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Edited version of your written advice
Authorisation Number: 4120045143329
Date of advice: 5 February 2018
Subject: Pay as you go withholding (PAYGW) exemption
Question
Are you required to deduct pay as you go (PAYG) withholding from payments made to players where the payments received do not form part of the players’ assessable income?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 2018
Year ending 30 June 2019
Year ending 30 June 2020
Year ending 30 June 2021
Year ending 30 June 2022
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You are a football club.
You make match payments to your players. One payment is made per season.
The amount of the payment varies and depends on the outcome of each match.
All players participate in another form of paid employment which they consider their vocation.
All players play for social reasons and do not play for other teams or receive any other form or income relating to playing football.
Over the last five years, the average annual payment to players is $XXXX.
Relevant legislative provisions
Taxation Administration Act 1953 Schedule 1 Division 12-1
Taxation Administration Act 1953 Schedule 1 Division 12-35
Reasons for decision
Division 12 in Schedule 1 of the Taxation Administration Act 1953 (TAA) outlines the situations where a paying entity is obliged to withhold part of an amount paid to another entity. The withheld amount is referred to as PAYG Withholding.
PAYG withholding must be deducted where a payment of salary, wages, commission, bonuses or allowances is made to an individual as an employee or office holder.
An entity is not required to deduct PAYG withholding from a payment where the whole of the payment is not included as part of the recipient’s assessable income.
Taxation Ruling TR 1999/17 discusses the Commissioner’s views on the assessability of receipts and other benefits by sportspeople.
The ruling states that a payment or other benefit received by a sportsperson is assessable income if it is:
● income in the ordinary sense of the word, or
● an amount or benefit that through the operation of the provisions of the tax law is included in assessable income. This includes non-cash benefits that may not be ordinary income.
However, where a person’s sporting activities constitute a pastime or hobby rather than an income-producing activity, money and other benefits received from the pursuit of that hobby are not assessable income, nor are the expenses allowable deductions.
Where a player has another form of paid employment which is their vocation, plays football for social reasons, does not receive any other income or benefit as a result of their playing football and does not rely on the payments to cover their regular living expenses the match payments the player receives will be considered to be income relating to a pastime or hobby. Thus, the payments to the player will not form part of their assessable income.
You are not required to deduct PAYG withholding from payments to a player where the payments are considered to be a receipt relating to a pastime or hobby in the hands of the recipient.