Issue
Are royalties received from writing activities included in the assessable income of an author where the writing activities do not constitute the carrying on of a business as an author?
Decision
Yes. Royalties are statutory income under section 15-20 of the Income Tax Assessment Act 1997 (ITAA 1997) and are included in assessable income under section 6-10 of the ITAA 1997, regardless of whether a taxpayer's writing is a business or hobby.
Facts
The taxpayer is writing a booklet for the purpose of publication from which the taxpayer hopes to earn income.
The taxpayer proposes to seek a publisher to publish the booklet. The taxpayer has not yet approached any publishers, but is hopeful that it will be published at some time in the future.
The taxpayer has no plans to self-publish the booklet.
Reasons for Decision
If the booklet is published any royalty income will be assessable, regardless of whether the taxpayer's writing is a business or hobby. Section 15-20 of the ITAA 1997 assesses royalties that are not 'ordinary income'.