Free kick for sports stars at tax time
CASHED- UP sports stars have won lucrative “public fame” tax breaks worth tens of thousands of dollars a year.
Every professional sports person will be eligible to cash in on the image- rights ruling handed down yesterday by the Australian Taxation Office.
Sports stars will be allowed to direct 10 per cent of their playing income to a private trust or company, attracting a tax rate of just 27.5 per cent.
Cricket superstars such as David Warner, Steve Smith and Mitchell Starc earn $ 2 million for national duties alone and could be eligible for windfalls of about $ 40,000.
But the controversial deal, backdated to July 1, is set to ignite debate about whether the special deal is justified, given the heavy tax burden borne by average workers and the nation’s ballooning debt.
The biggest earning sporting champs pay a top marginal income tax rate of 45 per cent, plus a 2 per cent Medicare levy.
For a $ 1 million- a- year earner, the benefit equates to at least $ 19,500.
But elite athletes will be eligible to claim even more than 10 per cent on a case- by- case basis. Details of the new tax arrangement were presented to agents at an AFL Players’ Association forum in Melbourne yesterday.
A statement about the tax guidelines for professional athlete salaries was posted on the ATO website at 2pm yesterday.
“The ATO will accept that up to 10 per cent of these payments can be treated as referable to the use and exploitation of the professional sportsperson’s ‘ public fame’ or ‘ image’ under the associated resident third- party’s licence and are therefore to be treated as the income of the associated resident third- party,” the statement says.
An ATO spokesman said: “We have received numerous … requests from sportspeople asking for advice about the tax treatment of payments for the use and exploitation of their image rights.”