Edited version of your written advice

Authorisation Number: 1012893518524

Date of advice: 13 October 2015

Ruling

Subject: Special Professional Activities

Question

Are you a 'special professional' for the purposes of Division 405 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

The scheme commenced on

1 July 20XX

Relevant facts

You have appeared on a reality television show. You now work as a model appearing in exhibitions and promotional activities which includes attending photo sessions and signing autographs.

You have developed a social media following and use this to conduct promotional and digital activities for companies wanting to attain your recommendations to your followers.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 405-15,

Income Tax Assessment Act 1997 Section 405-20,

Income Tax Assessment Act 1997 Section 405-25,

Income Tax Assessment Act 1997 Subsection 405-25(1),

Income Tax Assessment Act 1997 Subsection 405-25(2)

Reasons for decision

Division 405 of the ITAA 1997 applies special rates of tax on the above-average professional income of special professionals. It reduces the effect that fluctuations in special professional income would otherwise have on the income tax liability of these persons.

Under section 405-15 of the ITAA 1997, you are only subject to this concessional tax treatment if:

• you are an individual

• you are an Australian resident at any time during the income year

• your are a special professional, and

• you satisfy the first year requirements, that your taxable professional income is more than $2,500, in the current year or an earlier income year.

Subsection 405-25(1) of the ITAA 1997 states that you are a special professional if you are:

• the author of a literary, dramatic, musical or artistic work; or

• the inventor of an invention; or

• a performing artist; or

• a production associate; or

• a sportsperson.

A taxpayer is a performing artist if they exercise intellectual, artistic, musical, physical or other personal skills in the presence of an audience by performing or presenting:

• music

• a play

• dance

• an entertainment

• an address

• a display

• a promotional activity

• an exhibition

• or similar activity

Additionally, they are a performing artist if they perform or appear in or on film, tape, disc, television or radio broadcast.

In your case, you work as a model participating in exhibitions and promotions and your role is typical of someone who is undertaking promotional activities in the presence of an audience.

As such, you are considered a person who is a performing artist, and are therefore a special professional within the meaning given by subsection 405-25(1) of the ITAA 1997.

Further issues for you to consider

Being a special professional does not automatically mean that all your income is assessable professional income that qualifies for special professional averaging. Your assessable professional income includes any assessable income you derive as a reward for providing services relating to your activities as a special professional.

Also, subsection 405-20(4) of the ITAA 1997 is relevant in your circumstances. It states that your assessable professional income will include income that you derive, because you are or were a special professional, for:

• endorsing or promoting goods or services

• appearing or participating in an advertisement

• appearing or participating in an interview

• providing services as a commentator

• providing similar services