Class Ruling CR 2007/57
Date of effect: 1 July 2006

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: Class of entities 3. The class of entities to which this Ruling applies are Australian first class cricketers, past and present, at the national, state or rookie level who are in receipt of Education and Training Grant payments (Grant) provided by the Australian Cricketers Association (ACA) for preparation for life after cricket. Qualifications 4. The Commissioner makes this Ruling on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 13 to 26 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are Australian first class cricketers, past and present, at the national, state or rookie level who are in receipt of Education and Training Grant payments (Grant) provided by the Australian Cricketers Association (ACA) for preparation for life after cricket. | Qualifications: 4. The Commissioner makes this Ruling on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 13 to 26 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: 8. This Ruling will apply from 1 July 2006 to 30 June 2013. However, the Ruling continues to apply after this date to all entities within the specified class who entered into the specified scheme during the term of the Ruling, subject to there being no change in the scheme or in the entities involved in the scheme. 9. The Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling. Furthermore, the Ruling only applies to the extent that: 10. If this Ruling is inconsistent with a later public or private ruling, the relevant class of entities may rely on either ruling which applies to them (item 1 of subsection 357-75(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA)). 11. If this Ruling is inconsistent with an earlier private ruling, the private ruling is taken not to have been made if, when the Ruling is made, the following two conditions are met: 12. If the above two conditions do not apply, the relevant class of entities may rely on either ruling which applies to them (item 3 of subsection 357-75(1) of Schedule 1 to the TAA). 13. The following description of the scheme is based on information provided by the applicant. 14. The ACA is an independent body established to represent the interests of Australian first class cricketers, past and present, at the national, state or rookie level. 15. The ACA performs the following functions: 16. The ACA has established and funded the Education and Training Grant Program to encourage its members to plan and prepare for life after cricket. An amount of $150,000 is allocated each year for the program. The maximum individual grant is $4,000. The ACA anticipates that between 40 and 60 players will receive the Grant each year. 17. To be eligible for the Grant the player must be a member of the ACA. A player who has retired or been delisted from national, state or rookie level within the previous year is eligible to join the ACA and to apply for the grant. The ACA assists a player in identifying suitable educational and training courses which link with their proposed career path after cricket. No distinction is made between the level of cricketer. 18. The course must be accredited with a registered training or educational institution. It must relate to the player's life after cricket and the player must be currently enrolled in the course. Study will be undertaken on a part-time basis. 19. There are two rounds for applications each year, Round One closes on 29 January and Round Two closes on 20 July. Applications, irrespective of the period of the course, must be made each year the player wishes to receive the Grant. Players who are given the Grant for Semester 1 will receive the Grant monies in March, and Semester 2 will receive the Grant monies in August. 20. The Grant is available for course fees, student fees, tuition and essential course material. It can be used to pay Commonwealth Supported Place invoices (previously known as HECS). The grant does not cover items such as stationery, text books, calculators or general equipment nor does it cover living expenses. 21. There is no obligation on players who receive the grant to perform or provide any service, including appearances for the ACA or any other party. Funding for the grant is not directly or indirectly provided by a sponsor. 22. The following figures indicate the maximum amount of funding available for courses undertaken per calendar year. The funding may be increased at the absolute discretion of the Education and Training Sub-Committee. 23. If the full $150,000 is not distributed for Semesters 1 and 2 the Education and Training Sub-committee may review the grants made to players and provide extra funding to players where the original grant received did not fully cover their educational needs. 24. The Grant may be paid by the ACA as a direct payment to the educational institution or as a reimbursement to the member upon receipt of a dated invoice or receipt for the educational expenses from an accredited educational institution. It can also be paid by the ACA as a reimbursement to a third party on written direction of the player. 