A good many Competitive Sports Persons would like to be Sponsored and a good many Sponsors know the value of Sports Sponsorships (see graphic below later). However, some Sports Persons look upon Sponsorship as a donation or a gift without strings attached.
This is unfair to the Businesses who do Sponsor. A donation or a gift is not normally a Tax Deduction while a Sponsorship is a Tax Deduction provided the Sponsored Person promotes the Sponsors Product.
If a person needs a donation or a gift to Compete in Sport there are many people who will donate - at about the same % rate as "Body Organ Donations".
Business/Corporate Sponsorship is determined by the amount of publicity their product or service can attract by being displayed or promoted by the sponsored. Today, the Media carries most of this advertising more efficiently and easier, to the market place than most Sponsorships. However, to quote John Singleton "Only 20% of total advertising budgets is spent wisely - unfortunately, no one has ever been able to determine which is the 20% that works".
Many believe Sponsorship is a big part of that 20% of a marketing budget that works - except, of course, the Print and Electronic Media.
the Bad News:
Gone are the days when the charity element of Sponsorship was common. The Corporate world now wants its pound of flesh. If Corporate Shareholders are asked to allow Management to risk their gross profits promoting their product via Sponsorship they should be entitled to see a return on their investment.
Much of Corporate shareholdings is held by Financial and Superannuation Funds (Managers) who must maximise returns for their clients - or loose them.
the Wealthy say:
Recently, the Australian billionaire philanthropist, Richard Pratt, of Visy Industry, gave his colleagues a piece of advice on marketing -
"Sports are a less effective Sponsorship target than the arts"
He says Sport is over-rated as a marketing tool. This is possibly due to the lack of education for the Sponsored Sportsperson in his roll in the marketing process.
However, what must be remembered is that Sponsorship - any Sponsorship - is a viable alternative to advertising - either print or electronic.
All that needs to be done is to educate those Sportspersons who wish to be Sponsored so that they can do a better job of promoting the Sponsors Product or Service than the other competitors. At this point Sportspersons in general are near to useless for promotion (with the exception of the swimmers Kerin, Sam & O'Neil)
the Rich say:
Many business owners (shareholders) consider that if the Sportsperson could not contemplate sponsoring him/herself why should they expect other tax payers to pick up the bill?
This, particularly, when the Sportsperson (or family) might be paying 47% marginal tax when Business/Corporate are only paying 36% tax and the other 64% comes out of shareholders net profits.
It is, of course, a different situation when a Sportsperson is a high profile, mobile billboard in the TV lens on all sporting occasions - high exposure, identifying high achievement, with the Sponsors product.
Australian Tax Office News:
Sponsorship has three very different meanings for the three constituents involved. To the Sportsperson, a Sponsorship is seen as a reward for being the best or achieving the most.
To the Business owner(s) Sport Sponsorship is an element of their marketing mix - no different to any other advertising or promotion.
To the Australian Tax Office it is a tax deduction under Australian Income Tax Assessment Act: "an expense necessarily incurred in carrying on a business for the purpose of gaining or producing an assessable income" for the Sponsor and a possible Taxable Income for the Sponsored.
Payer foots some of the Bill:
The Sponsored Sportsperson sometimes does not realise that the Australian Tax Payer is footing some of the expense through a loss of that tax revenue (see Tricky Bit following)
are all Sponsored:
Actually, all Sportspersons are Sponsored in some way for there is always an expense involved that must be backed or supported by someone - even if it were the Sportsperson him/herself - but not always planned as a Tax Deduction as it should or could be.
In some cases the support comes from a Club or a section of the Community. In which case, the expense might be considered a Donation or a Gift.
If it is a Gift from a person - particularly a retired person - there are a few problems involved with Deeming ie the Dept. Social Security and ATO might become involved.
If the support comes from the TaxPayers in general, it is more than likely considered a Grant or some other form of Welfare.
All of these types of Sponsorships usually do not involve the Australian Tax Office either as Tax Deductible Expenses and not always as a Taxable Income to the recipient - provided the recipient understands the Tax Laws in relationship to Sport Earned Income.
Australian Federal Constitution, High Court and UN Principles:
There is no reason under the Australian Federal Constitution nor the Principles of the Charter of the United Nations that precludes a Sports Person from Sponsoring himself or being Sponsored by his/her family as a tax deduction, providing it is done within ATO Part IVA, the anti-Avoidance Legislation.
Accountants/Solicitors have a "Duty of Care" to advise their clients - sporting or not - but as there is a "Duty of Care" and the ATO s251M clause they are reluctant to advise on any tax matter rather than take the risk of future litigation or an ATO fine.
