File: 11930-2(MB)
Doc: 502R
Ref: S. 11of Pt VI to Sch V
Dear XXXXX
This is in reply to your request of February 28, 1994 requiring clarification on the definition of the word "professional" in the context of section 11 of Part VI of Schedule V of the Excise Tax Act (ETA) and as applicable to the XXXXX sponsored by XXXXX[.]
Statement of facts:
1) Participants competing in the XXXXX will be eligible to win a cash prize of approximately XXXXX[.]
2) The XXXXX a regulatory body does not identify athletes as either "professional" or "amateur".
Issue:
When will athletes participating in a XXXXX be considered "professional participants" pursuant to section 11 of Part VI of Schedule V of the ETA?
Reply:
The exemption under section 11 of Part VI of Schedule V of the ETA does not apply where there is:
"... a supply of a right to be a spectator at a competitive event in which cash prizes are awarded and in which any competitor is a professional participant in any competitive event."
Although the term "professional participant" is not defined in the legislation, a professional may be defined as an individual who generally competes in a sport for financial reward. Emphasis should be placed on the term "generally", which will give latitude to the exclusion of individuals who occasionally compete for cash awards. Examples of professional athletes might be professional football players who compete in sports for salary and professional boxers who compete for cash prizes.
In determining an athlete's amateur/professional status, the Department would also consider the status of an athlete as determined by a regulatory body such as its national sport association. The criteria established by these regulatory bodies must however, meet our policy position of the definition of "professional".
The XXXXX does not determine nor does it regulate the "amateur/professional" status of athletes in the sport of curling; therefore, whether competitors in a XXXXX are "professional" for purposes of section 11, must be determined solely on the criteria of "an individual who generally competes in a sport for financial reward" and each event must be examined on its own merit.
For example, a supply of a right to be a spectator at a XXXXX where any of the competitors are determined to be professional for GST purposes and a cash prize of XXXXX is awarded, does not meet the requirements for exemption pursuant to section 11. In comparison however, an event such as XXXXX held recently in XXXXX by the XXXXX meets the provisions of section 11. Although there may be professional competitors at the event, cash prizes are not awarded and competitors strive to win a place on the XXXXX and not financial reward.
In determining whether an individual is a "professional participant", the following criteria may be considered:
1) Is there a regulatory body which governs the sport?
2) Does this regulatory body determine or regulate amateur and professional status for this particular sport?
3) Do these regulations meet our policy position as defined above?
4) If there is no regulatory body, or, if regulations established by the regulatory body do not meet our policy, then are the athletes who are participants known to compete in similar tournaments for cash?
These questions are intended to gather further facts which may assist in establishing an athlete's professional status relevant to section 11, of Part VI of Schedule V of the ETA.
If you have any comments or questions concerning the above, please do not hesitate to contact Joanne Houlahan at (613) 954-7945 or Michèle Brûlé at (613) 952-9208.
Yours truly
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
c.c.: Joanne Houlahan
Michèle Brûlé
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