1. How the Amateur Athlete Trust Works
Eligible athletes can deposit income into the trust, deferring taxes on those earnings until they are withdrawn.
Funds in the trust are not immediately taxable, allowing for tax-sheltered growth.
Withdrawals from the trust are taxed as income in the year they are withdrawn.
2. Contributions to an RRSP
Athletes can transfer funds from their Amateur Athlete Trust directly into their RRSP without triggering tax at the time of the transfer.
These transfers do not affect the athlete's regular RRSP contribution room.
3. Eligibility Requirements
You must be recognized as an amateur athlete by a national sports organization.
The income deposited into the trust must be earned as a result of athletic performance (e.g., competition winnings, appearance fees, sponsorships).
4. Benefits of an Amateur Athlete Trust
Tax Deferral: Earnings placed in the trust are not taxed immediately, reducing your current taxable income.
Retirement Savings: Transferring funds to an RRSP allows athletes to save for their future while benefiting from tax-sheltered growth.
Amateur Status Maintenance: Using the trust helps athletes comply with eligibility rules for amateur competitions.
5. Key Considerations
Withdrawals from the trust or RRSP will be taxed as income in the year of withdrawal.
Funds in the trust must be used or transferred to an RRSP by the end of the year the athlete turns 71.
Why This Matters
An Amateur Athlete Trust is a valuable tool for athletes to manage their income, reduce current taxes, and save for retirement. By integrating the trust with an RRSP, athletes can maximize their long-term financial security.