The necessary tax information does not usually fall into the "Compliance" catogory for ATO Personal to deliver. It is a very "iffy" proposition for any Government Employee to deliver on an advisory basis due to the "Duty of Care".
This leaves only Tax Experts who are accredited and Certified DEET Instructors or qualified Applied Education Teaches such as the TPIs (Tax Planning Instructors)
These TEACH the application of the AITAA97 (Australian Income Tax Accessment Act 1997) so that Students can learn to TaxPlan their own affairs.
Coast Tax Deductible Tax Planning/Croquet Seminars:
Our Seminars on the Gold Coast (1) endeavours, not only to teach this as part of Tax Planning, but also arrangers the necessary product prerequisites (2) which are acceptable to the Australian Taxation Office.
These are the best two marketing "USPs" (Unique Selling Propositions) for our associated products on the Gold Coast.
Corporate/General Business Sponsorship Considerations:
(1) Sponsors require a positive economic/sales based analysis prior to and for renewal of
(2) The Sport or Sportsperson must align with the Business philosophy of the Sponsor.
(3) Participation numbers in the Sport have a strong bearing on Sponsorship interest.
(4) The Profile of Individuals or Teams influence attractiveness to Sponsorships.
Sponsorships become more attractive as the Individual or Team Profile is lifted through
(6) There is
increasing usage of Professional Management to negotiate Sponsorships.
Sponsors Partnership Relationship:
The concept of Partnership is a popular description of the Sponsorship relationship - defined as "one who shares or takes part in business with another or others with shared risks and profits". If the Player or team (National Association) is offering a medium for exposure and promotion for a Business then they are offering a Service. It follows that as Service Providers, the Player, Team etc. must treat Sponsors as Customers.
Sportspersons as Service Providers:
Service providers must show value for money. Hence, they must show enthusiasm for the Sponsors product. Indeed it is necessary almost single handedly, to sell the Sponsors product - not just on a 9 to 5 basis but 24 hours a day. Consider that, at times, personal social graces, good behaviour and decorum are also essential commitments.
Governments' Departments of Sport and Recreation:
Governments of all political persuasions realise the benefits of Sport to help grow a healthier population. A 10% increase of the population playing Sport or programmed exercise would decrease the cost of hospital and medical requirements by $100,000,000/year.
More surgery would be successful and more organ recipients would have a better chance of survival if and when they were able to acquire a preowned organ. Self Esteem from Sport has the potential to replace the poor peoples' need for drugs - legal or illegal.
Creates Government Employment:
A 10% increase in Sport would mean a similar increase in Government Employees so Sport creates Employment - and of course more rules for the enforcers.
The States' Sport and Recreation recommend that all Sport Coaches should be responsible, not only for recruitment of new Sport players, but also to find suitable Sponsorships. This would reduce the individual cost so that their Players can compete at Local, Regional, State, National and International Sporting Events. For this reason Sponsorships are a valued Tax Deduction.
the Good News:
It seems probable that for those in low profile Sports like Croquet or of low personal profile the easiest consideration is to be own Family Small Business Sponsored with TaxPlanning to be Tax Deductible as an s51(1) 2nd limb. The question then changes from "What product can I Sponsor?" to "What product or service shall I market?" Or, put another way, "Who would want to buy me for a billboard?" to "What type of Family Business might my Family like to be involved?"
When the Sportsperson/Family is in Business, i.e. a professional acting professionally, Sporting Sponsorships are then unlimited.
Followed by the ATO Tricky Bit:
It could be that the ATO might not consider a person Eligible to be an "active sportsperson" for Taxable Income purposes and indicated at Item 18 in the TaxPack 99 Supplement. In which case the Tax Deductible Sponsorship might be a "gift" in the hands of the Player i.e. non-Taxable Income. TaxPlanning/Croquet Seminars goes into this questionable situation in depth.
Otherwise, if one is
considered, an "active sportsperson"
there is an interesting preamble to Item 18 that must be
considered at page s31 of the TaxPack 98 Supplement. There are two Categories at Item 18
on the Supplement Tax Return.
Cat. 1 is labelled "Y" for Politicians?
Cat 2. is labelled "V" for "Eligible Persons" ----- and "Vampires"
Like perhaps, Croquet Players? But what is it that the ingenious Pollys have fabricated and contrived for themselves - in their game - that we might apply to our own Sporting advantage?
There it is, in the Supplementary Tax Return, a single letter dialogue box on the right - looks a bit like a Croquet Hoop
But why the mystery about the [ ] Croquet Hoop?
Gold Coast TaxPlanning/Croquet Seminars:
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