• Review of the sport exemption cases

    The clubs in the Cronulla, South Sydney Juniors and North Suburban judgments were not exempt as each club's main purpose was providing social amenities and licensed club facilities to members.

    In Cronulla, the provision of the football ground and financial support provided to rugby league were accepted as significant encouragement of sport. However the scale of the social activities provided to members was of greater significance.

    South Sydney Juniors illustrates that merely providing extensive sporting encouragement does not result in a club's main purpose being that encouragement. All of a club's features, sporting and non-sporting, must be considered.

    North Suburban highlights that you should review your club's status annually. Exemption is not based solely on the original reasons for the establishment of a club.

    The St Marys,Tweed Heads and Terranora decisions involved clubs where the social amenities and licensed club facilities did not disrupt the clubs main purpose of encouraging sport.

    In St Marys the rules of the club recorded rugby league as the major object. The membership categories and control given to football members in the rules pointed to the significance of the football activities over the social activities. This type of formalised structure appears in the constituent documents of many sporting clubs. Whilst the club also provided social facilities for its members, the intensity of activity directed towards football tipped the balance in favour of exemption.

    If your club's features are similar to St Marys and the significance of your club's social activities compared to its sporting activities are no more than those in St Marys, your club's main purpose will be the encouragement of sport. However when making your assessment you need to consider the following:

    • The possibility of cash reserves being used to construct a motel was a matter of concern in St Marys.
    • South Sydney Juniors was not exempt despite its rules requiring four of the seven directors to be appointed by the Junior Football League - the scale of the non-sporting facilities having greater significance.

    Tweed Heads and Terranora illustrate circumstances where trading with visitors to the club did not alter either club's main purpose. Both cases involved New South Wales clubs close to the Queensland border before poker machines were available in Queensland clubs. Leaving the extensive trading with visitors aside, the features of both clubs indicated a main purpose of encouraging sport. Notably, the control of the club in Tweed Heads was formalised in its constitution and the sporting membership was high. In both decisions the extensive social amenities provided mostly to visitors did not overtake the club's sporting purpose.

    Similar considerations may apply to sporting clubs in holiday regions offering their social facilities to visitors to the club.

    Terranora however, cannot be applied to clubs with features similar to the clubs in Cronulla and South Sydney Juniors. The main purpose of such clubs is providing social and recreational facilities and activities for their members.

    The other examples provided in Examples from case law involve a bowling club and a country club. Both involved small clubs, active in their sporting endeavours and operating their bar, dining and gaming facilities beyond game time. In both cases, the clubs were found to be exempt.

    Comparison with case judgments

    The table below summarises the features of the case judgments described in Examples from case law. Each of these clubs had extensive social, entertainment and gaming facilities in the years under review. Review your club's features comparing them with the summary below.

    Exempt

    Highly persuasive features

    Feature

    Tweed Heads

    Terranora

    St Marys

    Sporting activities conducted

    Bowls

    Sporting sub-clubs

    Rugby league

    Minor sub-clubs

    Extent of sporting encouragement

    Sport facilities equal to 70% of fixed asset value

    Local, national and global tournaments

    Golf, tennis, bowling, rugby, soccer, cricket and other sport facilities and teams

    32 rugby league teams

    Leased several playing fields from councils

    Use of surplus

    Expended on own sporting activity and developing club facilities

    Expended on own sporting activity and developing club facilities

    Expended on own sporting activity and developing club facilities

    Objects

    Promotion of bowls and good fellowship among members

    Promotion of golf, bowls, tennis and other sports, games and pastimes

    Manage and promote rugby leave in St Marys district and providing for members

    Persuasive features

    Feature

    Tweed Heads

    Terranora

    St Marys

    Membership and sporting members

    920 total

    830 bowling members

    4,400 total

    2,854 sub-club members

    6,500 total

    450 players, others ex-players or supporters

    Control

    Constitution restricted board to 'bowling members'

    No particular qualification for election of board

    Constitution restricted to life and football members

    Voting

    Bowling members only

    Open

    Open

    Promotion

    Bowling magazine

    Social facilities heavily promoted

    Sports newsletters

    Social facilities heavily promoted

    Not reported

    Other features

    Feature

    Tweed Heads

    Terranora

    St Marys

    Proximity

    Facilities in and around clubhouse

    Facilities adjacent to clubhouses

    Not reported

    Clubhouse

    Not reported

    Not reported

    Clubhouse reflected rugby league club

    Taxable

    Highly persuasive features

    Feature

    Cronulla

    South Sydney

    North Suburban

    Sporting activities conducted

    Financial & in kind support to associated football clubs

    Sporting sub-clubs

    Financial & in kind support to associated football clubs

    Sporting sub-clubs

    Minor sporting sub-clubs

    Extent of sporting encouragement

    Stadium gate, car parking and advertising rights

    Football club dependent on income

    Sporting sub-clubs

    Minor sporting sub-clubs

    Use of surplus

    Paid to associated clubs and expended on clubhouse

    Paid to associated clubs and expended on clubhouse

    Minor amount spent on own sporting activity

    Objects

    Maintain social club and providing sport facilities for associated clubs

    Providing social and sporting club and promoting rugby league

    Providing for members associated for social, sporting, charitable and educational purposes

    Persuasive features

    Feature

    Cronulla

    South Sydney

    North Suburban

    Membership and sporting members

    13,000 total

    Sub-club members not reported

    45,000 total

    1,470 sub-club members

    Not reported

    Control

    Board consisted of persons associated with the football club - historical, not formal

    Four of seven directors appointed by the football club

    No particular qualification for election of board

    Voting

    Open

    Open

    Open

    Promotion

    Mostly social facilities promoted

    Mostly social facilities promoted

    Mostly social facilities promoted

    Other features

    Feature

    Cronulla

    South Sydney

    North Suburban

    Proximity

    Stadium adjacent to clubhouse

    No field

    No field

    Clubhouse

    Not reported

    Not reported

    Not reported

      Last modified: 21 Mar 2011QC 23868