We’ve been working on a list of tax deductions for Canadian professional athletes, and in doing so, have compiled this list.
As of the date of posting this, this list is believed to accurate, although may or may not be inclusive of every possible deduction. In addition, there is no supporting legislation linked to these deductions – that will be coming. This list, is therefore not meant to be taken as fact, it’s always prudent to check and double check eligible deductions, to ensure that all possible deductions have been claimed and that none are missed.
Tax deductions unique to professional athletes.
1. Meals and Incidental Travel Expenses – According to tax law, a taxpayer who travels for business purposes can deduct “ordinary and necessary” travel expenses including meals, tips, local travel (such as taxi fare, rental cars, and other modes of transportation), as well as other miscellaneous expenses. Taxpayers have the option of either documenting their actual expenses or deducting a per diem amount per tax law.
2. Temporary Housing – Temporary living expenses may be deductible under certain circumstances. Law provides for deduction of these expenses if they stay in a location is temporary in nature (generally less than one year) and at the convenience of your employer. A lot of times minor league players fall into this category. In most cases, the living expenses of a player competing at the major league level will not be deductible given the indefinite nature of the stay.
3. Clubhouse Dues – Clubhouse dues are deductible as ordinary and necessary business expenses. It is best to pay these dues by check so there is acceptable documentation to support the payment was made. If you cannot pay by check, ask for a receipt from the clubhouse manager to save for your records.
4. Health Club and Training Expenses – Most or all of the conditioning and training expenses incurred by professional athletes are deductible as a miscellaneous itemized deduction.
5. Equipment – Most or all equipment purchased by a professional athlete used in competition or training is either wholly deductible or able to be deducted by taking a depreciation deduction over a number of years.
6. Union Dues – Union dues paid to a Players Association are deductible as a miscellaneous itemized deduction.
7. Agent and Management Fees – Fees paid to an agent or to a manager are tax-deductible, as are fees paid for account and tax preparations and consulting.
8. Charitable Giving and Planning – Charitable planning can play a significant role in the career and life of a professional athlete. If a plan is structured properly, the athlete can marry the goals of supporting causes that are meaningful to their family and him/her both during his playing days and long after they have retired.
This can be achieved while maximizing his/her charitable income deductions during his high income/high tax bracket years. Philanthropic athletes who don’t consider a formalized plan to integrate their desire to help others with a well thought out tax strategy would be doing themselves a grave disservice.