Skiing and sport

Funding, tax and the amateur athlete

These days, there are a lot of families with young athletes dreaming of making it in international competition. To do this, many of these athletes need additional funding to that obtained from the “Bank of the parents”. Does that have implications for you or your child’s amateur status? What does amateur status mean these days?

Actually, it seems to be simpler than in the old days. When it comes to the international competitions that our family dreams about, it isn’t much of an issue. To compete in the Olympics, you can have income related to your sport. You just can’t advertise it at the Olympics. They are serious about this. In Alpine sports, there are the international circuits called the North-American series, the Europa Cup and the World cup. How you obtain income doesn’t impact on whether you can compete in these competitions. The provincial and local competition circuits don’t check for income either.

The main group I’ve discovered to be very concerned with amateur status is the US college competition circuit—the NCAA or National College Athletic Association. This doesn’t mean that other school circuits may have an amateur definition, such as the United States Collegiate Ski and Snowboard organization, it’s just that I didn’t look farther.   

So the only amateur issue I’ve discovered, with respect to accepting funds or with advertising a sponsor, is that you would not be able to compete in NCAA. NCAA has an active Alpine racing program. I spoke to Peter Dodge, the Head Men’s Alpine coach at Dartmouth College—one of the best teams on the circuit. He noted that even if the athlete accepted a bursary from a Canadian provincial sporting organization, it could be in conflict with the NCAA amateur regulations. You can accept prize money, and you can accept funds to attend a meet, as long as the income doesn’t exceed the cost of attending. You can compete in a different sport to that which you have funding conflicts. It isn’t clear how close the sport can be. You are able to compete in golf, even if you get paid to play hockey. But if you have had funding for Alpine skiing, can you still race the skiing discipline of ski cross? You cannot use your image to advertise a product or, in turn, advertise a product with patches or your website. You can’t have a sport agent. There isn’t a clear rule book with NCAA. You have to apply on the site and have your case “adjudicated”. Suffice it to say, they are strict.

So is there any issue with accepting funds if you are not planning to race NCAA or some other post-secondary education circuit that might have an issue? Yes, but the reasons are all financial. If you just accept money, it is taxable income. That’s pretty simple.

 

There are ways to influence the tax issue. The Canadian national teams have accounts for the athletes where income can be deposited. I spoke with Tim Farstad, the Executive Director of Luge Canada. People or groups who donate funds to the athletes fall into two categories. One is a supporter and one is a sponsor. A supporter can donate to the team and get a tax benefit. A sponsor obtains advertising rights and does not get a tax receipt. If the athlete bills against such an account, with costs related to their sport, they don’t have an income.

Different provincial and national team programs have accounts for athletes that allow them to accept donations for covering training expenses. If the athlete uses these, then they don’t have to declare the income. Some associations, such as Alberta Alpine, even have a program that allows the donor to obtain a charitable tax receipt. 

The Canadian government has created an account stream with tax implications. The funds are held in trust by a third party and the athlete can choose to withdraw the funds at any time (within 8 years). The athlete pays tax when they withdraw the funds. It is unclear to me if NCAA would accept money being put into trust as per the Canadian athlete tax deferral account. However, if the athlete advertises for the company, NCAA will no longer class them as an amateur.

So, there are no problems taking funds and advertising a sponsor if you are competing in most athletic circuits—even up to the Olympics. There are issues with competing at the college level and there are tax implications.