Currently, Tasmanian theatres are at 50 per cent capacity, with venues of 250 people or less able to seat 75 per cent without an application.

However, larger theatres, and theatre companies wanting to use them, have to apply and have their application granted to seat up to 75 per cent.

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Encore Theatre Company co-founder Belinda King said to-date she was unaware of any company that had achieved 75 per cent in larger theatre venues in Tasmania.

"We can't proceed with mounting a large scale production unless we can have at least 75 per cent capacity," she said. "It is simply not viable for us to present a show in the Princess Theatre at 50 per cent capacity."

Ms King said if the company proceeded with shows at the current capacity, it would bankrupt them.

"We cannot understand why we're not at a similar level to other states with low or no levels of transmission. Every other jurisdiction has had a roadmap out, with the exception of Tasmania," she said.

Labor Arts spokeswoman Jen Butler said the Tasmanian theatre industry had the strictest restrictions on capacity in Australia.

She said they were calling on the state government to begin working with the Tasmanian theatre industry to develop a roadmap to return to 100 per cent capacity.

"Restrictions in place are far behind what's happening in the country," Ms Butler said.

Tasmania actor and producer John Xintavelonis, better known as John X, said the industry's patience was being tested.

"The communication is not there," he said.

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However, it is not just limits that have the theatre community riled up, but the suggestion that if theatre venues were allowed to seat up to 75 per cent, face masks would be mandatory.

"If face masks are imposed alongside going to 75 per cent capacity, we firmly believe this will be an enormous barrier for potential audiences, particularly when our state has enjoyed more than 300 days without transmission of the virus," Ms King said.

"You don't have to wear them in the cinema, why the hell are we wearing them in the theatre," Mr X said.

A Public Health spokesman said the service was committed to working with the theatre industry to ensure events could occur safely in Tasmania.

"As we conduct events with gatherings of people, we must do so in a way that minimises the chances of a COVID-19 outbreak occurring," the spokesman said.

"There are reduced theatre capacity limits in place in most states and territories."

Arts Minister Elise Archer said the government recognised the significant impact the pandemic had on the state's arts sector.

"We absolutely understand the frustrations of many in the community, and we know this has been incredibly tough on many industries," she said.

"Yet we have seen incredible resilience and adaption from our arts community, underpinned by strong government support.

"Our government will continue to work with Public Health to keep Tasmanians safe."

The government provided a new assistance package worth $1.5 million for funding for arts organisations.

The government also committed to providing $4 million in new funding for the sector over two years in the 2020-2021 state budget, and announced a $2 million program to share some of the financial risks associated with the reintroduction of live performances.

The outcry from the theatre community has come amidst the broader events community also facing issues.

The Basin Concert organisers announced on Friday they would have to move the concert to a different venue to comply with COVID-19 safety restrictions.

Ms Butler said the continuous changes in messages and restrictions have led to confusion for event organisers and patrons.

"Clear information sharing is vital in protecting Tasmanians against COVID. The last minute changes by government only lead to confusion for both event organisers and attendees."