Sportsperson management fees – tax deduction

As discussed back in 2007 at http://thomsonhall.com.au/wordpress/2008/01/16/tax-office-loses-2-court-cases-on-sportsperson-fees-appeals/ , the tax office originally denied tax deductions to 2 sportsperson for fees paid by them to their managers. The taxpayers challenged those decisions and won. We reported that the Tax Office was appealing those decisions.

On 22 August 2008, the Full Federal Court handed down a decision in Riddell v. Federal Commissioner of Taxation; Spriggs v. Federal Commissioner of Taxation.

The Full Court’s decision held that management fees paid by two professional footballers to management companies for services performed in negotiating their playing contracts were not deductible under subsection 8-1(1) of the Income Tax Assessment Act 1997.

Now the two professional footballers have been granted special leave by the High Court to appeal the Full Federal Court decision.

In the meantime the ATO will continue to apply the view as set out in Taxation Ruling TR 2000/5 Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements and deny deductions..

Tax Office loses 2 court cases on sportsperson fees – appeals

Professional sportspersons often engage managers to, amongst other things, negotiate fees and conditions with team owners. The Australian Tax Office does not believe that these fees are tax deductible.

On 23 November 2007, the Federal Court handed down decisions in Riddell v. Federal Commissioner of Taxation and Spriggs v. Federal Commissioner of Taxation.

These decisions held that management fees paid by two professional footballers to management companies for services performed in negotiating playing contracts were deductible under subsection 8-1(1) of the Income Tax Assessment Act 1997.

The Commissioner is appealing these cases in the Full Federal Court.