Class Ruling CR 2021/100

What this ruling is about: 1. This Ruling sets out the income tax consequences of payments made by the Australian Sports Commission (ASC) to individuals under the dAIS athlete grant scheme (the Scheme). 2. Full details of this scheme are set out in paragraphs 8 to 34 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997), unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to you if you are an individual who receives a grant from the ASC under the Scheme. When this Ruling applies 5. This Ruling applies from 1 July 2021 to 30 June 2026. 6. Athlete grants received under the Scheme are not assessable income for the purposes of sections 6-5 or 6-10. 7. CGT event C2 (under section 104-25) happens when an athlete receives the grant. However, any capital gain or capital loss is disregarded under subsection 118-37(2). 8. The following description of the Scheme is based on information provided by the applicant. If the Scheme is not carried out as described, this Ruling cannot be relied upon. 9. The ASC is a corporate Commonwealth entity and was established in 1985 under the Australian Sports Commission Act 1989. 10. The ASC comprises: 11. A revised Scheme was announced by the Australian Government as an extension to the Direct Athlete Support Scheme payments, which have been provided by the ASC since 1 July 2010. 12. The revised Scheme will be introduced to National Sporting Organisations (NSOs) as follows: 13. The revised Scheme aims to provide athletes with direct financial support to enable them to focus on training and competitions to achieve the strategy targets in Olympic, Paralympic and Commonwealth Games sports. Performance obligations 14. The value of the grant athletes are eligible to receive is based on each NSO's sport-specific application of the National Athlete Categorisation Framework, in which athletes are categorised against the criteria of: 15. The grant amounts, made in two equal payments, for Summer and Winter Olympic and Paralympic athletes are as follows: 16. Nominal grant amounts for Commonwealth Games-only athletes will be finalised for implementation post-Birmingham 2022 Commonwealth Games; however, the annual grant amounts for these athletes will not exceed the $35,000 paid to Summer and Winter Olympic and Paralympic athletes. Eligibility criteria 17. To be considered for a dAIS athlete grant under the Scheme, an athlete must: 18. Prior to nominating for dAIS support, NSOs will be required to develop a sport-specific National Athlete Categorisation Framework, agreed by the ASC, to underpin the prioritisation and planning of support to athletes under the dAIS scheme. The NSO sport-specific athlete categorisation matrix, aligned to the National Athlete Categorisation Framework, should outline criterion for Podium, Podium Ready, Podium Potential, Developing and Emerging athletes that covers: 19. All NSOs are required to address, within their own sport specific National Athlete Categorisation Framework, associated policies to categorise athletes for dAIS eligibility with consideration of the following: 20. An athlete may be nominated for a full allocation of dAIS grant under an associated policy if they meet the requirements outlined in their NSO Associated Policy for dAIS eligibility, as agreed by the ASC. 21. If an NSO elects to nominate an athlete under an associated policy for dAIS eligibility, athletes will be supported as part of the allocation available to the NSO. 22. Athletes nominated for dAIS under an associated policy in two consecutive dAIS programs will not automatically qualify for dAIS support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. Funding process 23. The funding process operates as follows: Additional support grants 24. The ASC, at its discretion, may provide dAIS additional support grants to an athlete who is: 25. The ASC will consider nominations twice a year, in March and October. 26. To be eligible for dAIS Transition Support, an athlete must: 27. If an athlete is currently receiving dAIS grant under an associated policy related to transitioning from the sport, they may not be automatically qualified for dAIS Transition Support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. 28. Eligible athletes will be provided with up to half (0.5) dAIS grant allocation, based on their most recent athlete categorisation level. Any funding provided is in addition to the NSO allocation. 29. If an athlete has received dAIS Transition Support and then decides to return to competitive sport within 12 months, the athlete may be required to return the funding provided and/or have future dAIS payments reduced by any dAIS Transition Support provided. 30. To be eligible for additional dAIS Dependents' Responsibilities, an athlete must be: 31. A maximum top-up of $10,000 per athlete per year will be considered. Any funding provided is in addition to the NSO allocation. 