25 August 1992 External T.I. 9218625 F - Amateur Athlete's Trust

By services, 7 July, 2022
Official title
Amateur Athlete's Trust
Language
French
CRA tags
143.1
Document number
Citation name
9218625
Severed letter type
Technical Interpretation - External
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
650153
Extra import data
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"field_proprietary_citation": [],
"field_release_date_new": "1992-08-25 08:00:00",
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Main text
  921862
24(1) C.R. Brown
  (613) 957-8954

Attention:  19(1)

August 25, 1992

Dear Sirs:

Re:  Taxation of Athlete Trust Funds

This is in reply to your letter of June 16, 1992 concerning the proposed amendments to the Income Tax Act which provide for the taxation of funds held in trust for athletes who are members of National Sports Organizations.

You have indicated that certain athletes as a matter of individual tax planning have incorporated corporations to be the beneficiary of the trusts established with the National Sports Organization.  The result is that endorsement income was subject to annual corporate tax rates.  In order to ensure that the National Sports Organization maintained control over the funds, the sole shareholder of the corporation was the National Sports Organization.  The National Sports Organization would then execute a declaration of trust indicating that once the athlete retired or turned professional, the shares would be turned over to the athlete.  In addition, a majority of the Board of Directors were individuals appointed by the National Sports Organization.

We agree with your view that the proposed legislation does not allow athletes who have organized corporations in the manner set out above to take advantage of the new proposed legislation to deal with athlete's funds held in trust and in particular to take advantage of the deferral of income available under the new proposals.

An individual who has such a corporation may be able to reorganize his or her current affairs to take advantage of the legislation.  However, the election to retroactively include amounts received in all the years after 1987 under the new rules would not appear to be beneficial.

We are informing our Current Amendments Division of this matter so they may consider if an amendment to the legislation should be recommended.

Yours truly,

for DirectorManufacturing Industries, Partnerships and Trusts DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

CC     Gord MurrayCurrent AmendmentsC. MuirheadDepartment of Finance