Private ruling: Special income averaging activity
Date of advice: 1 September 2018
Published: October 2018
Ruling period: Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you considered to be a special professional for the purposes of the concessional tax treatment under Division 405 of the Income Tax Assessment Act 1997 (ITAA 1997) for the 2013-14 to 2017-18 financial years? | A1: No Reason for decision Subsection 405-25(5) of the ITAA 1997 states that a person provides artistic support for the activity of making a film, tape, disc or television or radio broadcast if they provide services relating to the activity as: ● an art director ● a choreographer ● a costume designer ● a director ● a director of photography ● a film editor ● a lighting designer ● a musical director ● a producer ● a production designer ● a set designer, or "Performing artist" is defined by reference to the activities which a performer undertakes as part of his/her profession. The first category of activities encompasses music, a play, dance, an entertainment, an address, a display, a promotional activity, an exhibition and similar activities. The second category comprises those activities within the performing arts field which are not always carried on in the presence of an audience. This includes the performance or appearance of a person in or on a film, tape, disc or television or radio broadcast. "Production associate" refers to those persons who have an artistic input, as distinct from a technical input, into any of the activities mentioned in the definition of performing artist. The persons who qualify as production associates are specified in the definition of "artistic support" to be: an art director, a choreographer, a costume designer, a director, a director of photography, a film editor, a lighting designer, a musical director, a producer, a production designer, a set designer and any person who makes an artistic contribution similar to that made by any of these persons. "Sportsperson" is any person who competes in a sporting competition in any of the ways identified in the definition of sporting competition. A "sporting competition" is a sporting activity to the extent that: ● human beings compete by riding animals, or by exercising other skills in relation to animals (eg jockeys, rodeo riders) ● human beings compete by driving, piloting or crewing motor vehicles, boats, aircraft or other modes of transport ● human beings compete with, or overcome, natural obstacles or natural forces (eg mountain climbers), or ● human beings are the sole competitors (eg footballers, golfers, athletes). Income derived from the following activities is expressly excluded from assessable professional income (section 405-30 of the ITAA 1997): ● coaching or training sportspersons ● umpiring or refereeing a sporting competition ● administering a sporting competition ● being a member of a pit crew in motor sport ● being a theatrical or sports entrepreneur ● owning or training animals. Income from such activities will not be included in any above-average special professional income to which the averaging scheme applies. Application to your circumstances Based on your facts in circumstances your role is considered to be one of technical and administrative in nature, rather than an artistic endeavour. None of the activities listed under the special professional provisions capture the majority or your responsibilities or tasks listed in the facts provided. Even authors and inventors who enter into a scheme to provide services to others cannot count as assessable professional income any income derived under the scheme unless: (a) the scheme was entered into solely for the taxpayer to complete specified artistic works or inventions, and (b) the taxpayer does not provide such services to the other person or an associate under successive schemes that result in substantial continuity of the provision of such services (section 405-30 of the ITAA 1997). Hence persons such as journalists, draughtspersons and graphic artists who produce works as an ordinary part of their employment are not eligible for income averaging simply as a result of their ordinary employment tasks. Your employment as a particular agent is not considered an artistic endeavour. The activities listed as part of your employment that approach the artistic, do not represent the majority of your responsibilities, which are considered more technical or administrative in nature. Activities requiring artistic application would need to represent the majority or your roles and responsibilities for you to be considered a special professional for income averaging purposes.

Relevant facts and circumstances: In 2014 you began working at X. You have provided the following details of your job requirements: Agent / Management work ● Nurturing and developing ● Scouting, this involves looking for new relevant people to sign to the agency ● Quoting ● Booking jobs / putting together contracts Producing ● Scheduling daily appointments ● Negotiating contracts/rates with client and relevant people – this also includes timings, hours, overtime and all aspects of the job for the relevant person and agency. ● Quoting ● Reviewing contracts from clients and overseas agencies ● Billing and pricing up a job, our accounts department ● Meeting weekly deadlines with clients and proposals/briefs Creative design / assistance ● Designing media kits ● Creating the comp cards. ● Daily/weekly digitals and videos of the relevant people. Producing / creative assistance ● Meeting with photographers and stylists ● Putting together references for test shoots for photographers ● Putting together references for test shoots for stylists. ● Putting together makeup references for test shoots, ● Updating the relevant people folios weekly and resizing/editing and some retouching imagery for folio usage. ● Social media/marketing

Relevant legislative provisions: Income Tax Assessment Act 1936 Division 16A | 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)