32. The dAIS additional support grants are subject to the same means testing listed under the funding process described in paragraph 23 of this Ruling. Athlete responsibilities 33. Athletes must meet the following requirements to claim the dAIS athlete grant: The Athlete Agreement 34. The Athlete Agreement contains the following clauses: When this Ruling does not apply 35. This Ruling does not apply to individuals who receive a grant from the ASC under the Scheme and are carrying on a business as a professional sportsperson. 36. If you receive a grant from the ASC under the Scheme, and this Ruling does not apply to you, you should discuss your circumstances with your taxation adviser or the ATO. Commissioner of Taxation 22 December 2021 Payment is not included in assessable income 37. A payment or other benefit received by a taxpayer is included in assessable income if it is: Ordinary income 38. Subsection 6-5(1) provides that an amount is included in assessable income if it is ordinary income. 39. The legislation does not provide specific guidance on the meaning of ordinary income. However, a substantial body of case law exists which identifies likely characteristics. [2] 40. Amounts that are periodic, regular or recurrent, relied upon by a recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income. [3] 41. Similarly, amounts that are the product in a real sense of any employment of, or services rendered by, the recipient are likely to be ordinary income. [4] Amounts paid in substitution for salary or wages forgone or lost may also be ordinary income. [5] 42. Ultimately, whether or not a particular amount is ordinary income depends on its character in the hands of the recipient. [6] The whole of the circumstances must be considered [7] , and the intention of the payer may be relevant. [8] Employment or services rendered 43. The dAIS athlete grant is ordinary income if it is received by the athlete in their capacity as an employee or as consideration for any services rendered. 44. This is assessed by reference to the totality of the relationship between the ASC and each athlete [9] and whether the athlete has rendered or provided a specific service for the benefit of the ASC. [10] 45. While athletes in receipt of a dAIS athlete grant are subject to certain conditions such as training and performing at a 'medal potential standard' and abiding by the rules and spirit of their sport, they are also given a significant degree of control and flexibility in setting their own training schedules and providing their own equipment. 46. Athletes are not subject to the direction of the ASC in relation to how they will go about participating in events and the Athlete Agreement does not expressly contemplate the payment of any salary or wages to athletes in an employment capacity. 47. Having regard to the totality of the relationship between the ASC and athletes, the Commissioner considers that there is insufficient evidence of an employer/employee relationship. Accordingly, athletes do not receive the dAIS athlete grant in the capacity of employees. 48. Further, the purpose of the dAIS athlete grant is to provide financial support to athletes to assist them with event preparation and in recognition of their elite level within their sport. The grant is not made specifically as consideration for athletes participating in the Olympics, Paralympics, Commonwealth Games or other world championship events, or providing any other service to the ASC. 49. Although the payment is made under a government policy in relation to an athlete's potential sporting achievements, the Commissioner considers that this does not constitute a payment in respect of services rendered by an athlete. [11] Periodicity, regularity or recurrence 50. The dAIS athlete grant comprises biannual payments received by an athlete upon the signing of an annual Athlete Agreement with the ASC. Athletes are assessed against specific performance criteria in order to qualify for the dAIS athlete grant, including being assessed on medal potential based on their performance at agreed benchmark events. 51. While an athlete can be nominated by their NSO for support in a future period, the receipt of future grant payments is not guaranteed. The terms of the Athlete Agreement provide for two payments only. Moreover, the fact that an athlete qualifies for a grant in one period does not automatically qualify them for any future grants. 52. Therefore, the Commissioner considers that the dAIS athlete grant does not bear the characteristics of being periodic, regular or recurrent. Substitution of income and reliance 53. Although the express purpose of the dAIS athlete grant is to provide financial support to athletes and the means test implies some reliance on the payment to meet regular expenditure, the Commissioner considers that these factors are not by themselves decisive in characterising the dAIS athlete grant as ordinary income. [12] 54. Rather, the better view is that, having regard to the totality of the characteristics identified in paragraphs 43 to 53 of this Ruling, the dAIS athlete grant does not constitute ordinary income. Conclusion 55. For the reasons outlined in this Ruling, the Commissioner considers that the dAIS athlete grant received by individual taxpayers is not assessable under subsection 6-5(1) as ordinary income. Similar reasoning applies in respect of the dAIS additional support grants received by athletes. Statutory income 56. Section 6-10 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included as assessable income by another provision. 