11 Sep The amateur athlete Trust an underused tax tool
Few high-level amateur athletes know about the amateur athlete trust. Talking about money with other athletes is often seen as taboo and information on financial management for these individuals, with their particular status, is not easily accessible. Below, we aim to shed light on the subject and share the expertise we have gained with our athlete clients, because above all, the amateur athlete trust is a very advantageous tax tool.
The amateur athlete trust in a few words
The Amateur Athlete Trust (AAT) is a tax tool that allows amateur athletes to deposit their performance income in a tax-exempt account for the duration of their athletic career.
Who is it intended for?
The AAT is for amateur athletes who earn income in connection with their performance in a sport. To be considered an amateur, the athlete must meet all three of the following criteria:
- be a member of a registered Canadian amateur athletic association;
- have qualified to compete in an international sporting event sanctioned by an international sport federation as a member of the Canadian national team;
- and not be a professional athlete.
What kind of income can be contributed to an AAT?
It is important to know that most performance income received by athletes is taxable. The majority of scholarships are as well. Other income that can be placed in the trust includes income originating from sponsorships, public appearances, prizes, contracts or any other source related to the athlete’s athletic activities, as long as it is earned in connection with the athlete’s participation in international sporting events.
It should be noted that only financial assistance received through athletes’ cards is not taxable. It therefore does not need to be placed in the trust.
How long does the AAT stay open?
The AAT ceases to exist in the eighth year of the athlete’s retirement from international sporting events. For example, if an athlete retires in 2018, the trust could exist until 2026. As a result, the total amount in the AAT continues to grow on a tax-sheltered basis during this period. Keep in mind, however, that it is not possible to add money to the trust after the end of the athlete’s sporting career. The full amount in the AAT is taxed the year it is dissolved.
Blue Bridge: a service dedicated to amateur athletes
Blue Bridge has launched a service dedicated to high-level amateur athletes, providing them with a full range of services: access to a fiduciary, personalized advice on managing their requested portfolio, very close monitoring of their file, a concierge service and the possibility of having their annual tax returns filed.
For any other questions, please contact us to discuss your specific case. Our team will be happy to help guide you in your next decisions.
If you are intrigued, I invite you to attend our next seminar for elite athletes on October 15.
Here’s a sneak peek: