Show me more money!
Mark Riddell and David Spriggs may just be the two most popular athletes amongst their peers at the moment. Due to their persistence, they have set a precedent that will help athletes residing in Australia keep a bit more of their income. [Sports stars have win in High Court against the Australian Tax Office]
Riddell, a current Rugby League player and Spriggs, a former AFL footballer took on the Australian Tax Office (ATO) arguing that the money that athletes pay to agents for their services should be tax deductible.
Riddell employed the services of SFX Management Group for his 2005-2007 contract, paying a 7% fee on his performance contract and 20% on his media and other contracts. Spriggs hired Connors Sports Management paying 3% of his performance contract and 20% of his other contracts.
In basic terms, under current taxation law, cost incurred by the payee in generating assessable income can be claimed as deductions on his/her tax paid. Riddell and Spriggs argued that their cases should apply due to employing a sports agent to handle their contract negotiation in regards to playing, media and sponsorship.
The conclusion was made that these costs were related to the players gaining assessable income and therefore should be able to be claimed as a deduction on their tax.
I am unsure of other countries’ tax laws, but this makes perfect sense. In other professions, if you undertake expenses directly related to the income you earn then you can claim these back. If a company hires a consultant to advise them on certain business decision,s that expense is tax deductible, so why should this be different?
So what are the implications for Athletes and Agents? Well, athletes will now have a few extra dollars in their pockets, resulting in a better lifestyle for them. As for Agents, it could be a selling point as their cut being justifiable. Not to mention, it may convince some players without an agent to start looking for one.