Are Sporting Clubs Tax Exempt?

Do you know your sporting clubs might be eligible for income tax exemption? A sporting club will be exempt from income tax and can self assess its exemption in a year of income if it:

-is a non-profit society, association or club;

-is established for the encouragement of a game, sport or animal racing

-is not a charity

– and meets at least one of three tests ( physical presence in Australia test, deductible gift recipient test, prescribed by law test )

What is the main purpose of the club?

To be eligible for the exemption in the year of income, your club’s main purpose in that year must be the encouragement of a game or sport. For example, if your club’s main purpose is providing social and recreational facilities and activities for its members, it will not be exempt. Even if your club also gives money to encourage games or sports. Therefore, your club’s activities in the year of income must then demonstrate that the club’s main purpose is the encouragement of its game or sport.


Furthermore, income tax exemption will not apply to a group of entities collectively described as ‘the club’. Each particular entity in the group must assess its income tax exempt status.


If your club is income tax exempt:

-Your club does not need to pay income tax or lodge an income tax return, unless ATO specifically asked to.

-Your club does not need to get confirmation of its exemption from the ATO.

– You should carry out a yearly review to check if your organisation is still exempt.

-You should also do this when there are major changes to your organisation’s structure or activities.


If your club is not a tax exempt sporting club

Your club may fall in another type of exempt entity or it may be taxable. If it is taxable, it may have the benefit of special rules for calculating taxable income, lodging income tax returns and special rates of tax ( Source ATO ).

You can get a tax agent with full registration to work out it for you. If you require any assistance, please contact our Business Mantra experts on (08) 9242 3555 or email us at info@businessmantra.com.au. We shall be glad to serve you.

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