Tax Department Drops Bombshell On Sports Bodies

Chronicle (Levin), 13 May 1948, Page 6

Tax Department Drops Bombshell On Sports Bodies

AUCKLAND, May 12. Two sports bodies, the Auckland Rugby League and Auckland Boxing Association, have recently been classilied as professional sporting bodies by the Land and Income Tax Department. The League has been required to furnish returns of income derived during the linancial years of 1947 and 1948 in order that its liability may be determined. The Boxing Association has received an assessment of about £380 as tax on its prolits in the season ended March 31, 1947. The departmental attitude was explained in a lettcr written by Mr. N. J. Ohapman, superintcndent at Auckland, to the League. "1 have to ad-vi-se, ' ' Mr. Chapman wrote, ' ' that liability for taxation of professional sporting bodies has been recently re viewed and it has been decided that such organisations are iiable for income tax and the social security charge on [jroiits derived from outside the circle of membersliip. " ■ Chapman declined to discuss the decision to tax the two bodies. Ile expJained that a seetion of thc Land and Income Tax Act, 1923, provided that iports bodies could be held liable for tax where the participants in tlie sport were in receipt of a pecuniary gain. The action of tho Department has creatcd consternation in the two organisations. Mr. D. A. Wilkie, chairman of the Rugby League Biard of Control. said his board had made a protest ugainst its classification. The League gatne was controlled on an amateur oasis, he said. Ruie 32 of the Auckland imugue's constitution specilically foroade members from receiving a pecun.ary gain from the property or opera- . ious of the League. The sole exeeption was that members of the League 's representative leani were pennitted to feceive £1 for out of pocket and traveiling expenses for each game played in Auckland, and lUs a day for each day spent on tour. ' ' 1 do not know of any instance of Uie League paying a member or player except as provided in the rule, since 1 was elected a member of the Control Board in 1933," said Mr. Wilkie. "J ani well aware of the board 's custom of paving amounts to clubs during the season s competitions and I know that tliese amounts usualiv vury from aboul 5:300 for the season in the cuse ref a very successful club lo about £(50 for a club which fmishes last in the cliampionship. I aiu not ofticially aware of hovv the amounts are distributed by the clubs but if each club paid its pJayers, Ihe ainount received by each player in vhe season would demonstrably be insufficient to make him a professional -portsman, that is, oue who earns his living at the game." Mr. It. L. Parrell, iinmediate pasl president of tlie Boxing Association, said the objects of the association wero to encourage and assist in the advanceaient oi scjonliiic boxing, to govern and Vegubile aniateur ajul professional boxand lo prouiote and carry out competitions iimler the rules of the New (iealand Boxing Association. It whs auulily admitted, Mr. Parrell said, that .he association promote'd professional )onts in wiiiih the contestants received i pecuniary gain. Nevertheless, the association cousidered that its classili•ation as a professional sporting body .as uiiiair becau.se the income, funds :. ud ■ property of tlie association were. iccording to the rules, applied solely loward tlie proiuotiun of tlie associa.ion's objects and under no circumstanccs were tliov paid or transferred li,rectiy or indirectly to members of tlie association. Apart from the professiunals, payinents made were to salaried oliicers, to authorised representatives or lo delegatos by way of reasouable expenses and honoraria. "1 suggesi the association is not a professional sporting body for the iinple reason that. members do not get" anything out of its activities/' Mr.' raiaell said. "Professional boxers who iei-eive a nionelary gain from ljouts .•onducted by the association are already liable in the nonnal course, for income tax and the social security charge. ' '