25. Any player withdrawing from a course for which they have received a grant is required to repay the grant monies within two months of withdrawing from the course. Failing to repay the money will result in the player being ineligible for future grants of any type from the ACA's Career and Welfare program. 26. Any player who fails will be required to repay the grant unless they can demonstrate that the failure was not due to withdrawal or non attendance. Grants will not be available for courses or units previously failed by a player. It will be the responsibility of the Education and Training Sub-Committee in consultation with State Career and Welfare Managers to determine the circumstances surrounding a player's failure of a course or unit and the possible requirement to repay grant monies. 27. Amounts received under the ACA's Education and Training Grant Program are not assessable income for the purposes of section 6-5 or section 6-10 of the ITAA 1997. Commissioner of Taxation 20 June 2007 28. The members of the ACA are or were first class cricketers and are sportspeople to whom Taxation Ruling TR 1999/17 Income tax: sportspeople - receipts and other benefits obtained from involvement in sport will be relevant. 29. A payment or other benefit received by a taxpayer is included in assessable income if it is: 30. Paragraph 9 of Taxation Ruling TR 1999/17 states that for a sportsperson the following are assessable income: | Ordinary income: 31. Subsection 6-5(1) of the ITAA 1997 provides that an amount is included in a taxpayer's assessable income if it is income according to ordinary concepts. 32. In determining whether an amount is ordinary income the courts have established the following principles: 33. Relevant factors in determining whether an amount is ordinary income include: 34. Given the functions of the ACA, as set out in paragraph 15 of this Ruling, an employer/employee relationship does not exist between the players in receipt of the Education and Training Grant and the ACA, for the purposes of the first and last factors in paragraph 33 of this Ruling. 35. As the decision to award a grant to a player applicant is at the discretion of the Education and Training Sub-Committee of the ACA and the ACA is under no legal obligation to make a payment they are voluntary payments. 36. Paragraph 12 of TR 1999/17 states: 37. The ACA's Grant is limited to payments for course fees, student fees, tuition and essential course material for courses accredited with registered educational institutions. The Grant does not specifically contribute towards the player's living expenses. The Grants are either made by direct payment to the educational institution, reimbursement of the player or reimbursement to a third party. 38. Grants may be made twice yearly for Semesters 1 and 2 or in the case of a full year course in the first application period and do not extend beyond one year. The grant does not have the periodical, regular or recurrent payments in the sense intended in paragraph 12 of TR 1999/17. 39. Continued receipt of the Grant is conditional on successful completion of the player's studies. Any player who fails, unless they can show that the failure was not due to withdrawal or non attendance, or withdraws from a course must repay the Grant monies. Grants are given on a semester or yearly basis. In these circumstances a player would not have an expectation of receiving the Grant monies on a regular or recurrent basis. 40. There is no employment or business relationship between the player and the ACA. A successful applicant is not required to enter into any contractual relationship with either the ACA or a sponsor to perform services of any kind in return for the payment of the Grant monies. 41. These factors when considered together, lead to the conclusion that the Grants are not income according to ordinary concepts. | Statutory income: 42. As the Grants are not considered to be ordinary income it is necessary to consider whether the payments could also be included in assessable income under section 6-10 of the ITAA 1997. 43. Section 6-10 of the ITAA 1997 includes in assessable income amounts that are not ordinary income; these amounts are statutory income. These statutory income provisions are listed in section 10-5 of the ITAA 1997. For sportspeople the most relevant list items are sections 21 and 21A of the ITAA 1936, [8] and section 15-2 of the ITAA 1997: 44. The documents explaining the scheme establish that the players are not providing services to the ACA. The players are required to meet certain conditions in order to qualify for payment of the Grant. These do not amount to the rendering of services to the ACA. As such the payments are not assessable under section 15-2 of the ITAA 1997 because the players are not considered to be employees, nor are they 'rendering services' to the ACA. Similarly, as there is no business relationship between the players and the ACA, the payments are not assessable under sections 21 or 21A of the ITAA 1936. 45. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: 27. Amounts received under the ACA's Education and Training Grant Program are not assessable income for the purposes of section 6-5 or section 6-10 of the ITAA 1997. Commissioner of Taxation 20 June 2007


