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Taxable Income - My (athletes') Foot!

Publication date: 25 Aug 97 | Source: THE TAX INSTITUTE

"To suggest that an athlete who earns a few hundred or even thousand dollars from activities such as junior coaching or speaking about his or her commitment to sports results in Australian Sports Commissions' Direct Athlete Support payments magically becoming income is simply ludicrous", according the Taxation Institute of Australia President, Mr Richard Gelski.

"Payments made by the Sports Commission, or for that matter, the Olympic Committee to promising and talented sports people so as to encourage them to stay in their sports do not easily fall into the category of income," said Mr Gelski.

"We do not pay Susie O'Neill to swim, nor do we pay Cathy Freeman to run!"

"The payments are not made in return for services, they are more in the nature of gifts designed to maintain and improve Australia’s success as a sporting nation," he said.

It has been suggested that the Australian Tax Office has redefined the word "professional" in the context of athletes and thereby extended the tax net as it applies to Australia's sports men and women and that this "new ruling" will threaten Australia's medal chase at the Sydney Olympics.

Whether or not an athlete is professional or amateur is not the yardstick to determine whether or not a receipt is taxable in his or her hands. Rather one should look to the character of the receipt in the hands of the recipient in order to determine whether or not the receipt is taxable.

"It is my view that either the payments made under the Direct Athlete Support scheme have the character of income or they do not. The Australian Tax Office has issued a ruling on the predecessor of the Direct Athlete Support scheme (the Sports Talent Encouragement Plan awards) that provided those payments were not in the nature of income," Mr Gelski said.

"This matter needs to be clarified as a matter of urgency by the Australian Tax Office so that Australia does not jeopardise its chances at the 2000 Olympics."