Did you know that professional sportspeople can average their income to access a tax reduction in higher-income years?

The Australian government recognises that often sportspeople don’t generate a consistent income from year to year and has created special tax rules that recognise this fluctuation in annual income. Special professional income averaging (SPIA) is a way for elite athletes to take advantage of income averaging, which is a concessional tax treatment available to a small group of workers deemed “special professionals” by the Australian Tax Office (ATO).

How does special professional income averaging (SPIA) work?

In general terms, income averaging works by reducing the amount of tax athletes owe in a high-income year by comparing that income to the previous year’s sports-related income and applying a tax concession on the “above average” amount. This means sportspeople can avoid paying more tax in a year where their income is in a higher tax bracket than in previous years.

The special professional income averaging (SPIA) tax benefit you can claim is calculated by identifying the first year that you earn eligible sports income. This determination can sometimes be impacted by changes in your tax residency status, which we explain in our blog What Athletes Need to Know About Residency and Tax.

How do I know if I’m eligible for SPIA?

At Archer Sports Advisory, we have a comprehensive understanding of the complex methodologies that apply to income averaging for professional athletes. While SPIA can be incredibly valuable in the first few years of your sporting career when your income for prior years is low or zero, it’s vital that you use it appropriately.

We can help you assess your eligibility and ensure that the correct income has been reported in the appropriate sections of your tax return. Using income averaging incorrectly may mean that your tax benefit is calculated incorrectly, and the ATO might review or even audit your tax return. It’s also important to note that sports coaches, administrators, promoters or assistants like caddies or pit crews aren’t eligible for special professional income averaging.

At Archer Sports Advisory, we help professional sportspeople including cricket, soccer, AFL, netball and basketball players to take advantage of SPIA and other tax concessions they’re eligible for. As experienced advisors who work exclusively with elite athletes, we have an unmatched command of the tax rules that apply to sportspeople and can help you achieve positive tax outcomes.