Big Money, “Tax-Free” Contracts and The Tax Trap: What the R360 Offers Really Mean for Australian Athletes

The newly announced R360 global rugby competition is generating headlines for its large-scale, apparently “tax-free” contracts. For Australian players this promises the allure of contracts reportedly structured via jurisdictions with little or no income tax, such as Dubai. However, from an Australian taxation perspective this raises a major red flag: just because income is paid via a tax-haven location or a jurisdiction without personal income tax does not mean that Australian tax liability is eliminated. The key question remains: is the athlete an Australian tax resident? If so, global income is within the scope of the Australian Taxation Office (ATO). In short, contract structure is one thing, but residency is central.

The R360 Story in Brief

The proposed R360 competition is a global, city-based franchise rugby tournament planned for 2026, intended to attract elite athletes with large sums and novel residence and contract structures. Some key points:

• Contracts being offered to NRL or rugby union stars could exceed A$1.5 million per season, with the competitive hook being that players could “choose their residence” (for example, Dubai) to achieve tax benefits.
• The structure appears to rely on jurisdictions with very favourable or no personal income tax, making the “tax-free” headline plausible from a contract wording perspective.
• While sporting bodies in Australia and New Zealand have expressed concerns and threatened bans from national selection for players in R360, from a tax perspective the structure is especially interesting for mobile, high-earning athletes.
  From a tax advisory lens, this is exactly the kind of remuneration arrangement that triggers scrutiny: large sums paid offshore or via exotic domicile choices, combined with fuzzy residence positions. The bottom line: the tax benefits do not automatically follow just because a contract is “tax-free” in the pay jurisdiction.

Australian Tax Residency: The Decisive Gateway

For Australian tax purposes, the ATO generally taxes individuals who qualify as Australian residents on their worldwide employment income, regardless of where they earn or receive it. Conversely, the ATO taxes foreign residents only on Australian-sourced income. Crucially, residency is not merely determined by citizenship or the location of the payer alone. Rather, the ATO applies a mix of common-law and statutory tests. Key tests include:

• The “resides” (ordinary concepts) test – whether the person resides in Australia, based on factual circumstances.
• The domicile test – whether the person’s domicile is in Australia and whether their permanent place of abode is in Australia.
• The 183-day test – if present in Australia for 183 days or more in a tax year, unless their usual place of abode is outside Australia and they do not intend to reside here.
• The Commonwealth superannuation test – applies mainly to certain government employees overseas.

Many get hung up on 183-day test as the definitive test and believe that if you are outside Australia for half the year, you will not be a resident for tax purposes.  The truth is you only need to satisfy one of the four tests to be a tax resident, and the resides and domicile tests are most applicable to Australians heading overseas.  In the 2025 case of Quy v  Commissioner of Taxation, the individual was found tax resident even when averaging around 50 days a year in Australia over a 5-year period.

Taxation Ruling TR 2023/1 clarifies that there is no bright-line safe harbour residency remains a facts-and-circumstances test. What does this mean in practice for an athlete lured by a contract based offshore? Even if the player is paid via a “tax-free” jurisdiction, if they remain resident in Australia, they will be taxable in Australia on their global income, including that pay.

For Example

An Australian rugby league player signs with R360, receives payment through a Dubai-based franchise, and does not pay tax in Dubai. However, if he continues to live (or maintain a home) in Australia, travels back frequently, has family in Australia or his centre of interests remains Australia, then the ATO could determine he is an Australian tax resident. That means the “tax-free” contract becomes fully taxable in Australia.

Australian Tax Residency: What Australian Athletes Need to Watch Out For

Given the above, here are some practical considerations:

1. Residence status review
   • Does the athlete continue to maintain their home in Australia? Are spouse and children still based in Australia? Are they only away for short times?
   • Has the athlete made a genuine move overseas (established abode, family moves, international banking and asset base, etc.)?
   • Has the athlete spent 183 days or more in Australia? Even if less, other tests may capture them.
   • Ensure documentation and facts support any claim of non-residency.
2. Contract and remuneration structure
   • Payment via “tax-free” jurisdictions does not automatically equate to non-Australian tax liability.
   • If the athlete is taxed in Australia, foreign tax offsets (if any) may or may not be available, depending on whether tax is paid in the foreign jurisdiction.
3. Withholding, reporting and compliance
   • Even if no tax is withheld in the pay jurisdiction, the athlete must still self-assess and declare the income if Australian resident.
   • On ceasing Australian residency, CGT “exit” issues may arise (deemed disposal) relevant for athletes with investments or assets.
4. Dual tax treaty issues
   • If the athlete is genuinely resident in a foreign country, double tax treaty tie-breaker rules may apply.
5. Risk and reputational issues
   • The ATO is increasingly alert to high-earning individuals who try to circumvent Australian tax by paying via offshore jurisdictions while retaining strong ties to Australia.  The ATO has access to an array of data that could raise flags for an audit of tax positions.
   • Athletes should not assume “tax-free” means “tax-nothing”. The language of marketing should trigger a forensic residency review.

Before signing any contract, conduct a thorough residency analysis to understand your global tax position, as tax can be a dealbreaker.

Contact Us

If managing your financial affairs across borders is starting to feel overwhelming, you’re definitely not alone. It’s a complex space, and having the right support can make all the difference. At Atlas Wealth Group, we specialise in supporting Australian expats with cross-border tax planning, superannuation, and wealth management. Contact us to arrange a consultation with a qualified adviser who specialises in Australian expat financial planning to get personalised guidance tailored to your circumstances.

Stay updated on current issues with Atlas Wealth Groups’ podcasts, Atlas Weekly Recap or check out Expat Chat.

Click here to listen to the relevant Expat Chat Episode 161 – Will the R360 Rugby Players Receive Tax-Free Incomes?

Disclaimer: This article is intended for informational purposes only and does not constitute legal or financial advice. Individuals should consult licensed professionals when seeking guidance regarding their financial circumstances.