Sport is a significant part of Australian culture and social life. It provides entertainment and recreation and contributes to health and well-being.
Many sporting clubs, for example, are registered for tax exemption on the basis that they provide or contribute to the provision of facilities and materials, services and education to their members. Those are predominantly for social, cultural, recreational and sporting purposes.
Today, let’s explore how to know if your sporting club can be exempt. Here’s what you need to know:
What Type of Entity Is Your Organisation?
If your organisation is incorporated, it will be an Australian Public Company (or a non-registered public company) or a non-profit public organisation. Both categories of incorporated entities will require you to be a registered charity. If not incorporated, you might be a non-profit company, not-for-profit organisation, or non-profit public organisation.
To become a registered charity, you will have to apply to the Australian Charities and Not-For-Profit Commission (ACNC). The ACNC will tell you if your organisation can be a registered charity and if it can be a public company. If your organisation is already registered, it will provide you with the relevant details of your registration.
What Is Your Organisation’s Purpose?
Before engaging in tax exemption, your organisation must demonstrate that its purpose is charitable. It is for a public benefit, that it does not make a profit, and that it is not an organisation established for profit.
The ACNC has produced a set of public benefit principles to guide a group considering applying to be a registered charity.
Suppose your organisation is applying to be a public company. In that case, you will have to demonstrate that you need to be a company to achieve your purpose. In other words, you will need to show that you are a charitable organisation under the Corporations Act 2001.
Some examples of organisations that have been established as public companies include The Bupa Foundation and the Ronald McDonald House Charities.
Income Tax Exemption for Sporting Clubs
Suppose your organisation has been determined to be a public charity or a public company and has a purpose relating to the sport. In that case, it might qualify for income tax exemption.
To qualify for income tax exemption, your organisation must meet certain conditions. The only condition that applies to public charity status is that your organisation must be a “substantial contributor” to sport (or to providing facilities for sport).
The ACNC has published guidelines on what it considers a substantial contributor. Other than that, the income tax exemption that applies to public companies is very similar to the income tax exemption that applies to public companies.
Other Things to Consider
In addition to income tax exemption, there is a range of other taxes and duties available to sporting organisations that fit within the definition of a ‘substantial contributor to sport’.
The application of the GST and duty exemptions for public companies is similar to that for other public companies. For public companies that have been determined to be a public charities, there are GST and duty exemptions that apply to the charity’s activities. These are broadly similar to those that apply to non-profit companies.
The ACNC provides more information about the tax treatment of charities and public companies.
If you are considering applying for income tax exemption for your sporting club, it would be a good idea to seek the assistance of a tax professional.
The Bottom Line
Suppose your sporting club is a registered charity or a public company. In that case, your purpose is for sporting purposes, and you are a substantial contributor to the sport, you might be eligible for income tax exemption. Check with the Australian Charities and Not-for-Profits Commission to find out if your organisation can be a registered charity and if it can be a public company.
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