Income tax exemption and sporting clubs

The three tests

To be a tax exempt sporting club, your club must also pass one of the following tests:

1. physical presence in Australia test
2. deductible gift recipient test, or
3. prescribed by law test.

Physical presence in Australia test

Your club will meet this test if:

• it has a physical presence in Australia (which is greater than merely operating through an agent in Australia or holding property in Australia - a division in Australia would show the necessary physical presence), and
• to the extent that it has a physical presence in Australia, it incurs its expenditure and pursues its objectives principally in Australia. In determining this, there are special rules for offshore use of amounts you received as gifts or government grants.

Deductible gift recipient test

Your club will meet this test if:

• it has been endorsed as a deductible gift recipient (DGR) in its own right and not merely for a fund, authority or institution it operates, or
• it is listed by name in the income tax law as a DGR.

DGRs are entities to which donors can make income tax deductible gifts. The income tax law determines which organisations and types of organisations can qualify as DGRs.

Prescribed by law test

Your club will meet this test if it is prescribed by name in the income tax regulations, which is decided by government, and

• is located outside Australia and is exempt from income tax in its country of residence, or
• has a physical presence in Australia but incurs its expenditure and pursues its objectives principally outside Australia.

For more information about the three tests, see Income tax guide for non-profit organisations (NAT 7967).

Sections within Exempt sporting clubs

• Entity
• Non-profit
• Society, association or club
• The three tests
• Game or sport
• Encouragement
• Main purpose
• What to do next