Tax breaks for rugby bodies

Robbie Deans's Wallabies won't pay tax on New Zealand earnings. Photo / Dean Purcell

The Government has confirmed special tax breaks in the Budget for the two major rugby organisations behind the Rugby World Cup.

Finance Minister Bill English confirmed the Crown would reimburse income tax incurred by Rugby New Zealand 2011, the company set up to run the tournament, and also by the New Zealand Rugby Union where it was involved.

Separately, the Crown has agreed to reimburse the union for withholding tax incurred on payments made in relation to the tournament.

Inland Revenue has clarified that anyone representing overseas unions or official overseas rugby organisations also won't have to pay tax on income received from games or Cup-related activity while in NZ.

Visitors not part of official overseas rugby bodies may also be spared the taxman's pinch, but may get 20 per cent tax deducted from appearance money or prizes received - including any bonuses handed out because their team made the semifinals.

Interest.co.nz managing editor Bernard Hickey slammed the Government for giving tax exemptions to rugby organisations when it had just announced it was halving its KiwiSaver member tax credit.

"The question is, why is the Government giving tax breaks to professional rugby players and their administrators when mums and dads have just seen one of their savings tax breaks cut?

"Giving tax breaks to professional rugby unions paying professional rugby players an awful lot of money seems like special savings for special people - and you can't get more special in New Zealand than rugby players."

Rugby New Zealand 2011 has forecast a loss of $39 million for hosting the tournament.

It will pay for accommodation, transport and other services for visiting teams, offsetting those costs with ticket sales.

The loss will be paid two-thirds (67 per cent) by the Government and the remainder by the NZRU.

The tournament is expected to bring in $500 million.