Amounts you do and don't include
You must include all the income you receive during the income year as a professional sportsperson in your tax return, this includes:
- salary and wages, including cash or bonus payments
- allowances
- other income amounts – for example compensation or insurance payments which are made to replace your salary and wage income.
Don't include as income any reimbursements you receive.
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.
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 exampleOther 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
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
You must include all allowances your employer reports on your income statement or payment summary as income in your tax return.
An allowance is where your employer pays you an amount as an estimate of costs you might incur:
- to help you pay for a work expense – for example, sporting equipment
- as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, relocation allowance
- as an amount for having special duties, skills or qualifications – for example, first aid qualifications.
Your employer may not include some allowances on your income statement or payment summary. Find out about declaring income and claiming deductions for Allowances not on your income statement.
Allowances not on your income statement or payment summary
If you receive an allowance from your employer, it does not automatically mean you can claim a deduction.
Your employer may not include some allowances on your income statement or payment summary, you will find these amounts on your payslip. You don't need to declare these allowances as income in your tax return, unless you're claiming a deduction. Examples include travel allowances and overtime meal allowances.
If you spend the allowance amount on work expenses, you:
- don't include it as income in your tax return
- can't claim any deductions for the work expenses the allowance covers.
If you're not claiming a deduction, you don't need to keep any records of the amounts you spend.
If you spend your allowance on a deductible work-related expense, to claim a deduction you:
- include the allowance as income in your tax return
- include a claim for the work expenses you incur in your tax return
- must have records of your expenses.
If you can claim a deduction, the amount of the deduction is not usually the same amount as the allowance you have receive.
Allowances and claiming a deduction
The following table sets out allowances you may receive and when you can claim a deduction.
Reason for allowance | Example of allowance type | Deduction (Yes or No) |
|---|---|---|
Compensation for an aspect of your work that is unpleasant, special or dangerous or for industry peculiarities | Performance allowance 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 assessable, no deduction 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 exampleReimbursements
If your employer pays you the exact amount for expenses you incur (either before or after you incur them), the payment is a reimbursement.
A reimbursement isn't an allowance.
If your employer reimburses you for expenses you incur:
- you 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':