Issue
Can section 405-25 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to individuals who earn income as a performing artist or production associate for videos they upload on YouTube?
Decision
Yes. Section 405-25 of the ITAA 1997 can apply to individuals who earn income as a performing artist or production associate for videos they upload on YouTube.
Facts
The taxpayer carries on a business of creating cooking and baking videos for upload onto YouTube.
The taxpayer produces, designs, edits, scripts, voices over, films and acts as presenter in the videos for the purpose of up loading onto YouTube.
The taxpayer receives income from Google for their YouTube videos based on a share of advertising revenue and the number of views their videos receive.
Reasons for Decision
Section 405-5 of the ITAA 1997 applies a special rate of income tax to a taxpayer's above-average special professional income. The Income Tax Rates Act 1986 generally sets the specific rate so that the amount of income tax on the top four-fifths of taxpayer's above-average special professional income is effectively four times what would be paid on the bottom one-fifth of that income at basic rates.
A special professional, defined in subsection 405-25(1) of the ITAA 1997, includes a performing artist or production associate.
Subsection 405-25(3) of the ITAA 1997 provides that a performing artist includes someone who performs or appears in or on a film. Subsection 405-25(4) of the ITAA 1997 provides that a production associate includes someone who provides artistic support for the activity of making a film.
Artistic support includes providing services as a director, film editor, production designer or producer (subsection 405-25(5) of the ITAA 1997).
Film is defined in subsection 995-1(1) of the ITAA 1997 as an aggregate of images, or of images and sounds, embodied in any material. This definition is wide enough to capture YouTube videos.
Therefore, the taxpayer is a special professional under the categories of performing artist and production associate pursuant to subsections 405-25(3) and 405-25(4) of the ITAA 1997 respectively, as the taxpayer: • performs or appears in a film, and • provides artistic support in making a film. Note: The income the taxpayer receives from Google for their YouTube videos is a reward for providing services relating to their activities as a special professional. Therefore, the income can form part of the taxpayer's assessable professional income for the purposes of subsection 405-20(2) of the ITAA 1997.