musicians, as had been envisaged.

To secure tax-exempt status, a work does not have to have both cultural and artistic merit - either quality is recognised. Works eligible for the scheme include a book or other writing, a play, a musical composition, a painting or like picture, or a sculpture.

Regarding books, the tax exemption originally only applied to works of fiction. The 1994 guidelines changed this by saying that a non-fiction work may qualify if its essence is the presentation of the author's own ideas or insights, or if it is a pioneering work casting new light on its subject matter.

Excluded from the "original and creative" spectrum are books written primarily for use in the course of study, newspaper articles or series, plays and musical compositions written for advertising purposes, photographs that merely serve a utilitarian function, and sculptural objects "produced by processes other than by hand".

The Revenue Commissioners may consult a person or organisation of persons who, in its opinion, can provide authoritative assistance in establishing whether a work qualifies. According to the AAI, the Arts Council is the usual body consulted for visual art, although this is not formally acknowledged.

The Revenue defines a work as having cultural merit if its contemplation enhances the quality of individual or social life by virtue of that work's intellectual, spiritual or aesthetic form or content.

A work has artistic merit, according to the guidelines, when its combined form and content enhances or intensifies the aesthetic apprehension of those who experience or contemplate it. Claimants for artists' exemption must be resident, or ordinarily resident and domiciled in the State.

However, the Revenue will give advance opinions regarding the exemption to claimants resident abroad. This has operated as a welcome on the mat for numerous British recording artists in particular.

Artists, writers, composers and sculptors seeking artists' exemption have to submit a claim form to the Revenue Commissioners, together with samples of their work and any appropriate supporting documentation.

Those who receive tax-exempt status are obliged to register for PRSI with the Department of Social, Community and Family Affairs. They must also send a declaration of income form to the self-employment section of the department each year.

Tax-exempt artists must complete a self-assessment taxation form for each tax year, which has a specific space for artists' exempt income.

The cost to the Exchequer of providing the exemption has risen steadily in recent years and stood at £15.5 million (€19.7 million) for the 1997/1998 tax year.

There aren't any reliable figures for the number of working artists in the State, according to the Arts Council, as they are "a self-selecting group".