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Australia: High Court allows Spriggs and Riddell management expense deduction for pro athletes

In an interesting decision the Australian High Court held that management expense deductions are deductible expenses for professional athletes. In the case at hand the taxpayers were a professional Australian Rules football player and an Australian professional rugby league player. Their management agreements included two elements: a percentage of (3, respectively 7) of the gross earnings for the term of the employment contract with their team, and 20% of gross earnings in relation to gross income from marketing and media activities. The Australian Commissioners and Lower Courts had held that the commission in relation to the employment income was not deductible. The High Court overturned these refusals and held that the athletes promotional activities, i.e. exploiting their celebrity, were inextricably linked to their employment agreements of playing Australian Rules Football and rugby. Hence all management expenses were deductible in determining the athletes taxable income RB: In many European countries salary income of professional sportsmen in team sports are for tax purposes treated as employment income, and often no or only limited deduction of costs is then allowed. There is of course also the issue that in several countries employees many not pay another person for obtaining an employment. The Australian High Court has now decided that the employment income and income from promotional activities are so much linked that a difference in income tax treatment is not justified. Such argument could be made in many other countries and cases as well. Whether the judiciary in other countries would adopt this view would have to be awaited, and may depend on the respective sizes of the salary and the promotional income. Drawing a clear line would seem to be difficult.
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The editors of  the Journal Sports Law & Taxation are Professor Ian Blackshaw and Dr Rijkele Betten, with specialist contributions from the world's leading practitioners and academics in the sports law and taxation fields.

The Editors

Managing editor
Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

Editorial board

Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam


Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano


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