A rugby league star and an AFL football player have set an important precedent for sports stars after the High Court declared they could receive agents’ fees as a tax deduction.
League player Mark Riddell and AFL player David Spriggs had attempted to claim as a tax deduction the fees charged by their agents to negotiate their contracts, but the ATO rejected their claims in 2004.
Five years later, the High Court found the pair were not employees, but were instead “engaged in the business of commercially exploiting their sporting prowess and associated celebrity”.
The court allowed the deduction of the agents’ fees as expenses “incurred in the course of gaining or producing income”.
The case of Spriggs and Riddel were essentially used as a test case by professional athletes lobby group, the Australian Athletes’ Alliance.
Brendan Gale, chief executive officer of the AFL Players Association and director of the AAA, said he was pleased with the decision and thanked the ATO for helping to fund the test case.
“This decision will provide a positive benefit to all our members and indeed all other professional sports people.”
Tax lawyers and sports agents expect the case will lead many professional sports people to submit amended tax returns in an attempt to claw back agents fees and other related expenses.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
