Edited version of private advice

Authorisation Number: 1052170825575

Date of advice: 17 October 2023

Ruling

Subject: Business or hobby - sports coach

Question

Is the amount assessable as ordinary income?

Answer

The amount is assessable as ordinary income as it constitutes a fee for services provided.

This ruling applies for the following period:

Year ended 30 June 2023

Year ending 30 June 2024

Year ending 30 June 2025

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

You are a coach for a senior team in a sporting club (the club).

You spend about XX hours a week on coaching duties.

These duties include:

•         several nights per week training

•         attending game day

•         watching edits and reviewing the previous week's game

•         watching opposition games several times a week

•         occasional meetings and discussions.

You are not registered for Goods and Services Tax (GST)

No Australian Business Number (ABN) has been issued to the sporting club

The sporting club season runs for approximately XX months.

You will be paid an amount for coaching for the season.

You will receive a pro-rata amount every month for the duration of the season.

You pay for your own fuel and gate entry for away games.

You are not employed by the club.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Reasons for decision

Summary

The amount is assessable as ordinary income as it constitutes a fee for services provided.

Detailed reasoning

Section 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that your assessable income includes income according to ordinary concepts. This is known as ordinary income.

There is no legislative definition of ordinary income, so it is necessary to look to the relevant case law for guidance. Relevant case law has held that ordinary income generally has the characteristics of being earned expected and relied upon. Ordinary income generally has an element of periodicity, recurrence or regularity.

Ordinary income generally includes the following three categories:

•         income from rendering personal services

•         income from property; and

•         income from carrying on a business.

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 are assessable income. It applies to officials such as coaches, as well as participants. Paragraph 17 of TR 1999/17 sets out the relevant factors used when determining whether an amount is ordinary income as being:

•         whether the payment is the product of any employment, services rendered, or any business;

•         the quality or character of the payment in the hands of the recipient;

•         the form of the receipt, that is whether it is received as a lump sum or periodically; and

•         the motive of the person making the payment.

An amount paid for the provision of services to benefit the payer will be assessable income even if there is no employment relationship (paragraphs 25 and 26 of TR 1999/17).

Application to your circumstances

You currently coach the senior team in the club. You signed a contract to coach the team for the football season and will receive a monetary sum for doing so.

You will receive a pro-rata amount every month for the duration of the season.

You receive the amount for services you provide to the senior team in your capacity as a coach.

As the amount you receive is a fee for services provided, it is assessable as ordinary income.

You are not carrying on a pastime or hobby.