Payments to sportspersons for their “public fame” and “image”
The ATO has drafted safe harbour guidelines for apportioning payments made to professional sportspersons for the use of their public fame or image.
The ATO will accept that 10% of a sportsperson’s playing contract is associated with these appearances.
Under a licensing agreement, these payments can be directed to a connected resident third party.
The safe harbour rules apply where:
- payments are received pursuant to a professional sportsperson’s:
- playing contract and/or collective bargaining agreement where those agreements mandate the professional sportsperson’s participation in appearances for the development and promotion of their sport or the use and exploitation of the professional sportsperson’s “public fame” or “image” for the development and promotion of their sport, or
- agreement to provide additional services where those services are provided in conjunction with the use and exploitation of the professional sportsperson’s “public fame” or “image
- the professional sportsperson has granted a licence for the use or exploitation of their “public fame” or “image” to an associated resident third party, and
- the associated resident third party is contractually entitled to payments for the use and exploitation of the professional sportsperson’s “public fame” or “image” pursuant to a playing contract, additional service agreement and/or collective bargaining agreement
As the exact proportion of a playing contract to split between playing fees and appearance fees is difficult to calculate. As a result, the draft guidance states that the ATO will allow a safe harbour of 10% of the total playing contract value.
“The ATO has drafted safe-harbour guidelines for apportioning payments made to professional sportspersons for the use of their public fame or image.”
How can we help?
If you have any questions, require assistance or would like further clarification please feel free to contact Martin van der Saag on (02) 9984 7774 in order to discuss your particular circumstances in more detail.
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
“The ATO will accept that 10% of a sportsperson’s playing contract is associated with these appearances.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
Under current law (post-2023), fame- or image-related income is taxed as personal income of the sportsperson — even if paid to a related entity.
The newer determination treats fame-income as assessable to the individual, closing previous loopholes for income splitting via trusts or companies.
Licensing structures and image-rights entities are no longer a guaranteed route to lower tax — increasing scrutiny from the tax authority.
Since the ATO now treats fame/image income as personal income, using separate entities for licensing offers limited (if any) tax advantage.
Sportspersons, entertainers, and other public-facing individuals must reassess endorsement, sponsorship and licensing deals — tax treatment has changed.
Contracts and payment structures agreed under old rules may now lead to higher tax rates or compliance risk under the new rules.
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Frequently Asked Questions
What kinds of payments does this guidance apply to?
It applies to payments made under a sportsperson’s playing contract or collective bargaining agreement when the payment includes remuneration for appearances or promotional obligations tied to their public “fame” or “image,” or payments under a licence agreement granting use of their fame/image.
What is the “safe-harbour” in the guidance?
Under the safe-harbour, the ATO accepts that up to 10% of the total playing contract value may be attributed to use of public fame/image — simplifying apportionment between performance income and image/fame-related income.
Can these payments be directed to a related entity rather than the individual?
Yes — if a sportsperson grants a licence to an associated resident third-party (e.g. a related company or trust), payments for use of their fame/image under the licence may be received by that entity.
Does the guidance still apply now?
The original safe-harbour guidance (draft PCG 2017/D11) has since been withdrawn. As of the more recent ruling Taxation Determination 2023/4, the ATO confirms that income from fame or image paid to a related entity should instead be treated as assessable income of the individual.
What is the tax implication under the 2023 ruling for sportspersons (or celebrities)?
Under the 2023 ruling, payments derived from a person’s fame or image — even if received by a related entity — will be assessed as ordinary income in the name of the individual, rather than the entity. This removes many of the tax-planning benefits previously available under image-licensing arrangements.
Can image-related payments be directed to someone else (like a connected third party)?
Yes — under a licensing agreement, these payments can be directed to a connected resident third party, provided specific conditions are met.
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