A taxing question: does Tomic qualify as an Australian hero?

Not so taxing: Bernard Tomic’s decision to reside in Monaco means he avoids paying tax. AAP

BUSINESS OF SPORT: Australia is renowned for a sporting prowess that is remarkable for its population. Australians love their sporting heroes, from footballers to international tennis stars.

Many Australians will sit up all night to see their heroes compete and hopefully win. Most Australians also want their heroes to pay tax on Australian shores.

With the recent rise of Bernard Tomic on the international tennis circuit has come scrutiny at his decision to seek residency in Monaco to avoid paying tax in Australia.

Does this decision tarnish Tomic’s stature as an Australian hero?

Australia is renowned as a country with high income taxation, with the highest rate of 45% for individuals plus 1.5% Medicare levy reserved for those with a taxable income of over $180,000.

Paying Australian tax is generally not an issue for local codes such as Australian football. These players are restricted to a salary cap.

They compete and are paid in Australia, aside from the odd hybrid match against the Irish. There is therefore a lack of opportunity to claim residency for tax purposes outside of Australia.

Tennis is different because professionally, besides the Australian Open and the tournaments that complement it, the sport is typically played overseas.

Australians no longer dominate the sport like the heroes of yesteryear such as Rod Laver, Lew Hoad, Margaret Court and Evonne Goolagong.

Academies around the world nurture tennis prodigies and tennis players need to be part of this internationalisation to be successful.

Despite the numbers that try, only a few make it visibly onto the world stage. The blood, sweat and tears for most will not be rewarded, but for some the big pay days will come.

Bernard Tomic appears destined to be one of the few who make it. He is the second-youngest quarterfinalist at Wimbledon, behind Boris Becker 25 years ago who, like Tomic, was born in Germany.

Travelling the world seeking tennis success is not cheap and stars need an entourage to be successful. Tomic is accompanied by his Bosnian father, who is also his coach.

When the first big payout comes as it just did for Tomic - $210,000 for reaching the quarterfinals at Wimbledon - it makes sense that funds are stored for future development, campaigns and life after the very short time at the top.

The current Davis Cup captain Pat Rafter was awarded Australian of the Year despite being a resident of Bermuda for tax purposes.

Rafter has the style and presence of a hero and Australians generally embrace him despite the tax status that is causing controversy for the less likeable Tomic.

Tomic recently visited Monaco to become a resident of the tax haven. By doing this Tomic can avoid paying income tax on the hundreds-of-thousands of dollars he makes, and he will therefore keep a much higher percentage of total earnings.

What about the support Australia has given Tomic, some ask?

Perhaps Tomic is advertising Australia in the international market place and giving hope to Australians longing for the days when Australia was a force in world tennis.

Tomic recently played Davis Cup for Australia against China, winning his singles match to keep Australia firmly in the contest.

Lleyton Hewitt has a property in the Bahamas, an Atlantic Ocean tax haven. He was instrumental in the doubles victory which gave Australia the lead.

Absent was the old regular Mark Philippoussis because of enduring injury. Philippoussis has enough on his mind because, despite his best tennis days being behind him, his decision to live in the United States has led the US Internal Revenue Service pursuing him for an estimated $500,000 of tax debts.

The amount of tax that Tomic would not pay in Australia as a tax resident in Monaco throughout his career is hard to estimate because assessable income outside of tournament prize money would be difficult to establish.

To give some perspective, the court battle Hewitt was embroiled in with his former management group revealed an estimated $6.75 million from endorsements and tournament guarantees in 2005 and 2006. To establish taxable income, allowable deductions are subtracted from assessable income.

Even with the high costs of competing in the international arena it is likely the majority of his assessable income would have been taxable in Australia.

At a rate of 45% plus 1.5% Medicare, there is a large incentive for successful sportspeople to seek their tax residency outside of Australia.

In the right circumstances it is legal for Australian Citizens to have residency for tax purposes outside of Australia. For Tomic it seems the decision is not legal but moral.

Does he have a moral obligation to pay tax in Australia? It seems unlikely that he will pay tax in Australia in the foreseeable future.

Perhaps the Australian Taxation Office may need to reconsider its position if it wants more international sports stars to pay tax in this country.