Main purpose

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.

If your club also encourages social or other non-sporting activities for its members, provided the activities are merely ancillary or incidental, or secondary, to encouraging the game or sport, they will not prevent the club from being exempt.

Your club's constituent documents will help identify the purpose for which the club was set up and should be consistent with the aim of encouraging a game or sport. 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.

Other club records which will help indicate your club's activities and purpose include:

  • resolutions made by the persons controlling your club, such as the board, committee or directors
  • minutes of meetings of the board, committee or directors
  • business plans
  • promotional material concerning your club's activities, and
  • published reports about the club, such as its annual report.

If the main purpose of a club is the carrying out of non-sporting activities, the club is not exempt.

Example: Main purpose not sport

The Sandy Shores Country Club's constitution states that the club's object is to provide social and sporting facilities for its members.

The club's main activity is the operation of its clubhouse as a social, gaming and entertainment facility. A small number of members play in bridge, darts and snooker teams sponsored by the club. The club allocates a proportion of its surpluses to local sports and community associations in order to meet certain requirements under state gaming laws.

The club's main purpose is providing social amenities for members.

For many sporting clubs that mostly conduct activities directly related to their game or sport, it will be clear that the club's main purpose is the encouragement of a game or sport.

Example: Main purpose encouragement of sport

A club's primary object in its constitution is the promotion of netball. In the year of income, the club entered several teams at all levels in the local competition. Its sources of income were membership subscriptions, game day food and drink sales, corporate sponsorship, 'sports and recreation' grants, raffles and functions to support representative players, and venue hire. Minutes of meetings, business plans and other club material mostly detail sporting matters.

The club's main purpose is the encouragement of sport.

The sale of a club's assets to fund its ongoing sporting commitments will not of itself disturb its encouragement of sport.

Example: Sale of assets

The club in the above example sells a portion of land it owns adjacent to its courts to upgrade its courts and clubhouse facilities and enter a team in a state-wide competition.

The club's main purpose is the encouragement of sport.

Difficulties in working out main purpose arise if a club conducts both sporting and non-sporting activities and the non-sporting activities are not incidental or ancillary to the sporting activities. The following activities originally offered for the recreation of sporting members may become significant themselves:

  • operating bar and dining facilities for extended periods beyond game time
  • having or operating significant gaming and other recreational facilities on club premises
  • owning temporary accommodation available to members and non-members for holiday rental.

If your club conducts significant non-sporting activities in addition to its sporting activities, difficulties may arise in determining your club's main purpose. You will need to ask:

  • Are the non-sporting activities my club engages in merely incidental or ancillary to the encouragement of the club's game or sport?
  • Can my club justify to its members and the public that its main purpose is the encouragement of a game or sport?
    Last modified: 21 Mar 2011QC 23868