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AJML Accountants Update – May 2019

ATO provide guidance to taxpayers who generate income from videos uploaded to YouTube

– Part 6

Many taxpayers are making money by uploading videos to YouTube (about almost anything, from filming shopping trips to make-up lessons to baking videos) and electing for advertising to run across the video (the advertising revenue is shared between the taxpayer and YouTube/Google). This activity throws up some interesting issues for taxpayers who derive income in this way, and the ATO has released ID 2014/41 to provide guidance in relation to one such issue.

The facts in ID 2014/41

The facts in ID 2014/41 can be broadly summarised as follows:

  • The taxpayer carries on business of creating cooking 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; and
  • 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.

The issue that arose in the ID was whether S.405-25 can apply to individuals who earn income as a performing artist or production associate for videos they upload on YouTube.

By way of background, Division 405 provides a special tax rate for ‘special professionals’, being authors, inventors, performing artists, production associates and sportspersons, that can apply to smooth out the income tax paid in respect of fluctuations in their professional income is effectively four times what would be paid on the bottom one-fifth of that income at basic rates.

The decision in ID 2014/41

A special professional includes a performing artist or productions associates which, in turn, are defined as follows (under S.405-25(3) and S.405-25(4) respectively):

  • A performing artist includes someone who performs or appears in or on a film
  • A production associate includes someone who provides ‘artistic support’ for the activity of making a film (where artistic support includes providing services as a director, film editor, production designer of producer – refer to S.405-25(5)).

The ATO considered the meaning of ‘film’ in the context of the above definitions, being an aggregate of images and sounds embodied in any material and concluded that the definition is wide enough to capture YouTube videos. It followed that the taxpayer was a special professional under the categories of performing artist and production associate as the taxpayer performs or appears in a film and provides artistic support in making a film. On this basis, the income received for the YouTube videos was a reward for providing services as a special professional, which could form part of assessable professional income for the averaging provisions.