The prize money South African Olympic medallists have received will be taxed‚ the South African Revenue Service (Sars) says.
Sports Minister Fikile Mbalula announced on Tuesday that the cash rewards for athletes would be increased‚ accompanying the news of the bonsela by calling himself “Razzmatazz‚ Mr Christmas is here”.
Individual athletes‚ teams and relay teams that earn gold medals would get R500 000‚ with coaches getting a R100 000 share of the winnings and R400 000 going to the athlete or team.
A silver medal was worth R250 000 – R200 000 going to the athlete or team and R50 000 to the coach.
A bronze was worth R100 000‚ with R80 000 for the athlete and the coach bagging R20 000.
On top of the R500 000‚ Wayde van Niekerk will receive‚ Mbalula said‚ an additional R150 000 for breaking a world record.
Caster Semenya‚ who bagged a popular gold medal on Sunday‚ will be awarded R100 000 more‚ while silver and bronze medallists would receive an additional R70 00 and R50 000 respectively.
Sars spokesperson Sandile Memela said the prize money is taxable.
“The athletes who compete at the Olympics are professional or semi-professional sportspersons‚” Memela explained.
“Just as businesspeople use their skills and talents to earn business income‚ which is taxable‚ so do competitive sportspersons.”
He said prizes the athletes received‚ whether paid in cash or in kind‚ will form part of the sportspersons’ “gross income” and will be taxed as such.
“Should a prize be in the form of goods or services‚ for example‚ a motor car or free services‚ the open market value of the relevant goods or services will be included in gross income.
“As noted above‚ all prizes‚ irrespective of whether they are paid in cash or in kind‚ would fall within the professional sportsperson’s ‘gross income’.
“A medal would constitute a prize in kind‚ and accordingly tax would be paid on the open market value of the medal‚” Memela said
He said a sportsperson would need to register for and pay provisional tax on the prizes‚ medals‚ and any other amounts that they received outside an employment relationship.
“If a sportsperson is required to pay any taxes on prizes and medals in Brazil under Brazilian domestic law‚ the sportsperson would be entitled to claim a foreign tax credit of those taxes paid against his or her South African tax liability‚ subject to the ordinary rules for foreign tax credits being complied with.”
According to Sars‚ gross income from sporting activities is taxed in a similar manner to gross income from other sources.
“All gross income earned during a year of assessment (March 1 of each year to the last day of the following February) is added together‚ appropriate deductions are taken into account and the net amount is taxed according to the personal tax rates in force for that year.
“The rates are progressive‚ meaning that the more a person earns‚ the higher the tax rate becomes. Each individual’s tax rate will depend on other income earned during the year‚ so it cannot be said which tax rate will apply to each competitor’s prizes‚” Memela added. – TMG Digital
Taxman to take its cut of Mbalula’s bonsela to Olympic medallists
The prize money South African Olympic medallists have received will be taxed‚ the South African Revenue Service (Sars) says.
Sports Minister Fikile Mbalula announced on Tuesday that the cash rewards for athletes would be increased‚ accompanying the news of the bonsela by calling himself “Razzmatazz‚ Mr Christmas is here”.
Individual athletes‚ teams and relay teams that earn gold medals would get R500 000‚ with coaches getting a R100 000 share of the winnings and R400 000 going to the athlete or team.
A silver medal was worth R250 000 – R200 000 going to the athlete or team and R50 000 to the coach.
A bronze was worth R100 000‚ with R80 000 for the athlete and the coach bagging R20 000.
On top of the R500 000‚ Wayde van Niekerk will receive‚ Mbalula said‚ an additional R150 000 for breaking a world record.
Caster Semenya‚ who bagged a popular gold medal on Sunday‚ will be awarded R100 000 more‚ while silver and bronze medallists would receive an additional R70 00 and R50 000 respectively.
Sars spokesperson Sandile Memela said the prize money is taxable.
“The athletes who compete at the Olympics are professional or semi-professional sportspersons‚” Memela explained.
“Just as businesspeople use their skills and talents to earn business income‚ which is taxable‚ so do competitive sportspersons.”
He said prizes the athletes received‚ whether paid in cash or in kind‚ will form part of the sportspersons’ “gross income” and will be taxed as such.
“Should a prize be in the form of goods or services‚ for example‚ a motor car or free services‚ the open market value of the relevant goods or services will be included in gross income.
“As noted above‚ all prizes‚ irrespective of whether they are paid in cash or in kind‚ would fall within the professional sportsperson’s ‘gross income’.
“A medal would constitute a prize in kind‚ and accordingly tax would be paid on the open market value of the medal‚” Memela said
He said a sportsperson would need to register for and pay provisional tax on the prizes‚ medals‚ and any other amounts that they received outside an employment relationship.
“If a sportsperson is required to pay any taxes on prizes and medals in Brazil under Brazilian domestic law‚ the sportsperson would be entitled to claim a foreign tax credit of those taxes paid against his or her South African tax liability‚ subject to the ordinary rules for foreign tax credits being complied with.”
According to Sars‚ gross income from sporting activities is taxed in a similar manner to gross income from other sources.
“All gross income earned during a year of assessment (March 1 of each year to the last day of the following February) is added together‚ appropriate deductions are taken into account and the net amount is taxed according to the personal tax rates in force for that year.
“The rates are progressive‚ meaning that the more a person earns‚ the higher the tax rate becomes. Each individual’s tax rate will depend on other income earned during the year‚ so it cannot be said which tax rate will apply to each competitor’s prizes‚” Memela added. – TMG Digital
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