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  • Professional sportsperson – income and work-related deductions

    If you earn your income as a professional sportsperson, this information will help you to work out what:

    • income and allowances to report
    • you can and can't claim as a work-related deduction
    • records you need to keep.

    When we say 'you' or 'professional sportsperson', we are referring to a person who makes their living by playing a professional sport – for example, an athlete, footballer, basketballer or cricketer.

    This guide doesn't deal with the tax obligations of support staff, coaches, referees or umpires – see Fitness and sporting industry employees.

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    Income – salary and allowances

    Your employer will provide either an income statement or a payment summary that shows all your salary, wages and allowances for the financial year.

    Include all of the income you received during the financial year in your tax return, regardless of when you earned it, including:

    Don't include reimbursements.

    As a professional sportsperson you may be subject to income averaging – a concessional tax treatment – if you meet certain conditions – see Income averaging as a special professional.

    Salary and wages

    You must include your salary and wages as income in your tax return. Include any bonuses.

    See also:

    Other income amounts

    You need to show all your assessable income from the income year on your tax return. These amounts may include:

    Investment and untaxed income

    You may need to include any amounts you receive from someone other than your club as income in your tax return – for example, prize money for the purpose of rewarding you as a player, payments from sponsors and player's retirement fund payments.

    If you earn income that hasn't had tax withheld by the payer – for example, if your income is investment activities such as rent, dividend or interest income you receive – we may ask you to make regular pay as you go (PAYG) instalments during the year directly to us.

    See also:

    Employment termination payments

    Employment termination payments are treated as income for tax purposes and need to be included on your tax return. Some employment termination payments may be subject to a tax offset.

    See also:

    Non-cash and fringe benefits

    There may be circumstances where because of your sporting activities or your profile, you, your spouse or children, may receive a non-cash benefit – instead of cash payments.

    The market value of non-cash benefits may need to be shown on your tax return as income if they are not subject to fringe benefits tax (FBT) in the hands of your employer.

    Certain benefits received in respect of employment may be classed as fringe benefits. The values of these benefits are generally subject to FBT, a tax paid by employers.

    For example, under the terms of your playing contract, your club, an associate of your club, or someone acting in an arrangement with your club may:

    • give you a work car for private use
    • offer you a low-cost or discounted loan
    • provide free private health insurance
    • provide you with tickets to entertainment events
    • provide you with a living-away-from-home allowance or benefit.

    You may need to report fringe benefits on your tax return. Your payment summary or income statement should show the reportable fringe benefits amount.

    The reportable fringe benefits amount is not counted as part of your total income. You don't pay income tax on it – however, it's used to work out your entitlement to, or liability for, some government benefits and obligations, including:

    • Medicare levy surcharge
    • deductions for personal super contributions.

    See also:

    Allowances

    Include all allowances shown on your payment summary or income statement as income in your tax return.

    You may receive an allowance to:

    • compensate you for an aspect of your work, for example, carrying unpleasant or dangerous goods
    • help you to pay for certain expenses such as meals when you're travelling.

    If your employer pays you:

    • an amount based on an estimate of what you might spend, such as paying cents per kilometre if you use your car for work, then it's an allowance
    • for the actual amount of the expense (either before or after you incur the expense), such as paying for the petrol you use if you use your car for work, it's a reimbursement.

    Allowances on your payment summary or income statement

    You may receive allowances:

    • for work that may be unpleasant, special or dangerous
    • in recognition of holding special skills, such as first-aid certification
    • to compensate for industry peculiarities, such as for weekend or holiday expenses.

    These payments don't cover you for expenses you might incur.

    Include these allowances as income. If you receive an allowance from your employer, you aren't always entitled to a deduction – it depends on the situation. See Deductions.

    Allowances not on your payment summary or income statement

    Your employer may not include some allowances on your payment summary or income statement. This can apply to travel allowances and overtime meal allowances paid under an industrial law, award or agreement. You can see these allowances on your pay slips.

    If the allowance isn't on your payment summary or income statement, and you:

    • spent the whole amount on deductible expenses
      • don't include it as income in your tax return
      • you can't claim any deductions for these expenses
       
    • spent more than your allowance
      • include the allowance as income in your tax return
      • claim a deduction for your expense, if you're eligible. See Deductions.
       

    See also:

    Reimbursements

    If your employer pays you the exact amount for expenses you incur (either before or after you have incurred them), the payment is a reimbursement. We don't consider a reimbursement to be an allowance.

    If you're reimbursed for expenses you incur:

    • don't include the reimbursement as income in your tax return
    • you can't claim a deduction for them.

    Income averaging as a special professional

    As a professional sportsperson, you may be entitled to a concessional rate of tax where your taxable income includes certain amounts of professional income which, when added to your other income, moves you into a higher tax bracket.

    If you're a special professional, you must show your taxable professional income in your tax return at 'Other income'.

    Your taxable professional income is your professional income minus any deductions attributable to that income.

    You don't need to work out your average income or tax payable with income averaging – we'll work it out from the amount of taxable professional income you show on your tax return.

    See also:

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      Last modified: 17 May 2019QC 36159