Taxation law
Top of Form
Introduction
The issues in this case are matters of Question of Law rather than Question of Facts. The in depth examination of case laws and statutes is essential to identify the issues and remedies for this case.
The main issues in this case are
1. Whether the income from amateur sports, reimbursement of travel and other expenses paid by TV stations, collections from spectators, government grants, free equipments from golf clubs and sporting firms are taxable ?
2. Consequence of the advice given by Karrie's Cousin, who is an ATO Staff.
3. Could Karrie apply the same ruling after two years the ruling was issued and after she becoming a professional?
4. Can Sporting Elite's other clients prepare their returns based on the ruling issued to Karrie?

The first issue is regarding the taxability of income of an amateur sportsman from different sources.
Generally the taxability of the income generated from a amateur sport depends mainly on the factor that if the activity of the sportsperson constitutes a business or not. The intention or motive of the person is irrelevant, the main issue is if he/she is engaged in a business or not.
The assessable income of a tax payer as per Income Tax Assessment Act should include: “the value to the taxpayer of all of all allowances, gratuities, compensations, benefits granted to him in respect of, or for or relation directly or indirectly to, any employment of allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or services rendered by in him, whether so allowed, given or granted in money, goods, land, meals, sustenance, the use of premises or quarters or otherwise ”
The question as of the tax status of income from the grants and other money that athletes were receiving was clarified by a unanimous High Court decision in Commissioner of Taxation v Stone . The High Court held that sponsorship and appearance money as well as prize money and training grants, earned by Olympic javelin thrower, Joanna Stone, are subjected to tax for the relevant tax year. The court also if a person has profit, he could be considered as engaging in a business even if his aims are idealistic and are not monetary based.
The court further note that the taxpayer's athletic success is the reason for her receving prize money and the deals of sponsorship. Those financial rewards are rewards for her athletic success, which is the conduct of her business. Hence the Court stated that the Commissioner's decision to disallow the tax payer's objection in including the grants in her taxable income was correct. The transformation of athletic talent to money is construed as business by the Court and held that the income from grants and prize money are all taxable.

Here if we consider Karrie Wood's case, the income earned from government grants, the reimbursement of travel expenses, collection from the spectators are all taxable since the activities of Karrie Wood constitute a business irrespective her intention to be an amateur golfer.
The second issue is regarding the consequences of the advice given by Karrie's Cousin, an ATO staff.
Karrie sent an email to the ATO staff in her official email address regarding the taxability of the reimbursement receipts and the collections from the spectators. Her cousin replied through her same official email address stating that the receipts are not taxable since she is an amateur.
The ATO staff relied on public ruling that amateurs' income is not taxable. She did not consider the individual circumstances of Karrie.
It is mandatory for staff to search for and follow Law Administration Practice Statements (LAPS) relevant to the tasks they are performing. Failure to follow a relevant LAPS can result in disciplinary action .
Although LAPS provide direction and assistance to tax office staff, they are published and approved for taxpayers to rely on them in the same way as other publications rulings can be relied