https://www.heraldsun.com.au/sport/a...caaeee77317fef
FL stars to pocket tax breaks after Australian Taxation Office ticks off image rights deal
Michael Warner, Herald Sun
February 10, 2015 9:00pm
AFL stars will pocket tax breaks on their football income under an image rights deal ticked off by the Australian Taxation Office.
Changes to the league’s player contract rules will allow players to divert up to 30 per cent of their club wages to a private company or trust.
Companies and trusts are subject to lower tax rates than the top personal income tax bracket of 49 cents in the $1.
A ranking system measuring on-field achievements including all-Australian selection, best and fairest results, Brownlow Medal placings, premierships and rising star nominations will be used to determine how much money a player can assign for the use of their image.
Fringe players can divert 5 per cent of their wages and middle-ranked players between 10 and 25 per cent.
Only first and second-year players, rookies and players on minimum salaries are ineligible.
Details of the arrangement sent to player agents by the AFL Players’ Association yesterday reveal a player earning $750,000-a-season will be permitted to direct $217,500 to a third-party image rights company where it will be subject to a lower tax rate.
A player earning $350,000 could allocate $52,500, paying full tax on $297,500.
The scheme starts this season.
“The Australian Taxation Office accepted and confirmed that a player is able to licence his image rights to a third party,” AFLPA executive Braden Stokes told agents in the letter.
“In all cases, the players must be able to demonstrate and if necessary satisfy the ATO that the valuation of his image is bona fide and commercially justifiable.
“The AFLPA and the AFL have had extensive and protracted discussions with the ATO on the industry proposal to put in place a methodology for apportioning a player’s contract income between on-field playing duties and for the use of the player’s name, likeness and image.”
Player agents were told an undisclosed AFL star, who recently negotiated a “major contract” with his club, was seeking a private ruling from the ATO.
A decision is expected in the coming months.
The letter to agents said the game’s biggest stars would be able “in limited circumstances” to divert even more than 30 per cent of their wage for the use of their image.
The new arrangement requires players to sign two separate contracts with their club — a player image rights contract and a standard player contract — and is in addition to the existing Additional Services Agreement system.
Players have been pushing for a fairer rewards scheme for the use of their images by industry stakeholders for several years.
THE BIG TAX GRAB
How AFL players become eligible for tax relief.
*Players allocated a number of points based on salary, age and career achievements.
*A player with 21 points can divert 30 per cent of his income to a company/trust where he pays a lower tax rate.
*Brownlow medallists, best-and-fairest winners and the top-ranked players at each club carry the most points.
RANKINGS SYSTEM
Points allocated. Proportion of total income that can be allocated to marketing activities.
0-5 5%
6-10 10%
11-15 15%
16-20 25%
21+ 30%\
EXAMPLES OF PLAYERS ELIGIBLE FOR MAXIMUM TAX RELIEF
Gary Ablett Jr
Multiple Brownlows (10pts), multiple best-and-fairests (10pts), all-Australian (2pts).
Chris Judd
Multiple Brownlows (10pts), multiple best-and-fairests (10pts), all-Australian (2pts).
Nick Riewoldt
Multiple best-and-fairests (10pts), all-Australian (2pts), St Kilda top-six player (10pts).
Jobe Watson
Brownlow (5pts), multiple best-and-fairests (10pts), Essendon top-six player (10pts).