M.Com. (Taxation) / South African sportsmen and women (from now on collectively referred to as sportsmen) are currently facing new and exciting opportunities that were previously not available during the years of international sanctions. Opportunities such as international competition, meetings and extensive overseas tours have become the order of the day. However, to be able to compete at international level, means that sportsmen have to employ an ever increasing amount of resources to their sport, which results in the sport being transformed from a hobby or leisure time activity to a semi-profession. Due to this transformation, sportsmen are demanding compensation for the effort put into their sport. Despite strict amateur rules ample compensation is received by the sportsmen, which brings us to the question of what would the taxation implications be of such compensation received by amateur sportsman as a result of their participation in their respective sports. This study is aimed at answering this question, with specific reference to the two major so-called amateur sports, namely athletics and rugby. The Income Tax Act of 1962 makes no mention of income received by a sportsman specifically from the participation in any sport. To be able to answer the question reference has to be made to law reports and the general interpretation of the Act, and with the application of the same principles to the compensation received by a sportsman. The first important factor to determine is at what stage the sportsman crosses the proverbial Rubicon, in other words at what stage does the sport change from a leisure time activity to a profession. Various criteria relating to the income received have to be considered, amongst which are the following: - An amount in cash or otherwise - Received by, or accrued to a person - During the year or period of assessment - Excluding receipts and accruals of a capital nature - From a source within or deemed to be within the Republic of South Africa. Should the sportsman receive any compensation which complies to all the above mentioned criteria, then this compensation would be considered to be 'gross income' as specified in the Income Tax Act (Act 58 of 1962)(hereafter refered to as 'the Act'), and is the sportsman obliged to declare this compensation as gross income. As a result of the strict amateur rules, sportsmen are continuously looking for ways to obtain a commensurate compensation which is related to the amount of time, money and effort put in by them in the participation of their sport. One such an instrument is the use of trusts. This can be an effective way of earning a commensurate income from sport but it is important for the sportsman to keep track of the taxation implications of these instruments, especially as it is expected from the sportsman to declare all income received or accrued to him during the year of assessment.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:11130 |
| Date | 19 May 2014 |
| Creators | Pauer, Friedrich Wilhelm |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Johannesburg |
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