57. Section 10-5 lists provisions about statutory income and included in this list is section 15-2. 58. Subsection 15-2(1) includes in a taxpayer's assessable income the value of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to the taxpayer 'in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by' the taxpayer. 59. While the athletes are not considered to be 'employees', subsection 15-2(1) also includes in assessable income those allowances, gratuities, compensation, benefits, bonuses and premiums which are paid in respect of 'services rendered'. 60. There is no agreement that requires athletes to provide or supply services to the ASC. The athletes are required to meet certain conditions in order to qualify for the grant however these conditions do not amount to the rendering of services to the ASC. 61. Likewise, the grant is not paid for the rendering of services at any sporting event or for achieving a specified result but rather intended to provide athletes with support to assist with their training or transition away from their sport in relation to the transition payments. 62. As such, the grants received under the dAIS scheme are not assessable under subsection 15-2(1) because athletes are not considered to be employees, nor are they 'rendering services'. Capital gains tax 63. An athlete's entitlement to receive a dAIS athlete grant is a CGT asset under subsection 108-5(1) that is acquired when the grant is accepted. 64. CGT event C2 happens under section 104-25 when an athlete's entitlement to receive the payment is satisfied. The time of the CGT event under subsection 104-25(2) is when the payment is made. 65. However, any capital gain or capital loss resulting from CGT event C2 happening is disregarded under paragraph 118-37(2)(a). That paragraph provides a CGT exemption for a capital gain or capital loss that results from the receipt of a payment as reimbursement or payment of expenses under a scheme established by an Australian government agency under an enactment or an instrument of a legislative character. The dAIS is such a scheme. General deductions 66. As the dAIS athlete grants received by athletes are not assessable income, all losses and outgoings that are incurred in connection with athletes' sporting activities are not allowable as a deduction under section 8-1, nor is a deduction allowable under any other provision of the ITAA 1997. Pay as you go withholding 67. As explained in this Ruling, dAIS athlete grants made to athletes are not assessable income. The grants are not regarded as a withholding payment under Division 12 of Schedule 1 to the Taxation Administration Act 1953. The ASC is not required to withhold amounts from these grants, nor do they have any other associated PAYG withholding obligations; for example, obtaining tax file number declarations, providing payment summaries or annual reporting. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Class of entities or scheme: 8. The following description of the Scheme is based on information provided by the applicant. If the Scheme is not carried out as described, this Ruling cannot be relied upon. 9. The ASC is a corporate Commonwealth entity and was established in 1985 under the Australian Sports Commission Act 1989. 10. The ASC comprises: 11. A revised Scheme was announced by the Australian Government as an extension to the Direct Athlete Support Scheme payments, which have been provided by the ASC since 1 July 2010. 12. The revised Scheme will be introduced to National Sporting Organisations (NSOs) as follows: 13. The revised Scheme aims to provide athletes with direct financial support to enable them to focus on training and competitions to achieve the strategy targets in Olympic, Paralympic and Commonwealth Games sports. | Performance obligations: 14. The value of the grant athletes are eligible to receive is based on each NSO's sport-specific application of the National Athlete Categorisation Framework, in which athletes are categorised against the criteria of: 15. The grant amounts, made in two equal payments, for Summer and Winter Olympic and Paralympic athletes are as follows: 16. Nominal grant amounts for Commonwealth Games-only athletes will be finalised for implementation post-Birmingham 2022 Commonwealth Games; however, the annual grant amounts for these athletes will not exceed the $35,000 paid to Summer and Winter Olympic and Paralympic athletes. | Eligibility criteria: 17. To be considered for a dAIS athlete grant under the Scheme, an athlete must: 18. Prior to nominating for dAIS support, NSOs will be required to develop a sport-specific National Athlete Categorisation Framework, agreed by the ASC, to underpin the