Revenue Tax Briefing

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Revenue Tax Briefing Issue 52, May 2003

Sportspersons Employed by Clubs Expenses

What is the tax treatment of expenses paid to or incurred by soccer players and other sportspersons employed by clubs?

Legislative Provisions

The legislative provisions governing expense payments and deductions are contained in Sections 114 and 117 TCA 1997. A charge to income tax under Schedule E arises under Section 117 where expense payments are made to directors and employees of a body corporate which are not otherwise chargeable to tax. Such payments are treated as perquisites of the employment of the director or employee and are included in the assessable income of the director or employee for that year.

Section 114 TCA 1997 provides that where the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments of the office or employment of profit expenses of travelling in the performance of the duties of that office or employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.

Travel & Subsistence Expenses

Payments by an employer which do no more than re-imburse an employee for allowable expenses actually incurred may be made free of tax in certain circumstances. Revenue leaflets IT 51 (Employees’ Motoring Expenses) and IT54 (Employees’ Subsistence Expenses) set out the circumstances and the conditions to be fulfilled in this regard. These provisions apply equally to employed sportspersons and there are no special rules or treatment applicable to this category of employee. The question of allowable travel expenses will depend on the facts of each case, i.e., the location of the club grounds, location of training grounds, if different, location of matches, transport provided by the club etc.

Other Expenses

With regard to other expenses incurred by sportspersons, e.g., clothing, boots, gym membership, special foods, etc., a deduction will only be available where the expenses satisfy the requirements of Section 114. If an employee wishes to make a claim in this regard he/she should submit full details at the end of tax year so that the Inspector can determine what, if any, expenses are allowable. The following points should be noted:

  • With regard to gym membership and special foods the question of whether or not the expense has been incurred “wholly exclusively and necessarily” will arise. This test rules out any deduction for expenditure where a duality of purpose exists, i.e., a business and non-business related purpose, unless a specific apportionment can be made between that part of an expense which is wholly and exclusively incurred in the performance of the duties and another part which is not. Generally speaking claims for gym membership and special foods would be inadmissible on the basis that there could be no differentiation between that part of the expense incurred for the purposes of playing sport and that incurred to keep the individual fit and healthy.
  • In relation to clothing and footwear, the general principle is that expenditure on clothing qualifies for a deduction under Section 114 if it is in respect of the costs of protective clothing or a uniform. A deduction may therefore be due if a player is “necessarily obliged” to incur such costs. The question of any club and/or individual sponsorship in the provision of clothing or the provision of clothing by the club itself will also be relevant factors under this heading.
  • Medical care required as a result of injuries, e.g., doctor’s fees, physiotherapists, etc. may qualify for health expenses relief under Section 469 TCA 1997.