Income tax exemption - sporting clubs
Your club will be exempt from income tax and can self-assess its exemption if during the year of income it is an entity that:
- is a non-profit society, association or club
- is established for the encouragement of a game or sport
- is not a charity, and
- meets at least one of three tests.
These characteristics are explained in Exempt sporting clubs.
The main purpose of your club must be encouragement of a game or sport. Any other purpose of the organisation must be incidental, ancillary or secondary to encouragement of the game or sport.
If your club's main purpose is providing social and recreational facilities and activities for its members, it will not be exempt. This is the case even if your club also gives money to encourage games or sports.
A non-profit club's main purpose is providing dining, gaming and leisure facilities for its members. It does not conduct any sporting activity itself, but gives a yearly grant to an associated entity that is a rowing club. It is not exempt.
Fringe benefits tax
If your club is an income tax exempt sporting club, it will also qualify as a rebatable employer for the purposes of fringe benefits tax (FBT).
Rebatable employers are entitled to have their liability to fringe benefits tax reduced by a rebate equal to 48% of the gross FBT payable (subject to a $30,000 capping threshold per employee). If the total grossed-up taxable value of fringe benefits provided to an individual employee is more than $30,000, a rebate cannot be claimed for the FBT liability on the excess amount.