prioritisation and planning of support to athletes under the dAIS scheme. The NSO sport-specific athlete categorisation matrix, aligned to the National Athlete Categorisation Framework, should outline criterion for Podium, Podium Ready, Podium Potential, Developing and Emerging athletes that covers: 19. All NSOs are required to address, within their own sport specific National Athlete Categorisation Framework, associated policies to categorise athletes for dAIS eligibility with consideration of the following: 20. An athlete may be nominated for a full allocation of dAIS grant under an associated policy if they meet the requirements outlined in their NSO Associated Policy for dAIS eligibility, as agreed by the ASC. 21. If an NSO elects to nominate an athlete under an associated policy for dAIS eligibility, athletes will be supported as part of the allocation available to the NSO. 22. Athletes nominated for dAIS under an associated policy in two consecutive dAIS programs will not automatically qualify for dAIS support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. | Funding process: 23. The funding process operates as follows: | Additional support grants: 24. The ASC, at its discretion, may provide dAIS additional support grants to an athlete who is: 25. The ASC will consider nominations twice a year, in March and October. 26. To be eligible for dAIS Transition Support, an athlete must: 27. If an athlete is currently receiving dAIS grant under an associated policy related to transitioning from the sport, they may not be automatically qualified for dAIS Transition Support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. 28. Eligible athletes will be provided with up to half (0.5) dAIS grant allocation, based on their most recent athlete categorisation level. Any funding provided is in addition to the NSO allocation. 29. If an athlete has received dAIS Transition Support and then decides to return to competitive sport within 12 months, the athlete may be required to return the funding provided and/or have future dAIS payments reduced by any dAIS Transition Support provided. 30. To be eligible for additional dAIS Dependents' Responsibilities, an athlete must be: 31. A maximum top-up of $10,000 per athlete per year will be considered. Any funding provided is in addition to the NSO allocation. 32. The dAIS additional support grants are subject to the same means testing listed under the funding process described in paragraph 23 of this Ruling. | Athlete responsibilities: 33. Athletes must meet the following requirements to claim the dAIS athlete grant: | The Athlete Agreement: 34. The Athlete Agreement contains the following clauses: | When this Ruling does not apply: 35. This Ruling does not apply to individuals who receive a grant from the ASC under the Scheme and are carrying on a business as a professional sportsperson. 36. If you receive a grant from the ASC under the Scheme, and this Ruling does not apply to you, you should discuss your circumstances with your taxation adviser or the ATO. Commissioner of Taxation 22 December 2021

Ruling: 1. This Ruling sets out the income tax consequences of payments made by the Australian Sports Commission (ASC) to individuals under the dAIS athlete grant scheme (the Scheme). 2. Full details of this scheme are set out in paragraphs 8 to 34 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997), unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if you are an individual who receives a grant from the ASC under the Scheme. | When this Ruling applies: 5. This Ruling applies from 1 July 2021 to 30 June 2026. 6. Athlete grants received under the Scheme are not assessable income for the purposes of sections 6-5 or 6-10. 7. CGT event C2 (under section 104-25) happens when an athlete receives the grant. However, any capital gain or capital loss is disregarded under subsection 118-37(2). 8. The following description of the Scheme is based on information provided by the applicant. If the Scheme is not carried out as described, this Ruling cannot be relied upon. 9. The ASC is a corporate Commonwealth entity and was established in 1985 under the Australian Sports Commission Act 1989. 10. The ASC comprises: 11. A revised Scheme was announced by the Australian Government as an extension to the Direct Athlete Support Scheme payments, which have been provided by the ASC since 1 July 2010. 