For your information:

TAXATION RULING PERTINENT TO MUSICIANS:

The full ruling is available in PDF format from the Australian
Taxation office website http://www.ato.gov.au
To access this ruling quickly, perform a search in the "LEGAL
DATABASE" for TR 2004/D12

What this Ruling is about

1. Having regard to the distinctive nature of the arts profession,
this Ruling provides guidance on the principles to be applied in
determining whether an artist is carrying on *businessF1 as a
'professional artist' (refer to the definition of this term in
paragraph 3). This question is relevant to a number of tax law issues,
such as:

(a)
when an amount is income according to ordinary concepts under
section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997), because
it has been earnt in the ordinary course of carrying on such a
business;

(b)
whether a loss or outgoing has been necessarily incurred under
section 8-1 of the ITAA 1997 in carrying on a business of this type;

(c)
whether Division 35 of the ITAA 1997 applies,F2 where losses
from a business activity are deferred and allowed as deductions in a
future year against income from the same business activity; and

(d)
more specifically, whether the second arm of the exception
contained in subsection 35-10(4) of the ITAA 1997, concerning a
'*professional arts business', applies.

2. However, this Ruling deals only with the threshold question of when
a person carries on business as a professional artist and does not
cover in any detail these related issues. Other related issues also
not dealt with in this Ruling are:

·
the application of Division 70 of the ITAA 1997 to art works
(see paragraph 5), which are *trading stock within that Division; and

·
the application of Division 40 of the ITAA 1997 to capital
expenditure on the cost of *intellectual property, which is a
*depreciating asset within that Division.

Class of person/arrangement

3. This Ruling applies to professional artists. For the purposes of
this Ruling, professional artists are persons who carry on activities
of the type referred to in the definition of '*professional arts
business', in subsection 35-10(5), that is activities as either:

(a)
an 'author of a literary, dramatic, musical or artistic work';

(b)
a '*performing artist'; or

(c)
a '*production associate'.

4. This Ruling does not set out to consider the meaning of these
terms, other than to observe that the terms, '*performing artist' and
'*production associate' are defined in section 405-25, which are set
out in the Definitions section (see paragraph 98). The 'Note' to
subsection 35-10(5) states:

The expression 'author' is a technical term from copyright law. In
general, the 'author' of a musical work is its composer and the
'author' of an artistic work is the artist, sculptor or photographer
who created it.

5. In this ruling, the term 'art work(s)' is used to describe the
product or services produced as a result of activities undertaken
during the course of a '*professional arts business', as defined in
paragraph 3.


Good bedtime novel... nevertheless important!
Cheers
RW