ATO Interpretative Decision
ATO ID 2004/468 (Withdrawn)
Income Tax
Non Commercial losses: artist exception - whether artist's manager or agent is conducting a 'professional arts business'.FOI status: may be released
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This ATO ID is withdrawn as what constitutes a 'professional arts business' is considered in detail in TR 2005/1 'Income tax: carrying on business as a professional artist'.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 16 April 2010
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Is the manager or agent of a professional artist carrying on a 'professional arts business' for the purposes of subsection 35-10(5) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. A taxpayer conducting a business as a manager or agent of an artist, or artists, is not carrying on a 'professional arts business' for the purposes of subsection 35-10(5) of the ITAA 1997.
Facts
An individual taxpayer conducts a business of managing a professional artist.
The manager has no creative input into the artist's activities.
The manager handles the artist's financial affairs and negotiates with promoters for performance engagements.
Reasons for Decision
The exception in subsection 35-10(4) of the ITAA 1997 provides that the loss deferral rule in subsection 35-10(2) of the ITAA 1997 does not apply to defer any loss incurred by the individual from the activity for that income year if:
- (a)
- the activity is a 'primary production business', or a 'professional arts business'; and
- (b)
- your assessable income for that year (except any net capital gain) from other sources that do not relate to that activity is less than $40,000.
Subsection 35-10(5) of the ITAA 1997 subsequently defines a 'professional arts business' as a business you carry on as:
- (a)
- the author of a literary, dramatic, musical or artistic work; or
- (b)
- a performing artist; or
- (c)
- a production associate.
A note to paragraph 35-10(5)(a) of the ITAA 1997 states:
The expression 'author' is a technical term from copyright law. In general, the 'author' of a musical work is its composer and the 'author' of an artistic work is he artist, sculptor or photographer who created it.
The terms 'performing artist' and 'production associate' are defined in section 405-25 of the ITAA 1997.
For a particular business activity to be considered a 'professional arts business' as defined in subsection 35-10(5) of the ITAA 1997, the business activity must be one where the taxpayer is performing one of the activities outlined in subsection 35-10(5) of the ITAA 1997.
In this case, while the taxpayer is carrying on a business of managing a professional artist, they are not the author of the literary, dramatic, musical or artistic work, or a performing artist, or a production associate. Therefore, the taxpayer will not be carrying on a 'professional arts business' within the meaning of that term as defined in subsection 35-10(5) of the ITAA 1997 and as a result the exception in subsection 35-10(4) of the ITAA 1997 cannot apply.
Date of decision: 22 April 2004Year of income: 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
Division 35
subsection 35-10(2)
subsection 35-10(5)
paragraph 35-10(5)(a)
subsection 35-10(4)
section 405-25
Related Public Rulings (including Determinations)
Taxation Ruling TR 2001/14
Taxation Ruling TR 2001/14A - Addendum
Keywords
NCL carrying forward non commercial losses
NCL professional arts business exception
Non commercial losses
ISSN: 1445-2782
| Date: | Version: | |
| 22 April 2004 | Original statement | |
| You are here → | 16 April 2010 | Archived |