RussellEbertHandball
Flick pass expert
I listened to AFL Coaches Association CEO Alistair Nicholson today on Whateley and he brought up that the AFL had introduced last year, that 20% of the head coaches salary can now sit outside the soft cap limit. Here are the changes announced in November. It allows for manipulation by all clubs but more so by the wealthier clubs.
Coach on a $1.2m package at a wealthy club 20% or $240k sits outside the club, and $960k inside the cap limit.
Coach on a $600k package at a poorer club 20% or $120k sits outside the club, and $480k inside the cap limit.
The staff relocation deductions/exemptions are a good move IMO, especially helping non Vic clubs get people away from Melbourne / Victoria.
www.afl.com.au
The AFL has today announced an increase to the Soft Cap limit for 2024 along with several other changes and new rebates, including a Senior Coach deduction.
An increase of $250,000 has been added to the Soft Cap for 2024, bringing the total Soft Cap Limit for 2024 to $7.275 million. The updated Limit also includes a $75,000 adjustment related to formerly deductible expenditure being transitioned into assessable expenditure.
A Senior Coach deduction has also been established allowing Clubs to deduct up to 20 per cent of their Senior Coaches’ salary, representing additional ‘spend capacity’ over and above the Soft Cap limit increase.
The Luxury Tax Framework has been revised with regards to the tax rates applicable on expenditure over the Soft Cap Limit of up to $1 million. Tax Rates for overages above $1 million remain consistent with the previous policy. These changes are designed to allow Clubs greater flexibility should they choose to exceed the Limit, up to a threshold that is not considered as materially impacting competitive balance.
A new underspend mechanism will be introduced from 2024, allowing Clubs to carry-forward up to $100,000 of any remaining Soft Cap capacity available under the Consolidated Soft Cap Limit into the future year. This underspend value may be rebated against assessable expenditure in excess of the Consolidated Limit and only in the following year.
AFL CEO Andrew Dillon said the changes were a result of an extensive consultation process with clubs, as well as recognising the important role senior coaches play.
“Following on-going discussions with Club Presidents, CEOs, Senior Coaches and Clubs, I am pleased to announce we have addressed a number of challenges and themes surrounding the soft cap.” Mr Dillon said.
“The changes are aimed at providing more flexibility and support as we continue to return back to a position more reflective of pre-covid times. “The establishment of the Senior Coach deduction recognises the prominent role they play as leaders and ambassadors for their Clubs and the sport. We know this was important and we worked closely with the Senior Coaches to achieve the best outcome we could for 2024.”
Clubs will also be able to support the relocation of football staff without materially impacting the Club’s Soft Cap position.
Top line summary
I don't know how much the Luxury Tax rates for on expenditure over the Soft Cap Limit of up to $1M will now be, I will have to dig around, but below is the table with the rates before this announcement.
Its why clubs are reluctant to sack signed coaches before their final year starts and why it was so exorbitant for WCE to sack Adam Simpson who had a 2 year contract of about $1m a year and paying him out over 2 years would have cost a luxury tax of around $3.96m and around $3.6m if it was all in 1 year. There were media reports his payout would have been as high as $2.5m, which would have pushed the tax to $4.6m if paid out over 1 year and $5.2m over 2 years.
These tax rates were effective from July 2020 when the AFL went into panic mode about Covid, and worried it might have to go and borrow $600m, so they put it on the club's that you don't go and blow the soft cap or we will use the big stick, especially if you keep repeating the over spend.
2018 and 2019 soft cap limit was $9.70m
2020 and 2021 soft cap limit was $6.20m
2022 soft cap limit was $6.45m, a $250k was announced after this article said 2020-21-22 would stay the same
2023 soft cap limit was $6.95m, a $500k increase announced in July 2022 by the AFL
2024 soft cap limit was $7.20m, a $250k increase announced in July 2022 but was increased to $7.275m in November 2023 announcement.
The 2020 covid changes did allow for some exemptions as per paragraph from below article and tax rates tables also come from this Age article.
www.theage.com.au
There is also an allowance for medical, mental health and health staff – doctors, pyschiatrists and pyschologists and so forth – of $200,000 and a mandatory spend of $580,000 in medical and mental health. Thus a club can spend $780,000 paying doctors, mental health specialists and other health care professionals and effectively exceed the cap by $200,000 if it is allocated in that area.
Coach on a $1.2m package at a wealthy club 20% or $240k sits outside the club, and $960k inside the cap limit.
Coach on a $600k package at a poorer club 20% or $120k sits outside the club, and $480k inside the cap limit.
The staff relocation deductions/exemptions are a good move IMO, especially helping non Vic clubs get people away from Melbourne / Victoria.
