Creative Australia acting chief executive Tim Blackwell on Friday appeared before an anti-Semitism royal commission hearing examining education and the arts.
He said the statutory advisory body did not record the identity of successful grant applicants and could not confirm whether Jewish artists had been excluded.
Mr Blackwell said Creative Australia was limited in what it could do when it received complaints.
"We're not an investigative body. We don't have powers in terms of classification," he said.
Creative Australia can screen applicants during funding agreement negotiations and all recipients are bound by work health and safety or anti-discrimination laws.
A breach would result in the cancellation of funding, with efforts to retrieve money.
However, these conditions apply to the funded project, not the conduct of the artists themselves.
Mr Blackwell said Creative Australia staff undertook regular anti-racism training and used it to direct grant decisions.
Monash University's David Slucki earlier presented research on anti-Semitism in creative spaces.
Professor Slucki said dozens of Jewish artists came forward and shared personal stories of having to align themselves politically to be accepted by the broader arts community.
"If you don't take that 'maximalist' position, not only are you not in our camp, you're actually a fascist and genocide supporter," he told the inquiry.
"That kind of black and white binary thinking has done enormous damage here and elsewhere, and that's led to what you describe as a sense of cultural homelessness for some Jewish artists."
Some individuals engaging in the research were reduced to tears, including arts administrators who felt they didn't know what to do, Prof Slucki said.
Melbourne-based sculptor Nina Sanadze said she faced immediate backlash following the October 7 attacks in Israel.
The Soviet-born artist felt the Australian creative sector has been "radicalised" by a Marxist-Socialist ideology since the 1960s.
"They divide people into oppressors and the oppressed. And if you're in a category of the oppressor, any violence, any harassment, any bullying is by all means acceptable," Ms Sanadze said.
She said she struggled to engage with the art world's discussion of the Middle East and pressure to attend rallies.
Public hearings will recommence on Tuesday to examine the protests at the Sydney Opera House in 2023 and 2025.