Sports insights - April 2025

Bringing you the latest legal news, information and insights impacting the sport and leisure industry.

ATO rules on athlete support

Last month, the Commissioner of Taxation delivered Class Ruling 2025/20 (Ruling) concerning the financial benefits provided to elite athletes by national sporting organisations (NSOs) in Australia. This edition of Sport Insights unpacks the Ruling and what it means for NSOs looking to assist with the training, competition and living requirements of their athletes to give them the best chance of success at the Olympics, Paralympics, Commonwealth Games or world championships.

Athlete support agreements

The Ruling refers to a scheme whereby NSOs can enter into a contractual agreement with selected elite athletes which allows for:

• the NSO to provide financial benefits which support the athlete's pursuit of sport at an elite level (including payments for living expenses, travel, equipment, training support and appearance fees); and
• both the NSO and the athlete to be bound by minimum expectations with respect to their dealings with each other in connection with sport.

The template athlete support agreement (Template Agreement) provided by the Australian Sports Commission (ASC) can be entered into for a fixed term ranging from 12 to 24 months. While NSOs are not required to enter into the Template Agreement specifically, they still need to have some form of binding agreement in place which sets out the minimum standards expected of athletes in order to remain eligible for grant funding from the ASC.

Status of payments made under a Template Agreement

As a result of the Ruling, athletes receiving payments under a form of the Template Agreement are not considered employees of the relevant NSOs, and are assumed not to be carrying on a business of participating in sport.

This means that payments and benefits provided under the Template Agreement will not give rise to a pay as you go (PAYG) withholding or fringe benefits tax obligation for NSOs. The Ruling took effect on 6 March 2025 and applies until 30 June 2029.

Minimum expectations of athletes

Elite athletes chosen to represent Australia are considered to have greater responsibilities in light of their role modelling effect and the potential impact on the image of their sport. This is reflected in their obligations under the Template Agreement, where they are expected to (amongst other things):

• be able to compete at an elite or high-performance level;
• pursue their development by attending and participating in training sessions, camps, tours, events and competitions;
• comply with the code of conduct and rules of their NSO (including anti-doping policies), and not bring themselves or their NSO into disrepute;
• wear prescribed uniforms and act consistently with their NSO's sponsorship arrangements; and
• not play, train or participate for another international team, club or sport without the prior written authorisation of their NSO.

Employment status

The combination of payment to and imposition of obligations on athletes has historically created a question about their employment status and corresponding entitlements.

While there is no one determinative factor when considering whether an employment relationship exists, the more control an engaging entity can exercise over how, when and where someone performs work will increase the chance that they are in fact an employee. Ultimately, employment status depends on an objective assessment of the totality of the relationship between parties, having regard to the legal rights and obligations which constitute that relationship.

The Ruling states that where the terms of a relationship have been comprehensively committed to a written contract, it is the legal rights and obligations in that contract alone which is relevant to determining employment status. This can be contrasted with the position under the Fair Work Act 2009 (Cth), where primacy is no longer given to contract and whether an employment relationship exists is determined by ascertaining its "real substance, practical reality and true nature".

To that end, the Ruling provides that the character of the relationship between athletes and NSOs (if committed in the terms of the Template Agreement) does not rise to the level of control found in an employment relationship. This is in circumstances where:

• the Template Agreement does not dictate how athletes should maintain their fitness or undertake their training, and these activities are primarily for the benefit of the athlete rather than the NSO;
• the requirement for athletes to wear a uniform is a near universal requirement for participating in sport, and often imposed by an international governing body rather than being an exercise of control by the NSO;
• the payments provided to athletes are not specifically for them to attend events such as the Olympic or Commonwealth Games - rather, it is a natural incident of this financial support that athletes are enabled to train, recover and compete (in order to reach their potential); and
• the requirements to adhere to certain anti-doping and integrity policies are not sufficient to ground an employment relationship.

Key takeaways

The Ruling means that, by adopting a form of the Template Agreement, NSOs can have an increased degree of confidence that the provision of financial support alone will not be enough to create an employment relationship with athletes. As a result, payments made pursuant to a Template Agreement will not give rise to PAYG withholding or fringe benefits tax obligations for NSOs.

Lander & Rogers is well placed to advise on and assist NSOs with tailoring the ASC's Template Agreement for their organisation and thereby minimise the deemed employment risk. Please contact a member of our Sport & Leisure Team if we can assist.

Sport and leisure budget allocations 2025-26

The Australian Government delivered the 2025-26 Federal Budget on 25 March 2025. The funding will be used to advance the new National Sports Strategy launched in November 2024.

As part of this years' budget:

• The Australian Sports Commission (ASC) will receive approximately $470 million;
• Sport Integrity Australia will receive approximately $50 million;
• The Australian Sports Foundation will receive approximately $128 million.

The government will also support other sport initiatives:

• $132 million in 2025-2026 to improve health outcomes through preventative health and other health initiatives. Included in this funding is:
  • $3.2 million to the ASC to increase participation for women and girls in sports leadership, including in coaching, officiating and sports administration; and
  • $13.6 million to the New South Wales Government for the St George Illawarra Dragons Community and High Performance Centre. This Centre will provide sporting facilities for both high performance programs and programs focused on community participation.
• As part of the Critical Support for Multicultural Communities Grant Program, $15 million will be granted over three years from FY26 to the Aspire Performance Centre, which will serve as the primary location for the Bachar Houli Foundation and the Islamic College of Sport.

For more information, see Budget Paper No. 2, Budget Paper No. 4 and new National Sport Strategy.

For more information or enquiries about changes impacting the sport and leisure industry, contact Lander & Rogers' Sport & Leisure team.