Exploring South African Tax Consequences of Compensation Received by Amateur Rugby Players

• Citation: (2024) 36 SA Merc LJ 59
• DOI: https://doi.org/10.47348/SAMLJ/v36/i1a3
• Published date: 14 January 2025
• Pages: 59-86
• Author: Van Wyk, D.
• Date: 14 January 2025

JOBNAME: SAMLJ Vol 31 Part 1 PAGE: 1 SESS: 42 OUTPUT: Sat Nov 23 10:07:40 2024 SUM: 37BFC931

/first/Juta−JM/SA−Merc−2024/SAMLJ−2024−V36−pt1/03VanWyk

EXPLORING SOUTH AFRICAN TAX

CONSEQUENCES OF COMPENSATION

RECEIVED BY AMATEUR RUGBY PLAYERS

DANIELLE VAN WYK *

Senior Lecturer in Accounting at the School of Accountancy, Faculty of

Economic and Management Sciences, University of Stellenbosch.

CARA THIART

†

Lecturer in Taxation at the School of Accountancy, Faculty of Economic

and Management Sciences, University of Stellenbosch.

Abstract

Both professional and amateur rugby players participate in

community rugby. There is currently no guidance in the South African

literature that expressly addresses the possible tax consequences of

compensation received by amateur rugby players, if any. The objective

of this article is therefore to explore the potential tax consequences of

such compensation. The research approach entails an exploratory

study, adopting a qualitative research approach in the form of an

extensive literature review and an international comparative analysis.

The study provides contradictory insights on the common perception

that compensation received by amateur rugby players has no tax

implications in South Africa. The study found that contracted amateur

rugby players are considered employees of community rugby clubs and

their compensation, depending on the nature, is in most instances

taxable. Non-contracted amateur rugby players whose compensation

consists of only the reimbursement of bona fide expenses are not

considered employees of community rugby clubs, although

reimbursements received may be subject to taxation. The findings are

compared to current taxation practices of sports players in Australia,

New Zealand, Singapore, and the United Kingdom. The research is

valuable to amateur rugby players and community rugby clubs to

ensure tax compliance and improved compensation practices.

* CA (SA); MAccounting (Taxation) Cum Laude (Stell).

†

CA (SA); MAccounting (Taxation) (Stell).

002 - SA Mercantile Law - November 21, 2024

59 https://doi.org/10.47348/SAMLJ/v36/i1a3

(2024) 36 SA Merc LJ 59

© Juta and Company (Pty) Ltd

JOBNAME: SAMLJ Vol 31 Part 1 PAGE: 2 SESS: 42 OUTPUT: Sat Nov 23 10:07:40 2024 SUM: 3E9FC50D

/first/Juta−JM/SA−Merc−2024/SAMLJ−2024−V36−pt1/03VanWyk

Keywords: amateur rugby player; employee; independent contractor;

remuneration; reimbursements; employer; income tax; South Africa;

Australia; New Zealand

I INTRODUCTION

Tax matters in the South African sports industry have generally lagged

behind other industries (such as the mining, manufacturing and

insurance industries) because of a lack of quantum of litigation,

academic scholarship, and legislative action devoted to it. As recently as

2018, the South African Revenue Service (SARS) issued guidance on the

South African tax consequences of professional sports clubs and players

(‘the guide’).

1

Owing to limited academic research and the uncertainty

regarding the taxability of amateur receipts in South Africa, it is

important to explore the issues, for which challenges may be

encountered in order to provide possible solutions.

The article is arranged as follows: Part I Introduction, Part II Research

design, Part III Literature Review and Results Discussion, Part IV

International Comparative Analysis and Part V Conclusion.

(a) Orientation

Neither the guide nor a specific law provides a definition for a

professional sports player. However as per the guide, words such as

‘sports player’, ‘athlete’, ‘sportsperson’ or ‘player’ are used

interchangeably to mean any person who participates in a sport as a

professional. Generally, these types of sports players earn their income

by getting paid to play sports. The guide further acknowledges that the

tax treatment of compensation received by professional sports players

will depend on whether players are employed by clubs or are

independent contractors.

2

Although rugby and cricket are not considered among the highest-

paying sports worldwide, rugby is the highest-paying sport in South

Africa.

3

After soccer, rugby is the most popular sport in South Africa.

4

1

South African Revenue Service (SARS), ‘Guide on the Taxation of Professional Sports

Clubs and Players’, 2018, available at https://www.sars.gov.za/lapd-gen-g08-guide-on-the-

taxation-of-professional-sports-clubs-and-players/, accessed on 29 January 2020.

2

South African Revenue Service (SARS), 29 January 2020.

3

Greater Good South Africa, ‘Greater Good SA’, 2023, available at https://www.

myggsa.co.za/the-highest-paid-sport-in-south-africa-rugby-union/, accessed on 31 January

2023

4

South African Rugby, ‘SA Rugby’, 2020, available at https://www.sarugby.co.za, accessed

27 March 2020.

002 - SA Mercantile Law - November 21, 2024

https://doi.org/10.47348/SAMLJ/v36/i1a3

(2024) 36 SA MERC LJ

60

© Juta and Company (Pty) Ltd