Australia: Tax Office Follow-up on Spriggs and Riddell Jurisprudence

As a follow up to the Spriggs and Riddell jurisprudence (reported on sportsandtaxation.com on 18 September 2009), the Australian Tax Office is now inviting comments on the Decision of the High Court. The Tax Office has summarised the High Court decision as holding that fees paid for the negotiations of playing contracts are deductible if the fees are ?being incurred by taxpayers in the course of gaining or producing assessable income from carrying on a business of commercially exploiting their sporting powers and associated celebrity.?

The Australian Tax Office has accepted that the decisions for Spriggs and Riddell should be applied to all players in the AFL (Australian rules Football League) and NRL (National Rugby League) competitions. However, then The Tax Office refers to an earlier decision (Maddalena) regarding a footballer where his employment income was held not to be part of any business undertaken by the taxpayer. The Tax Office is therefore of the opinion that in each case it needs to be determined whether the individual is carrying on a business that includes employment activities, or whether the individual is pursuing two of more activities of ?unrelated income derivation.?

The Tax Office is inviting comments by 9 December 2009 on whether the decision has consequences not yet identified by the Tax Office, or if a precedential decision (e.g. a Public Ruling) needs reconsideration or amendment.