ATO Interpretative Decision
ATO ID 2001/413 (Withdrawn)
Income Tax
Assessable Income: Royalties - Author not carrying on businessFOI status: may be released
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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are royalties received from writing activities included in the assessable income of an author where the writing activities do not constitute the carrying on of a business as an author?
Decision
Yes. Royalties are statutory income under section 15-20 of the Income Tax Assessment Act 1997 (ITAA 1997) and are included in assessable income under section 6-10 of the ITAA 1997, regardless of whether a taxpayer's writing is a business or hobby.
Facts
The taxpayer is writing a booklet for the purpose of publication from which the taxpayer hopes to earn income.
The taxpayer proposes to seek a publisher to publish the booklet. The taxpayer has not yet approached any publishers, but is hopeful that it will be published at some time in the future.
The taxpayer has no plans to self-publish the booklet.
Reasons for Decision
If the booklet is published any royalty income will be assessable, regardless of whether the taxpayer's writing is a business or hobby. Section 15-20 of the ITAA 1997 assesses royalties that are not 'ordinary income'.
Date of decision: 5 September 2001
Legislative References:
Income Tax Assessment Act 1997
section 6-10
section 15-20
Keywords
Hobby v business
Authors & writers
ISSN: 1445-2782
| Date: | Version: | |
| 5 September 2001 | Original statement | |
| You are here | 6 June 2008 | Archived |