Edited version of private advice

Authorisation Number: 1052268000193

Date of advice: 9 July 2024

Ruling

Subject: Assessable income - coaching

Question

Are the payments received by the taxpayer for coaching assessable income under section 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XXXX 20XX

Relevant facts and circumstances

You are employed full-time at company A.

You have an interest in sport A and undertake a coaching role outside of your primary employment role.

You had previously coached other representative and senior teams on an honorary basis.

You are an accredited coach, with XX years coaching experience and XX years nonprofessional playing experience.

On XX XXXX 20XX, you commenced coaching junior teams for organisation A, after being approached by organisation A.

Organisation A is a national sporting league level sports club which is incorporated as an Australian public company.

From commencement, you have included the income from organisation A in your tax returns.

You receive $XX from organisation A for each of the three school terms in the year to coach the junior sport A teams.

You receive $XX plus XX% superannuation each year for this activity.

The agreement between you and organisation A is verbal, there is no written contract.

You receive no other benefits.

When you commenced coaching for the organisation A you did not:

•         Provide a TFN declaration form.

•         Receive payslips stating PAYG withholding.

In the 20XX income year, you provided a TFN declaration and started to receive payslips stating PAYG withholding.

All equipment is supplied by organisation A except for the whistle, footwear and sport's wear, which you provide.

You incur expenses associated with coaching.

You do not coach a specific team, instead you conduct predominantly skill-based training for a group of about XX players across XX age groups.

You are not related to any of the players.

Some of the players are family friends.

During a season you spend the following amount of time dedicated to the activity:

•         About one hour per week planning sessions and liaising with other coaches.

•         Two hours per week face to face coaching.

•         Twice per season, you travel to location A to meet other regional coaches and head coaches.

You have obtained no government licenses or approvals, only the accreditation issued by sport A.

You are a member of organisation B; this is the local club in your area. You pay to be a social member, are the club honorary President and provide the club with some sponsorship.   

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6-5(1)

Income Tax Assessment Act 1997 subsection 6-15(1)

Reasons for decision

Under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) assessable income includes income according to ordinary concepts, which is called ordinary income. Typical examples of ordinary income include salary, wages, allowances, bonuses, dividends, rent, and proceeds from carrying on a business.

Under subsection 6-15(1) of the ITAA 1997, if an amount is not ordinary income and is not statutory income, it is not assessable income.

Taxation Ruling TR 1999/17 Income tax: sportspeople - receipts and other benefits obtained from involvement in sport provides the Commissioner's view as to when receipts from involvement in sport are assessable income. It applies to officials, such as coaches, as well as participants.

For a payment or other benefit received by a sportsperson to be assessable income, it must be either ordinary or statutory income. Paragraphs 8 and 9 of TR 1999/17 states:

8. A payment or other benefit received by a sportsperson is assessable income if it is:

•         income in the ordinary sense of the word (ordinary income); or

•         an amount or benefit that through the operation of the provisions of the tax law is included in assessable income (statutory income). Statutory income includes non-cash benefits that may not be ordinary income.

9. The following are assessable income:

•         payments received from, in respect of, or in connection with employment;

•         payments or other benefits received for, in respect of, or in connection with services provided; and

•         amounts of a revenue nature or other benefits received, including prizes and awards, from carrying on a business of participating in sport. This includes the exploitation of personal skills in a commercial way for the purpose of gaining reward.

TR 2022/D3 Income tax: pay as you go withholding - who is an employee? further expounds the Commissioner's view on that which constitutes an employment relationship. Paragraphs 20 and 21 state:

20. The various indicia of employment that have been identified in case law remain relevant but are to be considered only in respect of the legal rights and obligations between the parties. The indicia point to whether the worker is working in the business of the engaging entity or not.

21. While no factor will be determinative, the more control the engaging entity can exercise over how, when and where the worker performs their work under the contract, the more likely the worker is to be an employee of the engaging entity. This is because the ability to exercise control demonstrates the subservient and dependent nature of the work of the worker to the business of the engaging entity

Application to your circumstances

On XX XXXX 20XX, you entered into an agreement with organisation A to start a coaching for the club's youth program. You are an accredited coach and perform skill-based training for a group of about XX players across XX age groups on a regular basis since commencement with organisation A. You receive $XX yearly from the club and XX% superannuation paid in regular instalments corresponding to the school terms. In the 20XX income year, you completed a TFN declaration form and started to receive payslips for PAYG withholding.

You have other employment and do not rely on your coaching role to provide your primary source of income; however, the payments are not isolated and there is repetition. You provide coaching as directed by organisation A for the benefit of the club's youth program. You are working in organisation A's business to carry out their youth program. When considering the totality of your relationship with organisation A, you are deemed to be employee of the club. As this income is derived from your employment with organisation A, it is assessable as ordinary income.

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