Taxation Ruling

TR 2000/5A1 - Addendum

Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements

Addendum

This Addendum amends Taxation Ruling TR 2000/5 to highlight that the ruling does not apply to an employee whose employment activities form part of a business that the employee carries on.

TR 2000/5 is amended as follows:

1. Paragraph 1

Insert:


1A. This Ruling does not consider the application of section 8-1 of the Act to the costs incurred by an employee in preparing and administering an employment agreement that forms part of a business being carried on by the employee. The High Court held in Spriggs v. Federal Commissioner of Taxation; Riddell v. Federal Commissioner of Taxation (2009) 239 CLR 1; [2009] HCA 22 that each professional football player carried on a business of commercially exploiting their sporting prowess and associated celebrity, which included playing activities undertaken as an employee. The Court confirmed that the fees paid by each player to a manager to negotiate a new playing contract were an allowable deduction in the circumstances where:

·
each business was well established and conducted in a commercial and business-like way;
·
the player was not exclusively an employee;
·
there was a synergy between the various income producing activities of the player; and
·
the conduct of each business was anticipated in the framework provided by the playing contracts and the competition rules.

2. Case references

Insert:


Spriggs v. Federal Commissioner of Taxation; Riddell v. Federal Commissioner of Taxation (2009) 239 CLR 1; [2009] HCA 22

This Addendum applies on and from 18 June 2009.

Commissioner of Taxation
2 March 2011

References

ATO references:
NO 1-2D8OY3S

ISSN 1039-0731