Professional sportsperson - income and work-related deductions (2022)

If you earn your income as a professional sportsperson, this guide will help you work out what:

  • income and allowances to report
  • you can and can't claim as a work-related deduction
  • records you need to keep.

When we say 'you' or 'professional sportsperson', we are referring to a person who makes their living by playing a professional sport as an employee. For example, an athlete, footballer, basketballer or cricketer.

This guide doesn't deal with the tax obligations of support staff, coaches, referees or umpires – see Fitness and sporting industry employees.

Find out about professional sportspersons':

  • Income – salary and allowances
  • Deductions
  • Record keeping

Income – salary and allowances

Include all the income you receive during the income year in your tax return, regardless of when you earn it, including:

  • salary and wages
  • other income amounts
  • allowances

Don't include reimbursements.

Your income statement or payment summary will show all your salary, wages and allowances for the income year.

As a professional sportsperson you may be subject to income averaging.

Salary and wages

You must include your salary and wages as income in your tax return. Include any bonuses.

Example: player of the match bonus

Cameron is a professional footballer. At the end of a match, he is presented with a cash amount of $1,500 for being the player of the match.

Cameron must include the $1,500 as income in his tax return.

End of example

Other income amounts

You need to show all your assessable income from the income year on your tax return. These amounts may include:

  • investment and untaxed income
  • non-cash and fringe benefits

Investment and untaxed income

You may need to include any amounts you receive from someone other than your club as income in your tax return. For example, prize money for the purpose of rewarding you as a player, payments from sponsors and player's retirement fund payments.

If you earn income that hasn't had tax withheld by the payer, we may ask you to make regular pay as you go (PAYG) instalments during the year directly to us. For example, if you receive income from investment activities such as rent from leasing a property you own, dividends from shares or interest income from bank accounts.

Non-cash and fringe benefits

There may be circumstances where because of your sporting activities or your profile, you, your spouse or children, may receive a non-cash benefit – instead of cash payments.

The market value of non-cash benefits may need to be shown on your tax return as income if they are not subject to fringe benefits tax (FBT) in the hands of your employer.

Certain benefits received in respect of employment may be classed as fringe benefits. The values of these benefits are generally subject to FBT, a tax paid by employers.

For example, under the terms of your playing contract, your club, an associate of your club, or someone acting in an arrangement with your club may:

  • give you a work car for private use
  • offer you a low-cost or discounted loan
  • provide free private health insurance
  • provide you with tickets to entertainment events
  • provide you with a living-away-from-home allowance or benefit.

You may need to report fringe benefits on your tax return. Your income statement or payment summary should show the reportable fringe benefits amount.

The reportable fringe benefits amount is not counted as part of your total income. You don't pay income tax on it – however, it's used to work out your entitlement to or liability for, some government benefits and obligations, including:

  • Medicare levy surcharge
  • deductions for personal super contributions.

Allowances

Include all allowances shown on your income statement or payment summary as income in your tax return.

While all allowances you receive from your employer are income, you can't always claim a deduction if you receive an allowance – it depends on the situation.

If you can claim a deduction, the amount of the deduction is not usually the same amount as the allowance you receive.

Allowance types, reasons and deductibility

Reason for allowance

Example of allowance type

Deduction (Yes or No)

Compensation for an aspect of your work that is unpleasant, special or dangerous

Performance allowance

No

These allowances don't help you pay for deductible work-related expenses

Compensation for industry peculiarities

Relocation allowance

No

These allowances don't help you pay for deductible work-related expenses

An amount for certain expenses

Meal allowance when you travel for work

Yes

If you incur deductible expenses

An amount for special skills

A first aid certificate

Yes

If you incur deductible expenses

Example: allowance is assessable income, no deduction is allowable

Alistair is a professional AFL player in Victoria. He receives a relocation allowance from his employer when he signs a contract with a new club in South Australia. The allowance is shown on Alistair's income statement at the end of the income year.

Alistair must include the relocation allowance as income in his tax return.

Alistair can't claim a deduction for any costs he incurs to relocate. The expenses are private and domestic in nature. They aren't deductible work-related expenses.

End of example

Example: allowance is assessable income, deduction allowable

Mary is a professional netball player. When her team travels interstate to play, Mary's employer pays for her flights and accommodation but she receives an allowance to cover the cost of her meals. The allowance is shown on Mary's income statement at the end of the income year.

Mary must include the allowance as income in her tax return.

Mary can claim a deduction for the cost of the meals she buys when she travels interstate to play a game.

End of example

Difference between allowances and reimbursements

An allowance doesn't include a reimbursement.

If your employer pays you:

  • an amount based on an estimate of what you might spend, such as paying cents per kilometre if you use your car for work, then it's an allowance
  • for the actual amount of the expense (either before or after you incur the expense), such as paying for the petrol you use if you use your car for work, it's a reimbursement.

Allowances not on your income statement or payment summary

Your employer may not include some allowances on your income statement or payment summary. This can apply to travel allowances and overtime meal allowances paid under an industrial law, award or agreement. You can see these allowances on your payslips.

If the allowance isn't on your income statement or payment summary, and you:

  • spent the whole amount on deductible expenses, you
    • don't include it as income in your tax return
    • can't claim any deductions for these expenses
  • spent more than your allowance, you
    • include the allowance as income in your tax return
    • can claim a deduction for your expense, if you're eligible.

Reimbursements

If your employer pays you the exact amount for expenses you incur (either before or after you incur them), the payment is a reimbursement. We don't consider a reimbursement to be an allowance.

If your employer reimburses you for expenses you incur:

  • don't include the reimbursement as income in your tax return
  • you can't claim a deduction for them.

Income averaging as a special professional

As a professional sportsperson, you may be entitled to a concessional rate of tax where your taxable income includes certain amounts of professional income which, when added to your other income, moves you into a higher tax bracket.

If you're a special professional, you must show your taxable professional income in your tax return at 'Other income'.

Your taxable professional income is your professional income minus any deductions attributable to that income.

You don't need to work out your average income or tax payable with income averaging – we'll work it out from the amount of taxable professional income you show on your tax return.

Find out about professional sportspersons':

  • Deductions
  • Record keeping

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