Australian Tax Office Wants To Sink Its Teeth Into Foreign Athletes

Mandy Robinson, Tax-news.com, London

17 August 2000

Athletes in next month's Sydney Olympics mistakenly thought they had
to compete against each other, but no matter who wins the medals, the
Australian tax-man is flexing his muscles and wants to come out on top.

Although the athletes will not get any prize money as such, many will earn cash from either their sponsors or their governments; bonuses will be paid
for winning medals, and some are likely to be paid large sums of money
for exclusive media interviews.

According to Australian Taxation Office (ATO) project director, Peter
Rowe, any money earned by either local or international athletes in the
Sydney Olympics, will be taxed by the Australian Government.
Mr Rowe spoke of the location of the athletes' performance as the key issue, saying: 'If the race takes place in Australia, regardless of where a contract
might be entered into, or in fact even where payment is made, then it
is the income derived from that performance in Australia which gives rise
to the tax liability.'

For the duration of the games, the very helpful ATO plan to set up offices
at the village in Homebush where 10,000 sportsmen and women will reside,
to advise them of their tax obligations, and also to collect the athlete's
tax debts before they leave the country. Those likely to earn money would
be obliged to sign up for an Australian business tax code.

Peter Rowe added that the ATO was not conducting a 'revenue-raising
exercise' (excuse me?), adding that overseas media and officials connected with the Olympics will not escape their tax liabilities either.

In fact, Peter Rowe's words have to be examined very closely: Australian tax law says that Australian-source income earned by a non-resident performer or entertainer is taxable, not that payments are taxable just because they are in respect of a performance in Australia. Thus, a payment by a foreign Government or sponsor paid outside Australia to a non-resident performer is not taxable in Australia. So what Mr Rowe is really saying is: 'If the race takes place in Australia, regardless of where a contract might be entered into, or in fact even where payment is made, then it is the income derived in Australia from that performance which gives rise to the tax liability.'

The ATO is thus seeking to tax payments from Australian media, or payments made in Australia from foreign media. But the taxation of international sportsmen and entertainers is one of the most developed branches of the tax minimisation industry, and one hopes that the athletes will have been told to make sure that their income from the event is paid outside Australia, and is not derived from an Australian source. So, don't give interviews to the Australian media!

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