A professional sportsperson's playing contract may include income relating to appearances for the development of their sport, using their public fame and image. As a result, the ATO has drafted guidance for safe harbour rules when splitting the playing fees and appearance fees from the overall contract.
In the guidelines, they will accept a maximum of 10% of your professional playing contract to reflect a payment for your public fame or image.
As a result, there may be a need to adjust the payment to your associated entity to be compliant with the safe harbour guidelines. Alternatively, you may need to review any additional payments to make sure they are in line with market value expectations.
This is currently a draft ruling and once legislated will be effective from 1 July 2017.
For further information please contact your RCB Advisors team member.
Sources:
Australian Taxation Office (https://www.ato.gov.au/law/view/document?DocID=COG/PCG201711/NAT/ATO/00001&PiT=99991231235958)
CCH iKnow (http://iknow.cch.com.au)
