Counter Offensive: Pay Umpires don’t tax them

Classify umpire payments as hobby income under ATO guidelines, reducing unnecessary tax burdens and administrative workload.

6/18/20252 min read

“The hardest thing in the world to understand is the income tax.” - Albert Einstein

Situation: Umpires are often paid for their efforts, however do these payments constitute an income that needs to be taxed. With no tax expertise on the committee, clubs face this choice without all the facts, and risk penalising the very volunteers they are trying to retain.

THE COMMON APPROACH

Concept of Operations (CONOPS): Clubs generally play it safe by classifying umpire fees as wages subject to PAYG withholding. This “better-safe-than-sorry” stance ignores the Australian Taxation Office’s hobby-vs-business guidelines, under which hobby income need not be declared as assessable income. The result is over-taxation, inflated admin work, and frustrated umpires. For more on taking proactive, offensive action in club finance, see https://missioncomd.com.au/offensive-action.

Targetable Critical Vulnerabilities (TCVs):

  1. TCV 1: Unnecessary Taxation on Hobby Income. By treating hobby-based umpiring as employment, clubs withhold tax needlessly. According to the ATO, “you do not need to declare the amounts you make from your hobby.” Those recovered GST funds could even be used to employ a bookkeeper—freeing volunteers from paperwork and enhancing financial oversight.

  2. TCV 2: Excessive Administrative Burden. Payroll processing triggers PAYG reporting, superannuation obligations, and frequent ATO lodgements. Volunteer hours are sucked into compliance tasks that could vanish if hobby-income rules were applied.

  3. TCV 3: Discourages Umpires and Officials. Imposing employment-style taxation and admin on hobby umpires sends a message that clubs prioritise compliance over appreciation. This can deter officials at a time when their support is imperative to the smooth running of your competition.

THE COUNTER OFFENSIVE

Concept of Operations (CONOPS): Investigate the true nature of umpire payments under ATO hobby-vs-business guidelines. Where umpiring clearly qualifies as a recreational pastime—occasional and not run in a “business-like manner”—clubs can issue reimbursements rather than wages. This shifts umpires off payroll, avoids unnecessary withholding, and preserves funds for what matters most.
Disclaimer: This approach is not tax advice—clubs should seek professional guidance to confirm hobby classifications.

Decisive Events (DEs): To implement the strategy, achieve these DEs:

  1. DE 1: Classify Umpiring as Hobby or Business. Review ATO factors: frequency, profit intent, scale, and organisation. If umpiring lacks a commercial purpose and is pursued for recreation, treat payments as non-taxable hobby reimbursements.

  2. DE 2: Transition to Reimbursement Model. Develop a straightforward claim process: umpires submit expense forms and receive full, tax-free payment. Eliminate payroll entries, PAYG withholdings, and super calculations when hobby criteria are met.

  3. DE 3: Educate & Document. Provide umpires with an overview of hobby-income rules and maintain clear records of payment classification. Documentation protects the club during ATO reviews and ensures transparency for all stakeholders.

What Success Looks Like: A club that applies the hobby-income approach reduces tax leakage and administrative overhead. Umpires receive full, untaxed payments where appropriate, boosting goodwill and retention. Volunteers reclaim hours previously lost to payroll compliance, freeing them to focus on growth and member engagement. Ultimately, more funds and fewer hassles reinforce a culture of smart, accountable financial management.

Conclusion: Defaulting to payroll for every umpire fee may feel safe but often leads to over-taxation and wasted volunteer effort. By leveraging ATO hobby-income guidelines—where recreational umpiring clearly qualifies—clubs can streamline payments, conserve resources, and strengthen their financial position. While this counter offensive isn’t a substitute for professional tax advice, it highlights an opportunity for smarter, leaner operations that benefit both your club and its officials.

Sources

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