The reason why your Olympic medal is taxable [en]

Winning an Olympic medal represents the pinnacle of a sporting career, an achievement that brings pride and recognition not only to the athlete, but to an entire country. To celebrate this achievement, the Canadian Olympic Committee offers performance bonuses through the Athlete Excellence Fund. These bonuses amount to $20,000 for a gold medal, $15,000 for a silver medal and $10,000 for a bronze medal.

Tax treatment of performance bonuses

In the wake of the recent Paris Olympic Games, many athletes who have flown the flag for Canada by winning a medal may be surprised to learn that the sums they receive as rewards are taxable in Canada.

In fact, bonuses received by Olympic athletes for their performances are considered taxable income by Canadian tax authorities.

For tax purposes, amounts received by a taxpayer in a taxation year as a reward for an achievement in a field of activity ordinarily carried on by the taxpayer, other than a prescribed prize, must be included in the taxpayer’s income for that taxation year.

Unfortunately, performance bonuses that an athlete receives through programs such as the Athlete Excellence Fund are not considered prescribed prizes, as they are not considered to be given in recognition of services to the public.

These amounts are therefore treated in the same way as any other employment income and must be declared by athletes on their income tax returns.

Possible deferral for amateur athletes

It is interesting to note, however, that in many cases, these bonuses can be placed in a trust for amateur athletes and thus benefit from a tax deferral.

The funds held in the trust will be taxable only on the earlier of the date they are distributed to the athlete or eight years after the last year in which the athlete was eligible to compete as a member of a Canadian national team.

However, this deferral option is only available to amateur athletes, not professional athletes (who receive compensation or income attributable to their activities as a player or athlete in a professional sport).

If you have specific questions or concerns about the taxation of your sports awards or any other aspect of your tax obligations, our tax team is here to help.

Please do not hesitate to contact us to discuss your specific situation and obtain advice tailored to your needs.