Image rights to be taxed in individual returns only

DLA Partners Luxury Property Services in Natai since 2005 Image Rights To Be Taxed In Individual Returns Only

A tax determination from the Australian Taxation Office (ATO) has stated that earnings from your “image rights” or “fame” can only be included in your own individual tax return. The views expressed in this determination differ from those in Draft Practical Compliance Guideline PCG 2017/D11 which was withdrawn on 24 August 2018.

Under previous guidance, you may have been able to allocate some of your earnings to a related company or trust for tax purposes. However, this new determination will mean that this can no longer happen..

You can no longer sub-licence public fame

The new rules effectively state that if you earn income from using your name, image, likeness, identity, reputation or signature, then this can only be personal income. This will be the case even if you sub-licence your fame to a related company or trust in order to send invoices to third parties. The determination provides an example of an arrangement between a related entity and a third party where the amount is assessable to the individual.

Also, the ATO is fully aware of the way in which you could “reverse” an agreement of sub-licencing with a related party, by having your related entity directly engage with you for the use of your public fame and image. This is also not allowed, due to Australian law not recognising property rights in fame.

Different international rules

The ATO acknowledges that there may be different rules around property rights in fame in other countries. Therefore, you may have arrangements like this in other countries that will be taxed differently in Australia.

With these differing international rules in place, we would need to review your situation to determine the most appropriate outcome, especially where the other countries you do business in have a double tax agreement with Australia.

Service agreements

Generally speaking, you may still use a related party to contract out for your services that relate to things like promotional events or product launches.

However, if you currently use a ‘bundle of rights’ approach in relation to these service fees, we may need to undertake further review of the arrangements going forward to stay in line with this tax determination. In this situation, we will follow up with you to discuss options you have for the 2023–24 income year.

If you would like to discuss this matter with us in more detail, please do not hesitate to contact us.

This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.