AUSTRALIAN TAXATION LAW

Australian Taxation Law



Australian Taxation Law

TASK 1- Stone v FC of T 2005 ATC 4234

Comprehensive summary of the facts of the case

This case focuses on whether the taxpayer who is carrying a business as a professional athlete and income that is generating through such a business is non-exempt income in the normal course. Stone J was one of the leading Australian Javelin throwers. Stone was a part of many international competitions along with the Sydney Olympic Games in 2000. Stone J was also a part of Queensland Police. She has been retired from Javelin Throwing as she had certain injury and is now focusing on her police career. As being a part of sport has been receiving money in various forms. These forms are government grants, prize monies, appearance fees and scholarships. There receipts were not treated as taxable income before 1999 as they are not in large number.

Receipts by Stone

At the end of 1999, Stone J has been account for $39 832 of assessable income which was her police officer salary. She also included amount of $136,448 receipts in her tax return which she had earned from Javelin throwing and these amount were not part and accounted for assessable income. These receipts were $93,429 - prize money, $27,900 - Queensland Academy of Sport, $12,419 - sponsorship and appearance fees of $2,700. The treatment of these amounts by the Commissioner was that they are non-exempt income and objection by the Stone J was forbid. Furthermore, if the sporting receipts were part of income then Stone would have permitted of $19,739 of deductions. This case was further took to the Australian tax Office - ATO in turn to spell out the receipts treatment earned by the professional sport people.

Judgment in the High Court

The decision taken by the High court was that the Receipts of Stone was taxable and Stine had to pay tax on it. The reason given by the court was that Stone had converted his professional athletic into driving financial rewards. She has been involved in those activities from which she can earn huge amount. She has been paid a huge amount in endorsing a companies and their product which makes it clear that she has transformed her athletic ability into financial ability.

High court deep investigation proved that sponsorship agreements& appearance fees qualified as services rewards. As far as Stone other activities are concerned, it was apparent that sponsorship agreements were made in quest of athletic activities and hence was a commercial agreement. Furthermore, according to the High court, the Grants were also taxable as they have been earned through the athletic tournaments. The goal of Stone of earning money but as a hobby and main aim was the archive sport excellence, but the issue of making profit took place.

Hill J's Decision in the Federal Court

Initially, it was detected by the Hill J that Stone has converted her sport talent in to the money making business and therefore, conducting professional athlete as ...