Taxation Ruling
IT 2425
Income tax : sports talent encouragement plan awards - whether assessable income
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FOI status:
May be releasedFOI number: I 1206404PREAMBLE
The Sports Talent Encouragement Plan was introduced in 1986 to replace grants made to athletes under the National Athlete Award Scheme. The plan is administered by the Australian Sports Commission.
2. The following extract from the Policy & Guidelines published in relation to the plan illustrates the reasons for it:-
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1. Introduction
- Australia's high performance athletes, teams and coaches have traditionally competed against their international peers with a level of success that defies the modest range of support given to them by Federal and State Governments and private enterprise. The recent developments of the Australian Institute of Sport (AIS), State institutes of sport (and their equivalent programs) and the progressive increases in Federal and State Government funding to sports programs are clear reflections of the public's growing awareness and approval of the contribution that sportspersons make to the nation's international standing and domestic morale.
- The Sports Talent Encouragement Plan (STEP) replaces the National Athlete Award Scheme (NAAS) and is designed to provide high performance athletes with direct financial assistance which complements the training and competitive opportunities initiated by their National Sporting Organisation, State Government or private enterprise. It is hoped that such a program of assistance will enable Australian athletes to achieve, maintain or improve high international rankings.
- The Australian Sports Commission and the Federal Government recognise the personal and financial sacrifices talented athletes and their families have to make in order to achieve high levels of performance in their chosen sport.
- By providing financial assistance to offset certain living, training and competition expenses, compensating for lost wages and by assisting with education expenses for student athletes, the Australian Sports Commission is endeavouring to relieve some of the pressure experienced by athletes while participating in international sport and at the same time maintaining educational programs and careers. 2. Objectives
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- To enable more Australian sports people attain and maintain world rankings and success in the international sports arena.
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- To allow Australian athletes to single mindedly pursue their sporting careers, secure in the knowledge that their families and employment opportunities will not suffer.
3. On the practical level assistance is available only to athletes who are registered with a registered national sporting organisation. Applicants are required to provide details of projected expenses associated with training and competition for the two years following the application. The allocation of grants is made after taking into account a specified number of criteria including an applicant's national and international ranking, performance results achieved in previous years, projected costs of training and competition programs and the extent of financial assistance received from other sources such as a scholarship or payments from a sponsor.
RULING
4. In the light of the comments appearing in the extract from the Policy & Guidelines in paragraph 2 above it is accepted that grants paid to athletes under the Sports Talent Encouragement Plan are not liable to tax. In essence, the grants are paid to amateur athletes to encourage them in the pursuit of excellence in their chosen field of athletics. It is clear, also, that the payments are made not solely for the benefits of athletes - they are also made as contributions to the national image of Australia both at home and overseas.
5. The grants do not have the character of income as that term is ordinarily understood. They are not payments contributing to or forming part of the rewards of an employee nor do they proceed or result from the pursuit of gain by the recipients. They are not paid in respect of any work nor are they the proceeds of any business or profession carried on by the recipient.
COMMISSIONER OF TAXATION
2 July 1987