AFL and NRL Preparing for Impact of Tax Law Changes

Australian football codes are preparing for the impact of changes to the ‘living away from home’ tax allowance that come into effect next month.

The narrowing of the allowance will make transfers to interstate and overseas clubs financially less attractive both to players and coaches.

The change is expected to have the biggest impact on West Coast rugby clubs and young players who move interstate to join the squads of National Rugby League (NRL) and Australian Football League teams(AFL).

The living away from home allowance (LAFHA) is a government benefit offered to Australian citizens who have to move interstate or overseas for work, as well as to overseas employees who come to Australia for their jobs and hold a temporary work visa. In effect, the allowance reduces the taxable incomes of those eligible to receive it.

But the federal government from July 1 will limit the tax exemption to only those who can demonstrate that they are maintaining a residence for their personal use in Australia and that they are living away for work purposes.

Anyone claiming the allowance will also be required to substantiate their expenditure on accommodation and food.

The NRL wrote to the Assistant Treasurer David Bradbury and the Minister for Youth Peter Garrett in May asking that players under the age of 25 be exempted in the hope that the exemption would pervent young players being discouraged from leaving their family homes.

The AFL is likely to be affected most by the changes although it is yet to take any action.
“We’re still assessing the potential impact on AFL players and AFL staff required to move interstate,” an AFL spokesman said.

In the case of the Super League rugby club Western Force, the new tax laws could make the task of attracting players from the east coast to Perth even harder.

“We have 19 players out of our squad of 35 players, as well as a number of the coaching staff who are currently in the LAFHA system,” Force chief executive Vern Reid said yesterday.

“I know in one case the overall benefit is approximately $(AU) 30,000 a year, while for an extended playing squad player making $(AU) 40,000 a year, $(AU) 4,200 of that comes from the allowance.”

At present, players and coaches are allowed to claim the allowance for two years, after which they are considered by the Australian Taxation Office to have effectively moved home.

“Clearly we believe we already are at a disadvantage when it comes to recruiting and this is going to add to our difficulties. Agents will factor in what a player would have received under the allowance and then suggest that someone is going to need to make up that shortfall,” Reid said.

Rugby Union Players Association (RUPA) boss Greg Harris said the allowance changes will cause further difficulties for Western rugby clubs.

“RUPA is looking into the problem but unfortunately that’s a cost of business consideration for the WA club and the Australian Rugby Union needs to take that into account in making its grant allocations to the franchises,” Harris said.

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