Deputy McDowell raised this amendment at the select committee last week. What he is proposing is essentially a tax deduction presumed against a person's total income from all sources for expenses incurred by certain sportspersons, to be specified in regulations, in playing or training for their sport. This is to be regardless of whether that person derives any taxable income from the sport concerned. The deduction will be subject to a ceiling of €5,000 in any year with a minimum figure of €2,000 to be assumed to be incurred for this purpose.
Generally, in the tax code expenses are allowable only to the extent that they represent costs incurred wholly and exclusively in deriving income. In the case of employees, there is a further test in that the expense must also be necessarily incurred in the conduct of their employment. In the case of persons who earn income from their sport, any expenses incurred in playing or training will be, to the extent that they are not reimbursed normally, fully allowable for tax purposes against their sporting income.
Deputy McDowell's amendment would not help such cases – it may hinder them by imposing an annual ceiling of €5,000 on allowable expenses where there is none at present. Persons who do not earn income from their sport cannot claim a deduction for sports related expenses against their ordinary employment or business income for the simple reason that sports expenses are not laid out for the purpose of earning their income. I made the point at the select committee, and I repeat it, that it is not possible to get a deduction against earnings where no such earnings exist. The net effect of Deputy McDowell's amendment would, therefore, be to give an annual tax deduction of up to €5,000 to certain amateur sportspersons to the extent that their expenses are not reimbursed. Depending, of course, on the regulations referred to in the amendment, it may prove difficult to stop the extension of the tax relief to persons engaged in sport as primarily a leisure activity rather than as a competitive activity. For example, by effectively providing tax relief for subscriptions to golf clubs, such relief would potentially be enormously costly and it is difficult to see what exactly it is aiming to achieve.
There is no doubt the introduction of relief for retiring sportspersons under section 12 of the Bill has prompted a renewed debate on the question of amateurism versus professionalism in certain sporting codes. This debate has been ongoing for a number of years. The question of whether to pay certain categories of sportspersons is one to be decided by the sporting organisations concerned and has nothing to do with tax relief per se. There are much more fundamental issues involved in such decisions.
As regards amendment No. 15 put forward by Deputies Mitchell and McGrath, it is not clear from the amendment whether this relief is intended as a tax credit of €2,000 per annum or as an annual allowance at the standard rate or at the sportspersons marginal rate. While the relief is intended to be limited to Gaelic footballers and hurlers nominated by county boards, it does not appear to be restricted to senior inter-county players and is open-ended with regard to how many players each county may nominate. My unwillingness to give tax relief to amateur sportspersons has been portrayed in some quarters as a snub to the GAA and their top hurlers and footballers. As I explained to the select committee last week, the tax relief for retiring sportspersons, which I introduced this year and which is contained in section 12 of the Bill as initiated, is restricted to direct earning from participation in sport. It is wrong to suggest that it can, in some way, simply be extended to cover amateur sportspersons. It does not nor can it apply where no earnings exist.
I am more than happy to stand on my record of support for the GAA. Indeed, I came in for a fair amount of criticism when I granted the GAA the equivalent of over €25 million in 1998 to aid in the redevelopment of Croke Park. I am very well aware of the effort and commitment which the top players make to training and preparation and of the pleasure and enjoyment they give to the sporting public. During the discussions at the select committee, Deputy Deenihan described these players as elite athletes and I would not disagree with that description. There are, however, sportsmen and women in other amateur codes whose dedication and commitment to their chosen sport is equally impressive and who are also excluded from availing of this relief. The question of whether these sportspersons should be paid is entirely a matter for their governing bodies just as it is for the GAA with regard to its top players. I am not prepared to agree to this amendment either. Even if I was, it could not be limited to GAA players. Once a link between a tax relief and sports income is broken, it would become difficult, if not impossible, to stop its extension to persons engaged in sport primarily as a leisure activity rather than a competitive one. This would be very costly.
The GAA is already well treated in the tax code. The current tax exemption for the income of sports bodies was introduced in 1927 specifically for the games of Gaelic football, hurling and handball, and it was only in 1963 that it was extended to other sports. Where a sports organisation wishes to reimburse its members, whether players, coaches, selectors or referees, for bona fide and reasonable expenses they incur in attending training sessions, matches etc., those payments are not assessable to income tax. There is no set limit which can be reimbursed tax free in any year. It depends entirely on the facts in each case. In the context of amateur sports, the tax code should not be expected to contribute any more than this. I do not intend to give further tax relief in these circumstances as a substitute for salary and for these reasons, I cannot accept this amendment either.
At the select committee, I pointed out what this relief is about. It relates to the income a sportsperson earns directly from sport and from direct participation in that sport. When a sportsperson retires after usually a short earning career, he or she will be allowed to have his or her tax recomputed taking into account that there would be a 40% deduction against directly earned sports earnings. If a person is able to arrange his or her affairs in such a fashion that he or she pays no tax as a result of other allowances and reliefs and no tax is paid in that year, when it comes to having his or her tax recomputed, he or she will get no tax back. It is based on the very simple principle that most sportspersons' careers are short-lived, whether rugby footballers, jockeys, soccer players or whoever. Two of the three people my friend, Deputy McGahon, mentioned will not benefit from this relief because they are not tax residents in this country and have not paid tax here.
If one wants to talk about professional jockeys, I could name a couple of hundred fellows I have known over my lifetime standing on street corners in parts of Kildare and Meath without anything in their back pockets. Their earning careers were short-lived and they now have jobs which are a long way from the heady and glorious days when they were acclaimed by the public. These people had short careers and whatever money they made was spent at the time. They may have been injured or whatever and they had no earnings. This will apply to direct participation in sport and to the earnings people receive from that.
As regards the GAA, I received a very nice letter from the chairman of the Gaelic Players Association asking me, on foot of its recent meet ing with the Taoiseach, to set out formal clarification on a number of issues, which I will do. I would like to clarify the point regarding expenses. Expenses incurred are subject to the usual limits laid down by Revenue. People are not taxed on their expenses. If in any profession or walk of life one gets money dressed up as expenses, but which is over and above expenses, it is taxable. The idea of expenses is to reimburse one for expenses incurred. It is not intended that there will be a profit element. Whether the GAA addresses the matter of paying players is entirely a matter for itself, and Deputy Deenihan and others—
