When to withhold tax
You may have to withhold an amount of tax from payments to performing artists who are Australian residents contracted to perform in a promotional activity.
You must withhold an amount from payments to performing artists who are both:
- Australian residents
- engaged under a contract to perform in a promotional activity that is
- conducted for an audience
- intended to be communicated to an audience by print, electronic or social media
- for a film or tape
- for a television or radio broadcast.
The requirement to withhold from performing artists only applies to payments made to individuals, including sole traders.
See also
- Foreign resident entertainment, sports, construction and casino gaming activities
- Labour-hire firms and their workers
Performing artists
A performing artist is:
- a singer
- a dancer
- an actor (including extras)
- a model
- a musician or comedian, providing that they are endorsing or promoting goods or services, or appear in an advertisement
- an individual who is no longer an active sportsperson but is engaged in promotional activities because of their sporting reputation
- a similar individual who is engaged to use his or her intellectual, artistic, musical, physical or other personal skills.
It should be noted a music group or band is usually a partnership for income tax purposes.
Performing artists are not:
- individuals engaged primarily because they are well known as currently active sportspersons
- make-up artists, stylists and photographers who may help produce the promotional activity but are not regarded as performing
- musicians and comedians who are performing but not endorsing or promoting goods.
Example 1
ABC Advertising Pty Ltd contracts with Zacharie who is a gold medallist sprinter who has retired from major sporting competitions but still competes in some local events. In this case, ABC Advertising Pty Ltd has contracted with Zacharie because of his reputation, rather than because he is an active sportsperson. Zacharie is not engaged primarily because he is a sportsperson and is considered to be engaged in promotional activities as a performing artist. Therefore ABC Advertising Pty Ltd must withhold an amount from any payment made to Zacharie.
End of examplePromotional activity
A promotional activity is where a person:
- endorses or promotes goods or services
- appears or participates in an advertisement.
The following payments are also considered promotional activities and are subject to PAYG withholding:
- Rollover payments - these payments are sometimes paid to performing artists where a producer wishes to use a promotional activity longer than originally contracted. You will need to withhold from the payment regardless of when the rollover payment is made.
- Payments for auditions and voiceover subs - you must withhold tax from payments to the successful applicant. You do not withhold from payments to:
- unsuccessful applicants as they have not participated in the final promotional activity
- individuals who assist in the audition process, such as someone who reads a part to interact with the person auditioning. Their role is additional to the promotional activity, rather than one that is a central part of it.
- Payments for wardrobe calls - you must withhold from payments for wardrobe calls made to a performing artist who has been engaged to perform in a promotional activity if the payments are made under a contract with the performing artist.
Promotional activities are communicated through:
- free-to-air and pay television (for example, infomercials and home shopping)
- the internet
- social media
- cinema
- outdoor advertising, such as billboards and television
- brochures
- digital media
- radio
- print media
- corporate videos
- 'in house' DVDs (if promoting goods and services)
- sponsorship or personal appearances
- point-of-sale material.
Withholding requirements
Unless there is a specific exception, payers need to withhold 20% from all payments made to performing artists and send the withheld amounts to us with any other withholding amounts.
Exceptions to this include if:
- the individual has not provided you with a TFN declaration
- the individual is under 18 years old
- you have received a notice from us to vary the amount to withhold.
See also
The individual has not provided you with a TFN declaration
If the individual has not provided the payer with a TFN declaration, they will be required to withhold 47% from payments made to resident payees.
The individual is under 18 years old
The amount payers need to withhold from payments to a performing artist performing in a promotional activity will be varied to nil if the following three conditions are satisfied:
- the individual is under 18 years of age
- the individual has not provided you with a TFN declaration (NAT 3092)
- the amounts you pay to the individual do not exceed:
- $350 where you pay the individual weekly
- $700 where you pay the individual fortnightly
- $1,517 where you pay the individual monthly.
Note: If you are making a single (one off) payment to the performing artist, apply the monthly threshold.
Payers will need to withhold 20% from all payments to a performing artist providing:
- the individual is under 18 years and payments exceed the above thresholds
- the individual has given the payer a completed TFN declaration.
Although payers do not need to withhold anything if the transaction satisfied the conditions outlined above, they still need to issue a payment summary to the individual and include the transaction on their PAYG annual report.
Otherwise, payers must withhold 47% from the payment for resident payees.
The individual has a downwards or upward variation in place
If we have granted the individual a variation to a rate less than 20%, the payer should:
- withhold at this rate for the period specified within the variation notice or until otherwise notified
- be provided with a copy of the official ATO variation notice by the individual.
The payer should withhold at a rate higher than 20% providing:
- the individual has completed a Withholding declaration
- the individual has requested an upwards variation
- both the payer and the individual agree.
Note: The payer must withhold at this higher amount for payments made from the date specified in the declaration.
The payer has a class variation in place
If the payer has had a class variation approved by us to withhold an amount from payments they make to performing artists at a rate of less than 20%, they should withhold at this rate from payments covered by the variation.
The performing artist's agent may withhold
If a performing artist is contracted to an agency, PAYG withholding and superannuation obligations rest with that agency. You will simply make payment to the agent for the services of the performing artist.
If the performing artist has entered into a contract with you, the legal obligations relating to PAYG withholding and super contributions rests with you. However, if you and the performer's agent agree, the agent may carry out these functions on your behalf
Whoever has the contract with the performer is responsible for meeting all withholding, superannuation and reporting obligations.
See also
- Paying and reporting withheld amounts
- Superannuation Guarantee Ruling SGR 2005/2 Work arranged by intermediaries
Reporting to us
You still need to report to us when engaging a performing artist as an individual.
You will still need to:
- obtain completed TFN declarations
- provide payment summaries
- complete activity statements, and
- undertake annual reporting.
See also
TFN declarations
A TFN declaration will need to be completed by a performing artist every time they enter into a contract to perform in a promotional activity. This will need to be done at the start of a relationship with each payer, before payments are made.
A TFN declaration is valid for 12 months from the last payment made to the performing artist. If a performing artist enters into numerous contracts in a financial year with one payer, the performing artist only needs to complete one TFN declaration for that payer.
See also
Providing payment summaries
You are required to provide each performing artist with a PAYG payment summary - business and personal services income (NAT 72545). If you do not contract with the performing artist on a regular basis, you may choose to issue a part year payment summary at the time you make the payment rather than at the end of the income year.
See also
Goods and services tax
A performing artist can only be registered for goods and services tax (GST) if they are conducting an enterprise. If a payment made to an artist is subject to withholding, the activity is not conducted as part of an enterprise.
No GST applies to payments subject to PAYG withholding. No input tax credits are available to an artist for GST incurred in connection with earning payments subject to PAYG withholding.
See also