You are here

8.8 Earnings from advance payments

Last amended 
15 August 2017

A person may receive an advance payment for writing a book or a similar endeavour i.e. a commissioned artwork, over a set time-frame. The advance can be used as actual earnings averaged over the designated period. Following completion of the book etc. the person may be deemed in a similar field i.e. as a journalist and the deemed earnings applied to future periods of payment.

Any subsequent royalty payments should also be held as earnings but can only be used in the period in which the labour they were derived from was undertaken i.e. applied to a retrospective period and an overpayment for that period raised. In a lot of cases this may not be practical and instead a deemed earnings amount is held in calculations instead. 

Example – Earnings from a book advance

Corporal X has an accepted claim for compensation for a condition which he sustained whilst serving in Iraq. He was discharged as a result of his condition and his normal earnings are $1,652.65 per week.

Whilst he is not currently employed, Corporal X has been approached to write a book about his experiences and signed a 12 month contract in which to produce it.  Shortly after signing the contract, he was paid a lump sum advance of $30,000 against future sales of the book.  As the lump sum constitutes earnings, it must be considered when calculating his ongoing incapacity entitlements.  His treating General Practitioner has provided medical clearance for him to work up to 22 hours per week.  For the duration of his contract he must provide a work diary of the number of hours he works in each week, as his entitlement to maximum rate weeks has ended.

It is important to note that after the first 45 weeks of incapacity (and subsequent reduction in compensation to 75% of NWE) the number of hours that Corporal X works affects the calculation of his incapacity payments.  The lump sum advance must be converted to a weekly amount as per the formula below:

NWE - AE, where

NWE   =   Adjustment percentage x $1,652.65

AE   =   $30,000   x   6 /313   =   $575.08 per week

If Corporal X works 22 hours in a week his entitlement would therefore be:

90% of $1,652.65 less $575.08 = $912.31 per week.