Income tax: special professional - sportsperson

Is the taxpayer, a professional golf caddy, a 'special professional' as defined in section 405-25 of Income Tax Assessment Act 1997 (ITAA 1997) ?

No. The taxpayer is not a 'special professional' as defined in section 405-25 of the ITAA 1997.

The taxpayer derives assessable income as a professional golf caddy. As a golf caddy, the taxpayer provides support to the competing golfer throughout the sporting event. This includes advice on distances, club selection, course layout and weather conditions.

Paragraph 405-25(1)(e) of the ITAA 1997 includes a sportsperson in the definition of special professional. Subsection 405-25(6) of the ITAA 1997 provides that a taxpayer is a sportsperson if they compete in a sporting competition.

Paragraph 405-25(7)(a) of the ITAA 1997 provides that a sporting competition is a sporting activity to the extent that human beings are the sole competitors or human beings compete by riding or exercising other skills in relation to animals; by driving, piloting or crewing motor vehicles, boats, aircraft or other modes of transport; or compete by overcoming natural obstacles or natural forces. In addition, paragraph 405-25(7)(b) of the ITAA 1997 provides that participation in the sporting activity by human competitors must involve primarily the exercise of physical prowess, strength or stamina.

Subsection 405-25(8) of the ITAA 1997 specifically exempts from the requirement in paragraph 405-25(7)(b) a navigator in a car rally, a coxswain in the activity of rowing or a competitor in a similar role in some other activity.

Clause 38 of the Explanatory Memorandum to the Taxation Laws Amendment Bill (No.4) 1987 discusses the definition of sport in the former section 158B of the Income Tax Assessment Act 1936 (ITAA 1936). Section 405-25 is the equivalent provision in the ITAA 1997 where the term 'sport' is now referred to as 'sporting competition' but the definition remains the same. Clause 38 of the Explanatory Memorandum states:

"Sport" is the central concept to the provision of a system of averaging for sportspersons. It is defined by reference to the activities by which a sportsperson competes and, by competing, takes a different role in the activities from those whose role is ancillary to the competitor - these persons are excluded either directly (in proposed section 158F - see below) or because their role does not involve them primarily in the exercise of physical prowess, physical strength or physical stamina.

The word 'compete' or 'competitor' is not defined in the tax legislation . The Australian Oxford Dictionary (1999, Oxford University Press, Melbourne), defines compete as to 'strive for superiority or supremacy'. Competitor is defined as 'a person who competes, a rival, esp. in business or commerce'. The Macquarie Dictionary (2001 Revised Third Edition, The Macquarie Library, Australia 2001) defines compete as 'to contend with another for a prize, profit, etc.; engage in a contest.'

In carrying out the activities of a golf caddy, the taxpayer is not competing in a sporting competition for the purpose of subsection 405-25(6) of the ITAA 1997. The taxpayer is not competing in the ordinary meaning of the term. By transporting golf equipment and providing guidance and advice to the golf player, the golf caddy is acting in an ancillary role to the person competing in the sporting competition.

The exception in section 405-25(8) of the ITAA 1997 relating to the exercise of physical prowess is not applicable in this case, as the role of a golf caddy is not that of a competitor in a role similar to that of a navigator or coxswain.

Consequently the taxpayer will not qualify as a sportsperson, and therefore a special professional, for the purpose of section 405-25 of the ITAA 1997.