12. The revised Scheme will be introduced to National Sporting Organisations (NSOs) as follows: 13. The revised Scheme aims to provide athletes with direct financial support to enable them to focus on training and competitions to achieve the strategy targets in Olympic, Paralympic and Commonwealth Games sports. | Performance obligations: 14. The value of the grant athletes are eligible to receive is based on each NSO's sport-specific application of the National Athlete Categorisation Framework, in which athletes are categorised against the criteria of: 15. The grant amounts, made in two equal payments, for Summer and Winter Olympic and Paralympic athletes are as follows: 16. Nominal grant amounts for Commonwealth Games-only athletes will be finalised for implementation post-Birmingham 2022 Commonwealth Games; however, the annual grant amounts for these athletes will not exceed the $35,000 paid to Summer and Winter Olympic and Paralympic athletes. | Eligibility criteria: 17. To be considered for a dAIS athlete grant under the Scheme, an athlete must: 18. Prior to nominating for dAIS support, NSOs will be required to develop a sport-specific National Athlete Categorisation Framework, agreed by the ASC, to underpin the prioritisation and planning of support to athletes under the dAIS scheme. The NSO sport-specific athlete categorisation matrix, aligned to the National Athlete Categorisation Framework, should outline criterion for Podium, Podium Ready, Podium Potential, Developing and Emerging athletes that covers: 19. All NSOs are required to address, within their own sport specific National Athlete Categorisation Framework, associated policies to categorise athletes for dAIS eligibility with consideration of the following: 20. An athlete may be nominated for a full allocation of dAIS grant under an associated policy if they meet the requirements outlined in their NSO Associated Policy for dAIS eligibility, as agreed by the ASC. 21. If an NSO elects to nominate an athlete under an associated policy for dAIS eligibility, athletes will be supported as part of the allocation available to the NSO. 22. Athletes nominated for dAIS under an associated policy in two consecutive dAIS programs will not automatically qualify for dAIS support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. | Funding process: 23. The funding process operates as follows: | Additional support grants: 24. The ASC, at its discretion, may provide dAIS additional support grants to an athlete who is: 25. The ASC will consider nominations twice a year, in March and October. 26. To be eligible for dAIS Transition Support, an athlete must: 27. If an athlete is currently receiving dAIS grant under an associated policy related to transitioning from the sport, they may not be automatically qualified for dAIS Transition Support. The ASC will review nominations on a case-by-case basis and may require additional information from the NSO and/or athlete. 28. Eligible athletes will be provided with up to half (0.5) dAIS grant allocation, based on their most recent athlete categorisation level. Any funding provided is in addition to the NSO allocation. 29. If an athlete has received dAIS Transition Support and then decides to return to competitive sport within 12 months, the athlete may be required to return the funding provided and/or have future dAIS payments reduced by any dAIS Transition Support provided. 30. To be eligible for additional dAIS Dependents' Responsibilities, an athlete must be: 31. A maximum top-up of $10,000 per athlete per year will be considered. Any funding provided is in addition to the NSO allocation. 32. The dAIS additional support grants are subject to the same means testing listed under the funding process described in paragraph 23 of this Ruling. | Athlete responsibilities: 33. Athletes must meet the following requirements to claim the dAIS athlete grant: | The Athlete Agreement: 34. The Athlete Agreement contains the following clauses: | When this Ruling does not apply: 35. This Ruling does not apply to individuals who receive a grant from the ASC under the Scheme and are carrying on a business as a professional sportsperson. 36. If you receive a grant from the ASC under the Scheme, and this Ruling does not apply to you, you should discuss your circumstances with your taxation adviser or the ATO. Commissioner of Taxation 22 December 2021 | Payment is not included in assessable income: 37. A payment or other benefit received by a taxpayer is included in assessable income if it is: | Ordinary income: 38. Subsection 6-5(1) provides that an amount is included in assessable income if it is ordinary income. 39. The legislation does not provide specific guidance on the meaning of ordinary income. However, a substantial body of case law exists which identifies likely characteristics. [2] 40. Amounts that are periodic, regular or recurrent, relied upon by a recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income. [3] 41. Similarly, amounts that are the product in a real sense of any employment of, or services rendered by, the recipient are likely to be ordinary income. [4] Amounts paid in substitution for salary or wages forgone or lost may also be ordinary income. [5] 42. Ultimately, whether or not a particular amount is ordinary income depends on its character in the hands of the recipient. [6] The whole of the circumstances must be considered [7] , and the intention of the payer may be relevant. [8] | Employment or services rendered: 43. The dAIS athlete grant is ordinary income if it is received by the athlete in their capacity as an employee or as consideration for any services rendered. 