AFL PLAYERS have won a significant tax break in future contracts after the Australian Tax Office ruled that a player is able to licence his image rights to a third party.

The ruling will allow players to have a percentage of their contract income paid to a private company or trust for the use of their image rights, taxed at a companies and trusts level that is lower than the highest personal tax rate of 49 per cent.

AFL.com.au understands that the percentage allocated, which is capped at 30 per cent, will continue to be counted as football payments for the purposes of AFL rules and total player payments.

The AFLPA told agents on Tuesday of the development, which has been given impetus by a player seeking a private ruling from the Australian Tax Office while negotiating a new contract.

The AFLPA has been working on getting an outcome on player image rights for players for several years.

For a player to be eligible he must demonstrate the valuation of his image is commercially justifiable, and the arrangement will need to be documented in two contracts – the standard playing contract and the player image rights contract.

To determine the amount a player can apportion to image rights, a formula involving elements such as best and fairest placings, All Australian selections, draft position and his age has been developed.

The arrangements will not apply to contracts for first- and second-year players, rookies and players on minimum CBA payments.