Danny is a director at Craythorne Ledger Chartered Accountants with over 13 years of accounting and taxation experience. Danny can assist our athletes with tax planning and completing a tax return, investment structure advice, creating a budget and savings plan, general financial education, assistance in compliance of post-career business opportunities and application of income averaging provisions set by the ATO for special professions.
Here are a few practical tips from Danny for those in professional sport – the below information is for general information only. It should not be taken as professional or financial advice, and you should consider seeking independent legal, financial, taxation or other advice to apply to your individual circumstances before making a final decision.
Are you in the business of sport?
Tax assessable income earned by professional athletes can include sports contracts, prizes and awards and promotions and advertising. If the income is earned from an activity considered a hobby, it is not assessable. An activity usually extends beyond a hobby when the talent is turned into the pursuit of money, but always depends on the specific circumstances.
Do you earn a professional sportsperson income?
Sportspersons are a class of special professionals eligible for income averaging, which can lead to a significant reduction in tax, especially in high income years. Income that can be averaged includes sports contracts, prizes and awards, promotions and advertisements and commentary. Umpiring and coaching cannot be averaged.
Common professional sportsperson deductions
Player manager fees
Gym memberships for maintaining high fitness level
Clothing with club logos
Sports specific equipment
Protective equipment (such as mouth guards or sun protection)
Motor vehicle or travel expenses to matches, training and appointments
To claim a deduction, you must have spent the money (not be reimbursed) and keep a record to substantiate the expense
Examples of expenses that are not eligible for tax deduction include:
Sports supplements and special dietary foods
General running shoes and sportswear
Education costs enabling the athlete to gain new employment or income sources
Medical consultations
It is recommended to seek advice from a tax professional to determine what expenses are deductible.
How can a tax specialist help a professional athlete?
Determining if the athlete is in the business of sport
Apply professional averaging on eligible athlete income
Considering how to structure income from multiple sources
Assisting the athlete register for obligations such as ABN and GST if required
Determining what expenses incurred are tax deductible
Implementing an efficient record keeping process
Preparing annual tax returns
Get in contact with Danny if you have any further queries by emailing him at danny@craythorneledger.com.au