44. This is assessed by reference to the totality of the relationship between the ASC and each athlete [9] and whether the athlete has rendered or provided a specific service for the benefit of the ASC. [10] 45. While athletes in receipt of a dAIS athlete grant are subject to certain conditions such as training and performing at a 'medal potential standard' and abiding by the rules and spirit of their sport, they are also given a significant degree of control and flexibility in setting their own training schedules and providing their own equipment. 46. Athletes are not subject to the direction of the ASC in relation to how they will go about participating in events and the Athlete Agreement does not expressly contemplate the payment of any salary or wages to athletes in an employment capacity. 47. Having regard to the totality of the relationship between the ASC and athletes, the Commissioner considers that there is insufficient evidence of an employer/employee relationship. Accordingly, athletes do not receive the dAIS athlete grant in the capacity of employees. 48. Further, the purpose of the dAIS athlete grant is to provide financial support to athletes to assist them with event preparation and in recognition of their elite level within their sport. The grant is not made specifically as consideration for athletes participating in the Olympics, Paralympics, Commonwealth Games or other world championship events, or providing any other service to the ASC. 49. Although the payment is made under a government policy in relation to an athlete's potential sporting achievements, the Commissioner considers that this does not constitute a payment in respect of services rendered by an athlete. [11] | Periodicity, regularity or recurrence: 50. The dAIS athlete grant comprises biannual payments received by an athlete upon the signing of an annual Athlete Agreement with the ASC. Athletes are assessed against specific performance criteria in order to qualify for the dAIS athlete grant, including being assessed on medal potential based on their performance at agreed benchmark events. 51. While an athlete can be nominated by their NSO for support in a future period, the receipt of future grant payments is not guaranteed. The terms of the Athlete Agreement provide for two payments only. Moreover, the fact that an athlete qualifies for a grant in one period does not automatically qualify them for any future grants. 52. Therefore, the Commissioner considers that the dAIS athlete grant does not bear the characteristics of being periodic, regular or recurrent. | Substitution of income and reliance: 53. Although the express purpose of the dAIS athlete grant is to provide financial support to athletes and the means test implies some reliance on the payment to meet regular expenditure, the Commissioner considers that these factors are not by themselves decisive in characterising the dAIS athlete grant as ordinary income. [12] 54. Rather, the better view is that, having regard to the totality of the characteristics identified in paragraphs 43 to 53 of this Ruling, the dAIS athlete grant does not constitute ordinary income. | Conclusion: 55. For the reasons outlined in this Ruling, the Commissioner considers that the dAIS athlete grant received by individual taxpayers is not assessable under subsection 6-5(1) as ordinary income. Similar reasoning applies in respect of the dAIS additional support grants received by athletes. | Statutory income: 56. Section 6-10 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included as assessable income by another provision. 57. Section 10-5 lists provisions about statutory income and included in this list is section 15-2. 58. Subsection 15-2(1) includes in a taxpayer's assessable income the value of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to the taxpayer 'in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by' the taxpayer. 59. While the athletes are not considered to be 'employees', subsection 15-2(1) also includes in assessable income those allowances, gratuities, compensation, benefits, bonuses and premiums which are paid in respect of 'services rendered'. 60. There is no agreement that requires athletes to provide or supply services to the ASC. The athletes are required to meet certain conditions in order to qualify for the grant however these conditions do not amount to the rendering of services to the ASC. 61. Likewise, the grant is not paid for the rendering of services at any sporting event or for achieving a specified result but rather intended to provide athletes with support to assist with their training or transition away from their sport in relation to the transition payments. 62. As such, the grants received under the dAIS scheme are not assessable under subsection 15-2(1) because athletes are not considered to be employees, nor are they 'rendering services'. | Capital gains tax: 63. An athlete's entitlement to receive a dAIS athlete grant is a CGT asset under subsection 108-5(1) that is acquired when the grant is accepted. 