Reasons for decision: Summary: Subsection 405-25(5) of the ITAA 1997 states that a person provides artistic support for the activity of making a film, tape, disc or television or radio broadcast if they provide services relating to the activity as: ● an art director ● a choreographer ● a costume designer ● a director ● a director of photography ● a film editor ● a lighting designer ● a musical director ● a producer ● a production designer ● a set designer, or "Performing artist" is defined by reference to the activities which a performer undertakes as part of his/her profession. The first category of activities encompasses music, a play, dance, an entertainment, an address, a display, a promotional activity, an exhibition and similar activities. The second category comprises those activities within the performing arts field which are not always carried on in the presence of an audience. This includes the performance or appearance of a person in or on a film, tape, disc or television or radio broadcast. "Production associate" refers to those persons who have an artistic input, as distinct from a technical input, into any of the activities mentioned in the definition of performing artist. The persons who qualify as production associates are specified in the definition of "artistic support" to be: an art director, a choreographer, a costume designer, a director, a director of photography, a film editor, a lighting designer, a musical director, a producer, a production designer, a set designer and any person who makes an artistic contribution similar to that made by any of these persons. "Sportsperson" is any person who competes in a sporting competition in any of the ways identified in the definition of sporting competition. A "sporting competition" is a sporting activity to the extent that: ● human beings compete by riding animals, or by exercising other skills in relation to animals (eg jockeys, rodeo riders) ● human beings compete by driving, piloting or crewing motor vehicles, boats, aircraft or other modes of transport ● human beings compete with, or overcome, natural obstacles or natural forces (eg mountain climbers), or ● human beings are the sole competitors (eg footballers, golfers, athletes). Income derived from the following activities is expressly excluded from assessable professional income (section 405-30 of the ITAA 1997): ● coaching or training sportspersons ● umpiring or refereeing a sporting competition ● administering a sporting competition ● being a member of a pit crew in motor sport ● being a theatrical or sports entrepreneur ● owning or training animals. Income from such activities will not be included in any above-average special professional income to which the averaging scheme applies. | Detailed Reasoning - Application to your circumstances: Based on your facts in circumstances your role is considered to be one of technical and administrative in nature, rather than an artistic endeavour. None of the activities listed under the special professional provisions capture the majority or your responsibilities or tasks listed in the facts provided. Even authors and inventors who enter into a scheme to provide services to others cannot count as assessable professional income any income derived under the scheme unless: (a) the scheme was entered into solely for the taxpayer to complete specified artistic works or inventions, and (b) the taxpayer does not provide such services to the other person or an associate under successive schemes that result in substantial continuity of the provision of such services (section 405-30 of the ITAA 1997). Hence persons such as journalists, draughtspersons and graphic artists who produce works as an ordinary part of their employment are not eligible for income averaging simply as a result of their ordinary employment tasks. Your employment as a particular agent is not considered an artistic endeavour. The activities listed as part of your employment that approach the artistic, do not represent the majority of your responsibilities, which are considered more technical or administrative in nature. Activities requiring artistic application would need to represent the majority or your roles and responsibilities for you to be considered a special professional for income averaging purposes. | Detailed Reasoning - This ruling applies for the following periods:: Year ending 30 June 2014 Year ending 30 June 2015 Year ending 30 June 2016 Year ending 30 June 2017 Year ending 30 June 2018 | Detailed Reasoning - The scheme commences on:: 1 July 2014 | Detailed Reasoning - Relevant facts and circumstances: In 2014 you began working at X. You have provided the following details of your job requirements: Agent / Management work ● Nurturing and developing ● Scouting, this involves looking for new relevant people to sign to the agency ● Quoting ● Booking jobs / putting together contracts Producing ● Scheduling daily appointments ● Negotiating contracts/rates with client and relevant people – this also includes timings, hours, overtime and all aspects of the job for the relevant person and agency. ● Quoting ● Reviewing contracts from clients and overseas agencies ● Billing and pricing up a job, our accounts department ● Meeting weekly deadlines with clients and proposals/briefs Creative design / assistance ● Designing media kits ● Creating the comp cards. ● Daily/weekly digitals and videos of the relevant people. Producing / creative assistance ● Meeting with photographers and stylists ● Putting together references for test shoots for photographers ● Putting together references for test shoots for stylists. ● Putting together makeup references for test shoots, ● Updating the relevant people folios weekly and resizing/editing and some retouching imagery for folio usage. ● Social media/marketing | Detailed Reasoning - Relevant legislative provisions: Income Tax Assessment Act 1936 Division 16A 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)