Appendix: 28. The members of the ACA are or were first class cricketers and are sportspeople to whom Taxation Ruling TR 1999/17 Income tax: sportspeople - receipts and other benefits obtained from involvement in sport will be relevant. 29. A payment or other benefit received by a taxpayer is included in assessable income if it is: 30. Paragraph 9 of Taxation Ruling TR 1999/17 states that for a sportsperson the following are assessable income: | Ordinary income: 31. Subsection 6-5(1) of the ITAA 1997 provides that an amount is included in a taxpayer's assessable income if it is income according to ordinary concepts. 32. In determining whether an amount is ordinary income the courts have established the following principles: 33. Relevant factors in determining whether an amount is ordinary income include: 34. Given the functions of the ACA, as set out in paragraph 15 of this Ruling, an employer/employee relationship does not exist between the players in receipt of the Education and Training Grant and the ACA, for the purposes of the first and last factors in paragraph 33 of this Ruling. 35. As the decision to award a grant to a player applicant is at the discretion of the Education and Training Sub-Committee of the ACA and the ACA is under no legal obligation to make a payment they are voluntary payments. 36. Paragraph 12 of TR 1999/17 states: 37. The ACA's Grant is limited to payments for course fees, student fees, tuition and essential course material for courses accredited with registered educational institutions. The Grant does not specifically contribute towards the player's living expenses. The Grants are either made by direct payment to the educational institution, reimbursement of the player or reimbursement to a third party. 38. Grants may be made twice yearly for Semesters 1 and 2 or in the case of a full year course in the first application period and do not extend beyond one year. The grant does not have the periodical, regular or recurrent payments in the sense intended in paragraph 12 of TR 1999/17. 39. Continued receipt of the Grant is conditional on successful completion of the player's studies. Any player who fails, unless they can show that the failure was not due to withdrawal or non attendance, or withdraws from a course must repay the Grant monies. Grants are given on a semester or yearly basis. In these circumstances a player would not have an expectation of receiving the Grant monies on a regular or recurrent basis. 40. There is no employment or business relationship between the player and the ACA. A successful applicant is not required to enter into any contractual relationship with either the ACA or a sponsor to perform services of any kind in return for the payment of the Grant monies. 41. These factors when considered together, lead to the conclusion that the Grants are not income according to ordinary concepts. | Statutory income: 42. As the Grants are not considered to be ordinary income it is necessary to consider whether the payments could also be included in assessable income under section 6-10 of the ITAA 1997. 43. Section 6-10 of the ITAA 1997 includes in assessable income amounts that are not ordinary income; these amounts are statutory income. These statutory income provisions are listed in section 10-5 of the ITAA 1997. For sportspeople the most relevant list items are sections 21 and 21A of the ITAA 1936, [8] and section 15-2 of the ITAA 1997: 44. The documents explaining the scheme establish that the players are not providing services to the ACA. The players are required to meet certain conditions in order to qualify for payment of the Grant. These do not amount to the rendering of services to the ACA. As such the payments are not assessable under section 15-2 of the ITAA 1997 because the players are not considered to be employees, nor are they 'rendering services' to the ACA. Similarly, as there is no business relationship between the players and the ACA, the payments are not assessable under sections 21 or 21A of the ITAA 1936.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | Short Courses/Professional Development (Maximum 2 courses per year) | Year 12 (Tutorial assistance) | TAFE and Private -Short Course (Cert 1, II or III) | TAFE & Private Providers - Long Course (Cert IV, Diploma, Advanced Diploma) | University (BA, Honours, Grad Certificate, Grad Diploma) | Professional Qualifications | Expenses of sports are not allowable deductions against voluntary payments, as these expenses do not relate to the voluntary payment received. | Appendix 2 - Detailed contents list


Related rulings: TR 1999/17
Legislative references: ITAA 1936 21 ITAA 1936 21A ITAA 1936 26(e) 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 51-10 ITAA 1997 51-35 TAA 1953 TAA 1953 Sch 1 357-75(1) Copyright Act 1968 Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006
Case references: FC of T v. Blake 84 ATC 4661 (1984) 15 ATR 1006
Subject references: sporting organisations voluntary payments to sportspersons