Edited version of your written advice

Authorisation Number: 1012812048829

Ruling

Subject: Athlete support payments

Question

Are the quarterly payments you receive through a financial grant assessable income?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commences on

1 July 2013

Relevant facts and circumstances

As a result of your performances you received a financial grant to assist with your living costs.

Payments were made on a quarterly basis.

You did not receive any salary or wages income in the financial year.

Relevant legislative provisions

Income Tax Assessment Act Section 6-5

Income Tax Assessment Act Section 6-10

Reasons for decision

Taxation Ruling TR 1999/17 Income tax: sportspeople - receipts and other benefits obtained from involvement in sport , sets out the Commissioner's view as to whether the receipts and other benefits obtained from involvement in sport are assessable income. The ruling does not distinguish between an 'amateur' or 'professional' sportsperson.

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.

Payments to sportspeople are often made in the absence of any legal obligation of the payer to do so. Such payments are referred to as a voluntary payment. Typically, voluntary payments are made as either a series of payments, such as under a financial grant, or as an occasional payment, such as an award or prize. The fact that a payment is voluntary does not mean that it cannot be assessable income.

Typically, such payments are not a product of, or received in respect of, any employment, services rendered, or any business. They are paid to a sportsperson by another party when the sportsperson has attained a specific standard. Sportspeople selected to receive a financial grant possess personal qualities and athletic abilities that show they are in a class of individuals able to pursue sporting excellence. 

A payment which is received as a part of a series of voluntary payments, such as under a financial grant, will be assessable income in the ordinary sense of the word if it has one or more of the following characteristics:

• it is made under an agreement or arrangement to provide financial support in the form of periodical, regular or recurrent payments;

• it is received in circumstances where the sportsperson has an expectation of receiving the payment as part of periodical, regular or recurrent payments, and the sportsperson is able to rely on the payment for his or her regular expenditure; or

• it is part of periodic, regular or recurrent payments made in substitution of income.

Expenses of sports are not allowable against voluntary payments, as these expenses do not relate to the voluntary payment received.

The quarterly payments you received were paid to provide you with financial support to meet ongoing living expenses. They were received on a periodic basis and were relied upon for your regular expenditure. Therefore, the payments are considered to be assessable as ordinary income.