Private ruling: Special professionals
Published: November 2011
Ruling period: 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you a 'special professional' for the purposes of Division 405 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes.

Relevant facts and circumstances: You are an Australian resident for tax purposes. You have been employed in an industry for a number of years. During your time in the industry you have developed to a high level, artistic skills which you use with your current employer, providing artistic support to a range of news, current affairs, documentary, sporting and entertainment programs. You are employed as an equipment operator; however your role is much broader than the normal duties of someone in that position. Your skills and expertise are not confined to one area of production, as they are employed across many areas including camerawork, sourcing news stories, story development, organising interviews, editing, lighting, conducting interviews with subjects being taped, and assisting in script development before editing and assembling the final product. Most other equipment operators are on award wages on a sliding pay scale. However you are paid a salary which is significantly higher than the award rate as a reward and recognition for the creative skills you possess and artistic support you provide. You have been the recipient of a number of special awards from an Australian related industry society, an industry testament to the wide range of artistic and creative skills you have displayed over many years. Your taxable income from your employment within the industry was more than $2,500 during the 2009-10 financial year.

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 Paragraph 405-25(4)(b) | Income Tax Assessment Act 1997 Paragraph 405-25(5)(a) | Income Tax Assessment Act 1997 Paragraph 405-25(5)(b)

Reasons for decision: Summary: 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 production associate if they provide 'artistic support' for the activity of making a film, tape, disc or television or radio broadcast (paragraph 405-25(4)(b) of the ITAA 1997). Paragraph 405-25(5)(a) of the ITAA 1997 states that a taxpayer is taken to provide artistic support if they provide services in any of the following roles: (i) an art director; or (ii) a choreographer; or (iii) a costume designer; or (iv) a director; or (v) a director of photography; or (vi) a film editor; or (vii) a lighting designer; or (viii) a musical director; or (ix) a producer; or (x) a production designer; or (xi) a set designer; or (b) you provide similar services relating to the activity. No definition of the expression 'similar services' is included in the ITAA 1997. However, the Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 4) 1987, which accompanied the introduction of the former Division 16A of the Income Tax Assessment Act 1936 (now Division 405 of the ITAA 1997), makes reference to the requirement for an artistic contribution and not merely a technical one (for example, by operation of camera or sound equipment). For example, ordinarily an equipment operator provides a technical role under the direction of the director, who have the artistic control. Their services are not similar to a costume, lighting or set designer, which are roles listed in paragraph 405-25(5)(a) of the ITAA 1997. In each of these roles they have artistic control within their area of expertise. In your case, although you are employed as an equipment operator, your role is much broader than the typical duties of someone in that position. In that you provide artistic support and contribute artistically to the production of television programs. As such, you are considered a production associate who provides artistic support for the activity of making television broadcasts, and are therefore a special professional within the meaning given by subsection 405-25(1) of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.