64. CGT event C2 happens under section 104-25 when an athlete's entitlement to receive the payment is satisfied. The time of the CGT event under subsection 104-25(2) is when the payment is made. 65. However, any capital gain or capital loss resulting from CGT event C2 happening is disregarded under paragraph 118-37(2)(a). That paragraph provides a CGT exemption for a capital gain or capital loss that results from the receipt of a payment as reimbursement or payment of expenses under a scheme established by an Australian government agency under an enactment or an instrument of a legislative character. The dAIS is such a scheme. | General deductions: 66. As the dAIS athlete grants received by athletes are not assessable income, all losses and outgoings that are incurred in connection with athletes' sporting activities are not allowable as a deduction under section 8-1, nor is a deduction allowable under any other provision of the ITAA 1997. | Pay as you go withholding: 67. As explained in this Ruling, dAIS athlete grants made to athletes are not assessable income. The grants are not regarded as a withholding payment under Division 12 of Schedule 1 to the Taxation Administration Act 1953. The ASC is not required to withhold amounts from these grants, nor do they have any other associated PAYG withholding obligations; for example, obtaining tax file number declarations, providing payment summaries or annual reporting. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


Appendix: Payment is not included in assessable income: 37. A payment or other benefit received by a taxpayer is included in assessable income if it is: | Ordinary income: 38. Subsection 6-5(1) provides that an amount is included in assessable income if it is ordinary income. 39. The legislation does not provide specific guidance on the meaning of ordinary income. However, a substantial body of case law exists which identifies likely characteristics. [2] 40. Amounts that are periodic, regular or recurrent, relied upon by a recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income. [3] 41. Similarly, amounts that are the product in a real sense of any employment of, or services rendered by, the recipient are likely to be ordinary income. [4] Amounts paid in substitution for salary or wages forgone or lost may also be ordinary income. [5] 42. Ultimately, whether or not a particular amount is ordinary income depends on its character in the hands of the recipient. [6] The whole of the circumstances must be considered [7] , and the intention of the payer may be relevant. [8] | Employment or services rendered: 43. The dAIS athlete grant is ordinary income if it is received by the athlete in their capacity as an employee or as consideration for any services rendered. 44. This is assessed by reference to the totality of the relationship between the ASC and each athlete [9] and whether the athlete has rendered or provided a specific service for the benefit of the ASC. [10] 45. While athletes in receipt of a dAIS athlete grant are subject to certain conditions such as training and performing at a 'medal potential standard' and abiding by the rules and spirit of their sport, they are also given a significant degree of control and flexibility in setting their own training schedules and providing their own equipment. 46. Athletes are not subject to the direction of the ASC in relation to how they will go about participating in events and the Athlete Agreement does not expressly contemplate the payment of any salary or wages to athletes in an employment capacity. 47. Having regard to the totality of the relationship between the ASC and athletes, the Commissioner considers that there is insufficient evidence of an employer/employee relationship. Accordingly, athletes do not receive the dAIS athlete grant in the capacity of employees. 48. Further, the purpose of the dAIS athlete grant is to provide financial support to athletes to assist them with event preparation and in recognition of their elite level within their sport. The grant is not made specifically as consideration for athletes participating in the Olympics, Paralympics, Commonwealth Games or other world championship events, or providing any other service to the ASC. 49. Although the payment is made under a government policy in relation to an athlete's potential sporting achievements, the Commissioner considers that this does not constitute a payment in respect of services rendered by an athlete. [11] | Periodicity, regularity or recurrence: 50. The dAIS athlete grant comprises biannual payments received by an athlete upon the signing of an annual Athlete Agreement with the ASC. Athletes are assessed against specific performance criteria in order to qualify for the dAIS athlete grant, including being assessed on medal potential based on their performance at agreed benchmark events. 51. While an athlete can be nominated by their NSO for support in a future period, the receipt of future grant payments is not guaranteed. The terms of the Athlete Agreement provide for two payments only. Moreover, the fact that an athlete qualifies for a grant in one period does not automatically qualify them for any future grants. 