Senior coach deduction introduced as AFL increases soft cap limitThe AFL has increased the soft cap limit for 2024
By AAP
2 November 2023CLUBS have got their wish and will be able to pay senior coaches up to 20 per cent of their salary outside the soft cap from next year.
The AFL has also lifted the cap on football department spending by $250,000, bringing the limit to $7.275 million.
Since club finances were slashed during the COVID-19 pandemic, clubs and coaches have been pleading with the AFL to lift the cap on spending and help remunerate staff.
"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," AFL boss Andrew Dillon said.
"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."
A new underspend mechanism will also be introduced for next season allowing clubs who spend less than the soft cap limit to carry forward up to $100,000 to the next season.
It can only apply to the following season.
The AFL has also revised the luxury tax rates, with clubs to not be penalised as harshly if they spend above soft cap.
https://www.afl.com.au/news/1059887/senior-coach-deduction-introduced-as-afl-increases-soft-cap-limit--------------------------------------------------------------
AFL Statement - 2024 Soft Cap ChangesThe 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 summaryIncrease 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.
This will result in the AFL Soft Cap limit increasing to $7,275,000 in 2024. We can also confirm that the $200,000 Gather Round deduction will continue to apply in 2024 as well.
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.
Clubs may take a deduction to the value of 20% of their normally assessable remuneration of the Senior Coach. This effectively represents additional ‘spend capacity’ over and above the Soft Cap limit increase outlined above.
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.
The Luxury Tax Framework has been revised with regards to the tax rates applicable on expenditure over the Soft Cap Limit of up to $1M. Tax Rates for overages above $1M 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.
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.
A new underspend mechanism will be introduced from 2023, allowing Clubs to carry-forward up to $100K 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 in the following year only.
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.
https://www.afl.com.au/news/1059885/2024-soft-cap-changes
