High profile individuals
The Government has announced that, from 1 July 2019, income from the commercial use of an individual’s fame or profile must be attributed to that individual and included in their personal income.
Currently, high profile individuals such as sports people and actors are able to licence out their fame or profile to a related company or trust which in turn receives the income for the use of their image by third parties. The income derived from the commercial use of an individual’s fame is considered to be business income and therefore individuals can take advantage of different corporate structures and potentially lower tax rates.
The proposed measure in the 2018-19 Budget means that all remuneration (cash and non-cash benefits) received for the use of an individual’s fame or profile, must be included in that individual’s assessable income and taxed at their marginal tax rates. Income will no longer be able to be diverted to a company or beneficiaries of a trust. This will mean that high profile individuals are likely to pay higher taxes.
This integrity measure aims to reduce income diversion as a way for high profile individuals to manipulate and minimise their taxable income. From 1 July 2019, income derived from the commercial use of an individual’s fame will be treated in the same way as personal services income and must be included in their assessable income. BDO expects this to have a significant impact on sports people, as they have previously received rulings allowing them to divert up to 20% of their income by licencing out their fame and profile.