• Worksheet - Working out your club's income tax status

    This worksheet has been designed for use by sporting societies, associations and clubs to self-assess their income tax status.

    We recommend that you assess your club's status each year and complete a separate worksheet for each year. You should also review when there has been a major change in structure or activities.

    What you will need

    For the year of assessment, you will need the following information as it applied in that year:

    • your club's constituent or governing documents such as its memorandum and articles of association, constitution, rules or charter
    • information about your club's activities, finances, plans, advertisements and history, and
    • an up-to-date copy of this guide.

    Check that you are using documents applicable to the year of assessment when completing this worksheet.

    How to use this worksheet

    To complete this worksheet, you will need to answer the questions in the order provided.

    If you need help or a question tells you that your club is not exempt, see Self assessment - sporting clubs.

    Once you have worked out your club's income tax status, you do not need to apply to the ATO to have it confirmed.

    Keep this worksheet with your club's records. It will show why and how you arrived at the decision of your club's income tax status and help future office bearers.

    Your assessment will apply only to the year for which you have completed this worksheet. For another year, get another copy of the worksheet and complete it in terms of your club's facts and circumstances for that year.

    If your club operates through several entities, complete this worksheet for each entity.

    1. Full name of your club

     

    2. Australian business number (ABN)

     

    3. Year of income

     

    4. Reason for review (please tick)

    Annual Review

     

    Change in circumstances

     

    Other: please specify

     

    5. Is your club a charity?

    No - Go to question 6.

    Yes - Do not continue this worksheet. Go to Charity.

    Sporting clubs that are charities include:

    • a club wholly integrated in a school or university and furthering its educational aims
    • a club that primarily uses a game to help rehabilitate the sick, and
    • a club that primarily uses a sport to relieve disability.

    There is an endorsement process for charities to be exempt from income tax.

    6. Is your club a non-profit entity?

    No - Your club is not income tax exempt. Go to Taxable clubs.

    Yes - Go to question 7.

    The ATO accepts a club as being non-profit where, by operation of law or by its constituent documents the club is prevented from distributing its profits or assets among members while the club is operating and on its winding-up. The club's actions must be consistent with the prohibition.

    An entity for these purposes includes a corporation, unincorporated association, a trust or a partnership.

    7. Is your club a society, association or club?

    No - Your club is not exempt as a non-profit sporting club. Go to Self assessment - sporting clubs.

    Yes - Go to question 8.

    Society, association or club is not defined in the tax law and takes the ordinary meaning of the words. It has been accepted as referring to a voluntary organisation having members associated together for a common or shared purpose.

    8. Did your club meet at least one of the 'three tests'?

    No - Your club is not income tax exempt. Go to Taxable clubs.

    Yes - Go to question 9.

    Sporting clubs that are not charities must pass one of the following three tests to be exempt from income tax:

    • physical presence in Australia test
    • deductible gift recipient test, or
    • prescribed by law test.
     

    Notes

     

     

     

     

    Sports and activities

    The tax law requires that exempt sports organisations be established for the main purpose of encouraging a game or sport.

    Evidence of being established for this encouragement is provided by your club's constituent documents. You will most likely find this in the 'objects' clause or 'purposes' clause of the constituent document. The word 'encourage' or 'encouragement' might be used, but other words like 'advance', 'foster', 'further' or 'promote' might be used with a similar intention.

    Your club must demonstrate by reference to its activities in the year of income that its main purpose is the encouragement of a game or sport. Evidence of your club's activities may be found in the minutes of meetings and resolutions of your club's board or committees, the club's business plans, material promoting the club's activities, and published reports about the club, such as its annual report.

    9 Do your club's constituent documents include an object or purpose being the encouragement of a game or sport?

    No - Your club may not be exempt as a non-profit sporting club, see Self assessment - sporting clubs.

    Yes - Go to question 10.

    Your club's constituent documents may specify a particular game or sport, or they may merely state as one of the club's objects, the encouragement of a games or sports.

    Note the games or sports your club encourages below.

    10 Does your club actively encourage its games or sports?

    No - Your club may not be exempt as a non-profit sporting club, see Self assessment - sporting clubs.

    Yes - Go to question 11.

    A significant feature of a tax exempt sporting club is that the club actively encourages its games or sports.

    Encouragement can be directly carrying on activities or supporting them less directly.

    Note your club's encouragement of its sports below.

    Notes

     

     

     

     

    11. Did your club conduct or provide at least one of the following in the relevant year?

    • bar or dining facilities for extended periods
    • significant gaming and recreational facilities
    • holiday and other temporary accommodation
    • other business activities.
     

    No - Go to question 12.

    Yes - Go to Schedule for multiple purpose clubs.

    To be eligible for the exemption, your club's main purpose must be to encourage a game or sport. Difficulties can arise if a club conducts other activities, particularly extensive social or commercial activities.

    12. Is the main purpose of your club the encouragement of a game or sport?

    No - Your club is not exempt as a non-profit sporting club, see Self assessment - sporting clubs.

    Yes - You have self-assessed that your club is exempt from income tax.

    To be eligible for the exemption, your club's main purpose must be to encourage a game or sport. If your club's main purpose is providing social amenities and licensed club facilities to its members or the carrying on of some other enterprise, the exemption does not apply.

    If your club's non-sporting activities are minor compared to its sporting activities and it satisfies the other requirements for exemption, answer yes to this question.

    Once you have completed this worksheet you should sign it and keep it with your organisation's other records.

    Name of person conducting review

     

    Position held

     

    Signature

     

    Date

     

    Approval by Board/Committee/Trustee

     
      Last modified: 21 Mar 2011QC 23868