January 27, 2017
Prescribed Prizes – Olympic Athletes Medal Tax
Canadian Olympic Athletes Medal Tax
In Canada, prizes received for achievement in a field of endeavor, other than prescribed prizes, are required to be included in income. Canada Revenue Agency (“CRA”) has confirmed that a cash prize received by an Olympic athlete as a performance award is not a prescribed prize and is included in the athlete’s income. Canada awards its medalists from the Olympics with $20,000 for gold, $15,000 for silver and $10,000 for bronze.
What Are Prescribed Prizes?
Prescribed prizes are described as prizes for meritorious achievement in the arts, the sciences, or service to the public. The CRA’s Income Tax Folio notes that a Nobel Prize or the Governor General’s Literary Award would be considered a prescribed prize and therefore not taxable.
US Olympic Athletes Medal Tax
New rules apply in the United States pursuant to the Appreciation for Olympians and Paralympians Act of 2016, which states that “athletes do not include the value of any medal awarded in, or any prize money received from the U.S. Olympic Committee on account of, competition in the Olympic Games or Paralympic Games” as long as the athlete’s gross income does not exceed $1,000,000. When applying these new rules to Olympic medals, an exemption will be granted for the bonuses received by medalists. Currently, the the U.S. pays to the athlete $25,000 for gold, $15,000 for silver $10,000 for bronze. Originally, the only exception from the income inclusion was for the Nobel Prize.
Conclusion
If you’re an Olympic athlete and don’t want to pay tax, compete for the U.S. However, if you’re really smart and could win a Nobel Prize, do it in Canada!
Please contact Steve Reed, CPA, CA of the Manning Elliott Tax team at 604-714-3600 for assistance with the taxation of your Olympic or Nobel prizes.
The above content is believed to be accurate as of the date of posting. Canadian Tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.