Private ruling: Special Professional Income Averaging
Date of advice: 14 July 2017
Published: December 2017
Ruling period: Period ended 2017
Date scheme commenced: 01 July 2016

Ruling: Q2: Does a beautician who works with entertainment sets and performing artists, fit the definition of a special professional under the Act? Answer No

Relevant facts and circumstances: You are a sole trader. You have a business. You have a registered trademark. You have been acknowledged by your industry. You produced, directed and participated in a video for online distribution. Your videos generate income. You receive payment from an e-commerce site. You have social media presence including Facebook and Instagram You have regular write ups and editorials written about you both online and in print. You provide services for clients. You attend trade shows. You conduct workshops for professional individuals. These classes target individuals that want to learn your procedures.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 405 | Income Tax Assessment Act 1997 subsection 405-25(1) | Income Tax Assessment Act 1997 subsection 405-25(2) | Income Tax Assessment Act 1997 subsection 405-25(3) | Income Tax Assessment Act 1997 subsection 405-25(4) | Income Tax Assessment Act 1997 subsection 405-25(5)

Reasons for decision: Summary: Subsection 405-25(1) states that you are a special professional if you are: (a) the author of a literary, dramatic, musical or artistic work (b) the inventor of an invention (c) a performing artist (d) a production associate (e) a sportsperson. You are a production associate as defined in subsection 405-25(4) if you provide artistic support for an activity in subsection 405-25(2) involving the making of a film, tape, disc or television or radio broadcast as a director or a producer. Artistic support activities include the services such as director, film editor or producer to name a few categories from subsection 405-25(5). You have indicated that you were the director, producer and participated in Tutorials for distribution via online services. These roles are regarded as Special Professional roles. These videos are posted on line, which allows anyone with internet access to view your videos upon registration and payment. However your other services are not regarded as a Special Professional role under section 405-25. Providing services at entertainment sets on performing artists does not have sufficient nexus to determine you are a Special Professional under the Act. Special Professionals are seen as inventors, performing artists, production associates and sportspersons. As a beautician you do not fall within these categories. A Makeup Artist is a trained person whose job it is to improve the appearance of a customer’s face, body, and hair, using make-up and beauty treatments. Whilst it is acknowledged that you have significant skills. The profession of Makeup Artist does not meet the strict application of the legislation as a Special Professional under section 405-25. Appearing at tradeshows or delivering classes are not seen as an artistic performance for an audience therefore are not regarded as a professional artist under subsection 405-25(2). The delivery of classes is seen as taking on the role of providing an education service. Services, including your role as an educator, are not listed as an artistic support activity in subsection 405-25(5). Whilst you work with clients who may be seen as performing artists this does not mean that you are also seen as a performing artist in consideration of subsection 405-25(1).

Question 1: Are you considered to be a special professional for averaging purposes in relation to the creation of videos as the producer, director and participant for online sales? | Reasons for decision: Legislative references within the Reasons for decision are to the Income Tax Assessment Act 1997