Commentary

B5.314 Lump sums for copyrights

Business tax
Business tax | Commentary

B5.314 Lump sums for copyrights

Business tax | Commentary

B5.314 Lump sums for copyrights

The cases cited in this article support the general proposition that if an author or dramatist, or any other person, whose profession or vocation involves the creation of copyrights, sells a copyright while still carrying on his profession or vocation, the sum thus received is chargeable to tax as trading income. If there is no profession or vocation the sum received is not taxable as trading income. Payments received after a profession or vocation has been discontinued, and arising from the carrying on the profession or vocation before the discontinuance are charged to income tax separately from the profits of the trade1, as described in B2.803 (post-cessation receipts).

An author, dramatist or other person who produces copyright work must treat every lump sum which he receives on the sale of any of his copyrights as a taxable receipt, if he is practising his vocation when he receives it. In Billam's2 the appellant was the secretary of an organisation, and he had for some years written plays in his spare time. He wrote the plays in the hope of selling them, but without success until, while still holding his

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