2024 Soft Cap Changes
The total Soft Cap Limit for 2024 has been increased to $7.275 million
www.afl.com.au
The AFL has today announced an increase to the Soft Cap limit for 2024 along with several other changes and new rebates, including a Senior Coach deduction.
An increase of $250,000 has been added to the Soft Cap for 2024, bringing the total Soft Cap Limit for 2024 to $7.275 million. The updated Limit also includes a $75,000 adjustment related to formerly deductible expenditure being transitioned into assessable expenditure.
A Senior Coach deduction has also been established allowing Clubs to deduct up to 20 per cent of their Senior Coaches’ salary, representing additional ‘spend capacity’ over and above the Soft Cap limit increase.
The Luxury Tax Framework has been revised with regards to the tax rates applicable on expenditure over the Soft Cap Limit of up to $1 million. Tax Rates for overages above $1 million remain consistent with the previous policy. These changes are designed to allow Clubs greater flexibility should they choose to exceed the Limit, up to a threshold that is not considered as materially impacting competitive balance.
A new underspend mechanism will be introduced from 2024, allowing Clubs to carry-forward up to $100,000 of any remaining Soft Cap capacity available under the Consolidated Soft Cap Limit into the future year. This underspend value may be rebated against assessable expenditure in excess of the Consolidated Limit and only in the following year.
AFL CEO Andrew Dillon said the changes were a result of an extensive consultation process with clubs, as well as recognising the important role senior coaches play.
“Following on-going discussions with Club Presidents, CEOs, Senior Coaches and Clubs, I am pleased to announce we have addressed a number of challenges and themes surrounding the soft cap.” Mr Dillon said.
“The changes are aimed at providing more flexibility and support as we continue to return back to a position more reflective of pre-covid times. “The establishment of the Senior Coach deduction recognises the prominent role they play as leaders and ambassadors for their Clubs and the sport. We know this was important and we worked closely with the Senior Coaches to achieve the best outcome we could for 2024.”
Clubs will also be able to support the relocation of football staff without materially impacting the Club’s Soft Cap position.
Top line summary
- Increase of $250,000 in the AFL Soft Cap limit for 2024 – noting this is in-line with previous guidance. There will also be adjustment to the limit of an extra $75,000 related to a deduction previously applied to administrative resources now permanently being transitioned into assessable expenditure.
- Senior Coach Deduction (20% of salary outside cap) – this recognises the prominent role Senior Coaches have as leaders and ambassadors for their Clubs and the code.
- Reduced luxury tax rates – providing more flexibility for Clubs that might want to spend above the limit and are more reflective of the pre-COVID settings.
- Underspend / overspend mechanism – this provides more flexibility and means Clubs won’t lose cap capacity if they spend under the limit in a particular season.
- Staff relocation deductions – deductions now made available for Clubs that are supporting the relocation of football staff without materially impacting the Clubs Soft Cap position.
I don't know how much the Luxury Tax rates for on expenditure over the Soft Cap Limit of up to $1M will now be, I will have to dig around, but below is the table with the rates before this announcement.
Its why clubs are reluctant to sack signed coaches before their final year starts and why it was so exorbitant for WCE to sack Adam Simpson who had a 2 year contract of about $1m a year and paying him out over 2 years would have cost a luxury tax of around $3.96m and around $3.6m if it was all in 1 year. There were media reports his payout would have been as high as $2.5m, which would have pushed the tax to $4.6m if paid out over 1 year and $5.2m over 2 years.
These tax rates were effective from July 2020 when the AFL went into panic mode about Covid, and worried it might have to go and borrow $600m, so they put it on the club's that you don't go and blow the soft cap or we will use the big stick, especially if you keep repeating the over spend.
2018 and 2019 soft cap limit was $9.70m
2020 and 2021 soft cap limit was $6.20m
2022 soft cap limit was $6.45m, a $250k was announced after this article said 2020-21-22 would stay the same
2023 soft cap limit was $6.95m, a $500k increase announced in July 2022 by the AFL
2024 soft cap limit was $7.20m, a $250k increase announced in July 2022 but was increased to $7.275m in November 2023 announcement.
The 2020 covid changes did allow for some exemptions as per paragraph from below article and tax rates tables also come from this Age article.
Revealed: details of the AFL's new footy tax
Under the new tax, clubs that spend more than $500,000 over the cap on football spending would be slugged by a tax of 200 per cent for every dollar over that amount in the first year.
There is also an allowance for medical, mental health and health staff – doctors, pyschiatrists and pyschologists and so forth – of $200,000 and a mandatory spend of $580,000 in medical and mental health. Thus a club can spend $780,000 paying doctors, mental health specialists and other health care professionals and effectively exceed the cap by $200,000 if it is allocated in that area.
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