AFL stars to pocket tax breaks after Australian Taxation Office ticks off image rights deal

AFL stars will pocket tax breaks on their football income under an image rights deal ticked off by the Australian Taxation Office.

Changes to the league’s player contract rules will allow players to divert up to 30 per cent of their club wages to a private company or trust.

Companies and trusts are subject to lower tax rates than the top personal income tax bracket of 49 cents in the $1.

A ranking system measuring on-field achievements including all-Australian selection, best and fairest results, Brownlow Medal placings, premierships and rising star nominations will be used to determine how much money a player can assign for the use of their image.

Fringe players can divert 5 per cent of their wages and middle-ranked players between 10 and 25 per cent.

Only first and second-year players, rookies and players on minimum salaries are ineligible.

Details of the arrangement sent to player agents by the AFL Players’ Association yesterday reveal a player earning $750,000-a-season will be permitted to direct $217,500 to a third-party image rights company where it will be subject to a lower tax rate.

A player earning $350,000 could allocate $52,500, paying full tax on $297,500.

 

The scheme starts this season.

Here are the work expenses that you should be particularly careful with in the 2016-2017 financial year:

1.      Trips between home and work. Generally you can’t claim a deduction for these because they’re considered private travel

2.      Car expenses for transporting bulky tools or equipment, unless: (you need to use your bulky tools to do your job, your employer requires you to transport this equipment or there is no secure area to store the equipment at work.)

3.      Car expenses that have been salary sacrificed.

4.      Meal expenses for travel, unless you were required to work away from home overnight.

5.      Private travel, so if you take a work trip that includes personal travel you can only claim the work-related portion.

6.      Everyday clothes you bought to wear to work (eg, a suit or black pants), even if your employer requires you to wear them.

7.      A flat rate for cleaning eligible work clothes without being able to show how you calculated the cost.

8.      Higher education contributions charged through the HELP scheme.

9.      Self-education expenses when the study doesn’t have a direct connection to your current employment – your future or dream jobs don’t count.

10.  Private use of phone or internet expenses – only the work-related portion counts.

11.  Up-front deductions for tools and equipment that cost more than $300. However, you can spread your deduction claim over a number of years. That’s called depreciation.

If You’re Angry About Taxes, Here’s Who to Blame –

It’s coming up to tax season again, which has a lot of us wondering: Who came up with this crap? The oldest records of taxes go back to 6000 B.C. in what is now Iraq. The ancient Greeks, Egyptians, and Chinese all had their own versions of taxes, too. Abraham Lincoln, instituted federal income taxes to help pay for the Civil War. The English used rules established by Roman emperor Caesar Augustus for personal and inheritance taxes. So when you’re sending payment to the ATO this year, you can choose who you want to blame: Greeks, Egyptians, Iraqis, the Chinese, Romans or the English.

Small business changes announced in the 2015-16 budget are now law. The following changes apply from 1 July 2016:

  •          27.5% company tax rate for small businesses. The maximum franking credit that you can allocate to a frankable distribution is also 27.5%. If you have lodged early, see below for more information.
  •      8% small business income tax offset (up to $1,000) limited to businesses with a turnover of less than $5 million. It applies only to business income for sole traders, or share of business income for partnerships or trusts
  •          $10 million small business turnover threshold (previously $2 million). This means more businesses can access a range of small business concessions, including the $20,000 instant asset write-off and reduced company tax rate.



SMSFs can be set up with balances of as little as $200,000, but these smaller funds are often insufficiently diversified which drives down returns. They become more viable if the trustee chooses to take on some of the administration themselves, however in many cases this is best left to professionals.

That being said, an SMSF can have up to four members, so funds may be pooled with spouses and/or family members in order to maximise the starting balance and subsequent contributions.

Establishing an SMSF can be a fruitful exercise for high-net-worth investors due to the increased flexibility and control it offers. However, with these benefits come increased responsibility. Investors must be aware of the regulatory requirements and associated costs which are unique to the SMSF sector.

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