52. Therefore, the Commissioner considers that the dAIS athlete grant does not bear the characteristics of being periodic, regular or recurrent. | Substitution of income and reliance: 53. Although the express purpose of the dAIS athlete grant is to provide financial support to athletes and the means test implies some reliance on the payment to meet regular expenditure, the Commissioner considers that these factors are not by themselves decisive in characterising the dAIS athlete grant as ordinary income. [12] 54. Rather, the better view is that, having regard to the totality of the characteristics identified in paragraphs 43 to 53 of this Ruling, the dAIS athlete grant does not constitute ordinary income. | Conclusion: 55. For the reasons outlined in this Ruling, the Commissioner considers that the dAIS athlete grant received by individual taxpayers is not assessable under subsection 6-5(1) as ordinary income. Similar reasoning applies in respect of the dAIS additional support grants received by athletes. | Statutory income: 56. Section 6-10 provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included as assessable income by another provision. 57. Section 10-5 lists provisions about statutory income and included in this list is section 15-2. 58. Subsection 15-2(1) includes in a taxpayer's assessable income the value of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to the taxpayer 'in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by' the taxpayer. 59. While the athletes are not considered to be 'employees', subsection 15-2(1) also includes in assessable income those allowances, gratuities, compensation, benefits, bonuses and premiums which are paid in respect of 'services rendered'. 60. There is no agreement that requires athletes to provide or supply services to the ASC. The athletes are required to meet certain conditions in order to qualify for the grant however these conditions do not amount to the rendering of services to the ASC. 61. Likewise, the grant is not paid for the rendering of services at any sporting event or for achieving a specified result but rather intended to provide athletes with support to assist with their training or transition away from their sport in relation to the transition payments. 62. As such, the grants received under the dAIS scheme are not assessable under subsection 15-2(1) because athletes are not considered to be employees, nor are they 'rendering services'. | Capital gains tax: 63. An athlete's entitlement to receive a dAIS athlete grant is a CGT asset under subsection 108-5(1) that is acquired when the grant is accepted. 64. CGT event C2 happens under section 104-25 when an athlete's entitlement to receive the payment is satisfied. The time of the CGT event under subsection 104-25(2) is when the payment is made. 65. However, any capital gain or capital loss resulting from CGT event C2 happening is disregarded under paragraph 118-37(2)(a). That paragraph provides a CGT exemption for a capital gain or capital loss that results from the receipt of a payment as reimbursement or payment of expenses under a scheme established by an Australian government agency under an enactment or an instrument of a legislative character. The dAIS is such a scheme. | General deductions: 66. As the dAIS athlete grants received by athletes are not assessable income, all losses and outgoings that are incurred in connection with athletes' sporting activities are not allowable as a deduction under section 8-1, nor is a deduction allowable under any other provision of the ITAA 1997. | Pay as you go withholding: 67. As explained in this Ruling, dAIS athlete grants made to athletes are not assessable income. The grants are not regarded as a withholding payment under Division 12 of Schedule 1 to the Taxation Administration Act 1953. The ASC is not required to withhold amounts from these grants, nor do they have any other associated PAYG withholding obligations; for example, obtaining tax file number declarations, providing payment summaries or annual reporting. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | Summer Olympic and Paralympic NSOs | Winter Olympic and Paralympic NSOs | Commonwealth Games-only NSOs | Revised Scheme Implementation | Post-2020 [1] Tokyo Olympic and Paralympic Games | Post-2022 Beijing Winter Olympic and Paralympic Games | Post-2022 Birmingham Commonwealth Games | Annual After-Tax Income range | Eligible % of dAIS Scheme | 15. I agree that nothing in this agreement creates a relationship of employment or agency between the AIS and me that I will not be deemed, for any purposes, to be an employee or agent of the AIS.


Legislative references: ITAA 1997 6-5 ITAA 1997 6-5(1) ITAA 1997 6-10 ITAA 1997 8-1 ITAA 1997 10-5 ITAA 1997 15-2 ITAA 1997 15-2(1) ITAA 1997 104-25 ITAA 1997 104-25(2) ITAA 1997 108-5(1) ITAA 1997 118-37(2) ITAA 1997 118-37(2)(a) TAA 1953 Sch 1 Div 12 Australian Sports Commission Act 1989
Case references: ACE Insurance Ltd v Trifunovski [2011] FCA 1204 284 ALR 489