What is an Amateur Athlete Trust?

If you are a Canadian amateur athlete who earns income from endorsements, competitions, public speaking appearances, etc., then an Amateur Athlete Trust (AAT) may be right for you. An AAT enables athletes, like you, with the ability to store this income and grow your wealth tax-free.

Who is eligible to open an Amateur Athlete Trust?

An AAT may be established by an amateur athlete who is a member of a Registered Canadian Amateur Athletic Association and is eligible to compete in international sporting events as a Canadian national team member.

What are the benefits of an Amateur Athlete Trust?

There are significant income tax benefits realized when eligible income is contributed and retained within an Amateur Athlete Trust. These include:

• Deferral of income tax on income from endorsements, prize money, income from public appearances etc. for eight or more years,

• Deferral of income tax on investment income earned within the trust for eight or more years,

• Ability to generate RRSP contribution room with respect to income contributed to the trust.

In addition to the benefits above, in 2014, changes were made to the rules surrounding AAT’s which effectively allow income contributed to the AAT to qualify as earned income of the athlete for RRSP purposes, notwithstanding that amounts are retained in the AAT.

How does it work?

An eligible Canadian Amateur Athlete can contribute income earned from endorsements, prize winnings, speaking engagements, appearances, etc. to an AAT, which is then excluded from the income of the amateur athlete. There is no contribution limit on how much an athlete can add to their AAT. Once in the AAT, no tax is payable, including on investment income earned with the AAT. Money can be withdrawn from the AAT at any time, or, at the latest, eight years after the last year in which the athlete competed as a Canadian national team member. When money is withdrawn from the AAT it is included in the athlete’s income and then subject to tax. The tax rate will be the athlete’s marginal tax rate in the year the money is withdrawn.

How do I get started?

To create an AAT, you will need legal advice to establish the trust, and a tax advisory and financial advisor familiar with trusts to help facilitate the ongoing management. There will be legal costs to establish the trust, and there may also be costs for the ongoing management.

Complimentary Athlete Trust Analysis

Is an amateur athlete trust appropriate for you? RBC Royal Bank has been helping Canadian Athletes since 1947. With advisors across Canada, we can help you determine if an Amateur Athlete Trust is right for you. For a complementary analysis, please contact John Hastings an Investment Advisor at RBC Dominion Securities and a former member of the Canadian National Kayak Team, and an alternate on the 2012 Olympic Team. John, who is located in Ottawa, is happy to discuss the merits of an AAT and connect you with an RBC advisor in your region.

John Hastings, MBA, Investment Advisor, RBC Dominion Securities