Updated ,first published
The Australian government will push through changes to tax law in this month’s federal budget to ensure players who sign up for the new PNG NRL team are exempt from paying tax.
The PNG Chiefs will join the NRL as its 19th team in 2028 as part of a $600 million Albanese government package aimed at bedding down relations with the Pacific nation and countering the security ambitions of China in the region.
The PNG government passed legislation to make players and staff at the new team exempt from paying tax in Australia’s near neighbour.
The move has been seen as a key factor in drawing players to the Chiefs, who this week unveiled Wests Tigers co-captain Jarome Luai as their blockbuster first signing.
On Friday night, it emerged that the Australian government would make a small amendment to Australia’s tax provisions to ensure income earned by players and staff at the PNG team was not taxable in Australia.
The change is to be confirmed in the budget this month.
“This change ensures the tax exemptions provided by Papua New Guinea operate as intended,” Minister for Pacific Island Affairs Pat Conroy said.
“The new team is a symbol of the bond between our two nations, including our shared commitment to a secure and prosperous region, and it will deliver economic benefits to both countries.”
ARL Commission chairman Peter V’landys confirmed this week that the tax-free arrangement for the PNG team would be in place for at least 10 years.
Tax specialists had raised concerns that Australians who took up an offer to play for the Chiefs could be assessed as Australian residents for tax purposes even if they spent less than the standard cap of 183 days a year in the country, meaning they would be subjected to tax on their global earnings.
Factors weighed up by the Australian Tax Office in making such determinations include whether individuals have established a permanent home overseas, how long they intend to reside abroad for and how often they frequent Australia.
Australia has a long-standing double tax treaty with PNG, under which there was also scope for players to be assessed as residents of the Pacific nation for tax reasons.
However, the Australian government has left no doubt about the situation by altering the law.
The news comes after the Chiefs rocked the NRL this week with the acquisition of Luai, who was whisked away to Port Moresby on a private jet paid for by the PNG government before agreeing to a tax-free $1.2 million-a-season contract.
He will collect $540,000 a season more than he would if he was on the same salary at an Australian club.
In addition, third-party sponsorships – which players can top up their earnings with – will also be tax-free in PNG.
It had been made clear that players would not have to pay tax in PNG when the team’s admission to the competition was announced by Prime Minister Anthony Albanese and his PNG counterpart James Marape in December 2024.
But Luai’s decision to join the Chiefs on a three-year deal from 2028 has triggered debate about the advantages handed to the historic expansion club to get it off the ground.
Chris Barrett is a senior sports reporter for The Sydney Morning Herald. He is a former South-East Asia correspondent for the Herald and The Age.Connect via X or email.