Creating Wealth Alpha: The Amateur Athlete Trust

Apr 02, 2019 | John Hastings


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Technically speaking, I'm an investment advisor. However, I find that I am spending more time discussing tax-efficiency and wealth protection strategies with clients than before. Hopefully that isn't a reflection of my investment advice!!!    

 

As a former Canadian amateur athlete, I want to highlight the Amateur Athlete Trust. This is a lesser known tax efficiency strategy I speak about regularly with our Canadian Olympians and Olympic hopefuls in the RBC Olympian program and the Canadian Olympic Committee's Game Plan program. If you are an athlete, or parent/relative of an athlete, read on as this may come as welcome news to you.

 

These vehicles are designed for amateur athletes (who compete for Canada on a national/Olympic team) and earn income from sponsorship, speaking engagements, competitions, etc. With an Amateur Athlete Trust, an athlete can house and invest such sources of income in a tax-sheltered vehicle. More specifically, these athletes don't need to pay income tax on any of these revenues received and they don't pay any tax on any capital gains, dividends, or interest on the invested funds. In fact, they only pay tax when the funds are withdrawn from the trust.

 

The Amateur Athlete Trust isn't for every athlete, especially those who are just breaking even. For those where a trust is applicable (income far exceeds your expenses), the implications of deferring tax on income, interest, capital gains and dividend income is a pretty significant way to create wealth. Now, if you are a family member or friend of an athlete who just happens to own a business and looking at ways to support an athlete or transfer wealth in a tax-efficient manner, then an Amateur Athlete Trust may be worth further exploration. As is often the case, behind most successful Canadian athletes is a family member with wealth, and if leveraged properly, an Amateur Athlete Trust can be a major source of wealth alpha. 

 

Click here to learn more about Amateur Athlete Trusts.