• Features indicating sporting purpose

    The ATO considers the following features as being persuasive in indicating the main purpose of a club as being the encouragement of a game or sport.

    Highly persuasive features:

    • The club conducts activities directly related to a game or sport.
    • The sporting activities encouraged by the sporting club are very extensive.
    • The club uses a significant proportion of its surplus funds in encouraging its game or sport.
    • The club's constituent documents emphasise that the club's main purpose is to encourage a game or sport, and the club operates in accordance with those documents. The club's history demonstrates that the club has in fact continued to encourage a game or sport.

    Relevant but less persuasive features:

    • A high level of participation by members in the sport or game encouraged by the club.
    • The members of the committee or persons who control the direction of the club are predominantly participants in or concerned with the encouragement of the game or sport (as distinct from day-to-day management of the club).
    • Voting rights in the club vest only in members involved in encouraging the game or sport, whether by personal participation or by encouraging participation by others.
    • The club promotes itself to patrons and the public as one encouraging the game or sport, and its advertisements and publicity emphasise the game or sporting facilities provided.

    Other factors that may be supportive of a conclusion that a club's main purpose is to encourage a game or sport include:

    • the proximity of the club's social facilities to its sporting facilities, and
    • the decoration and fit out of the club so as to reflect its game or sporting nature, for example, the display of trophies, honour rolls or boards, pictures or statues of outstanding sporting achievers, displays of sporting equipment etc, along with the actual game or sporting facilities.

    The absence of a feature, for example, junior members of a club not having voting rights, or the proximity of social facilities to sporting facilities, may not be detrimental to the exempt status of a club.

    Further Information

    For more information, see Taxation Ruling TR 97/22: Income tax: exempt sporting clubs.

    End of further information

    For clubs providing social activities such as entertainment, dining, gambling and accommodation in addition to the sporting encouragement, you need to ask:

    • Is my club a sporting club with social facilities provided in furtherance of the sporting purpose?
    • Is my club a social or community club with a sporting interest?

    The provision of food, drink and other entertainment may be integral to a sporting event. For many sporting clubs the provision of such entertainment is also a potential source of funds to further the sporting purpose:

    • profits from game day sales and fundraising events assist in sporting equipment purchases
    • extended operation of the club's catering facilities may help to offset the deficit of the sporting activities, or
    • surpluses from gambling and entertainment operations may fund both capital and operational sporting expenditures.

    Provided such activities are merely ancillary or incidental, or secondary, to encouraging the club's game or sport, they will not prevent the club from being exempt.

    Where the club's main purpose is providing social amenities and licensed club facilities to its members, the exemption does not apply.

    The table below contrasts features indicating a club's main purpose is the encouragement of sport with features indicating a non-sporting purpose. The presence or absence of a feature may not be detrimental to a club's claim that its main purpose is the encouragement of sport. For example, a small sports club will not have extensive sporting activities, but its main purpose may still be the encouragement of its sport.

    Highly persuasive features


    Encouragement of sport

    Not encouragement of sport

    Sporting activities conducted

    The club conducts activities directly related to its game or sport.

    Social activities are incidental or ancillary to the sporting activities.

    Club's history indicates continual involvement in sport.

    No sporting-related activity conducted by the entity. Social purposes are dominant.

    Sporting activity conducted by associated entity.

    Extent of sporting activities

    Sporting activities extensive.

    Social activities are secondary to the sporting activities.

    Sporting activities are secondary to social activities or business activities including where sporting activities are significant.

    Use of surplus

    Surplus used in encouraging the club's sport (or sports).

    History indicates that surplus is used in encouraging the club's sports.

    Use of surplus directed mostly to encouraging club's social activities.

    Surplus used to fund sporting activities of another entity.

    Purposes in constitution

    Primary object in constitution is the encouragement of a game or sport.

    The game or sport conducted is named in the constitution.

    No mention of sport in constitution.

    Persuasive features


    Encouragement of sport

    Not encouragement of sport

    Member participation in sport

    Significant numbers of members participate in the sporting activities conducted by the club.

    Other members indirectly support in volunteering, fundraising, assisting juniors or regular match attendance.

    Majority of membership not involved in the sports encouraged by the club.


    Persons administering club have sporting background.

    Board comprises sporting members elected by sporting members.

    No particular requirement for sporting background.


    Voting members are mostly members participating in the club's game or sport.

    Most voting members not involved in sport or do not have particular interest in the sport.


    Sporting activities promoted in newsletters.

    Other activities promoted. Minor promotion of sporting activities.

    Other features


    Encouragement of sport

    Not encouragement of sport


    Sporting and social facilities co-located.

    Social facilities removed from sporting facilities (if any).


    Sporting memorabilia displayed prominently throughout clubhouse.

    No particular emphasis on sport in clubhouse d cor.

      Last modified: 21 Mar 2011QC 23868