Ottawa, December 29, 2008
Archived - Government of Canada Rewards Sacrifice, Encourages Excellence by Broadening Amateur Athlete Trusts
Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
The Honourable Jim Flaherty, Minister of Finance, today announced proposed changes to the Income Tax Act that would increase the number of Canadian amateur athletes eligible to defer income tax on income from endorsements, prizes and other remuneration related to the athlete's athletic endeavours.
"Excellence in amateur athletics, particularly at the elite levels, entails significant sacrifice by the athletes, many of whom delay careers to realize their dreams of representing Canada internationally," said Minister Flaherty. "The Government of Canada recognizes that sport continues to be a defining part of Canada's identity and is pleased to support Canada's athletes. We are proud to recognize their sacrifice, encourage their success and ease their eventual integration into the workforce by deferring tax on income from their athletic endeavours."
Under the existing income tax rules, athletes may defer paying tax on funds that are required, under the rules of the relevant international sport federation, to be held by a qualifying organization in order to preserve eligibility to compete at the amateur level. An athlete is generally taxed on those revenues only upon distribution to the athlete.
Most international sport federations no longer impose this constraint on an athlete's eligibility to compete at the amateur level. Accordingly, the availability of this tax deferral is now generally quite limited. Under today's proposal, the Income Tax Act will be amended to extend the rules so that a broader category of athletes may benefit from the tax deferral.
The new rules will generally apply to an amateur athlete who is, in a taxation year, a member of a registered Canadian amateur athletic association and eligible to compete in international sporting events. These amateur athletes will be able to place income for the year from endorsements, prizes and other remuneration related to such athletic endeavours in a qualifying account. Income earned in the account will be tax-deferred in the same manner as income contributed to the account by the athlete. The new measure will apply in respect of revenues received in 2008 and subsequent taxation years. These revenues will be taxed generally only upon the earlier date of distribution to the athlete or, as with the existing rules, eight years after the last year in which the athlete was eligible to compete as a Canadian national team member. Eligible income earned in 2008 that is contributed to a qualifying account on or before March 2, 2009 will be considered to have been contributed in 2008 for the purposes of calculating the athlete's income for 2008.
The Government intends to introduce legislation in respect of this tax deferral at an early opportunity.
Draft legislative proposals to implement this proposal, together with explanatory notes, are attached.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance
To receive e-mail notification of all news releases, please register at http://www.fin.gc.ca/scripts/register-eng.asp.