Private ruling: Community services organisation
Date of advice: 29 May 2026
Published: 17 August 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Club exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a society, association or club established for community service purposes under item 2.1 in section 50-10 of the ITAA 1997? | A1: No. | Q2: Will the Club's voluntary work on Activity A be income tax exempt under Division 50 of the ITAA 1997? | A2: No.

Relevant facts and circumstances: The Club is a society, association or club located within Australia. The Club is an incorporated not-for-profit organisation with less than 300 members. In the relevant income year, the Club completed and lodged the Not-for-profit (NFP) income tax self-review return as income taxable. Following this, the Club lodged an NFP non-lodgement advice, as the Club's taxable income for the year was below the applicable lodgement threshold. The Club's activities are recreational in nature and members complete volunteer work. The Club is an affiliated club with a larger Australian Club and has both insurance cover and risk management guidelines. The Club's aim is to provide a safe and healthy environment for the activities. The Club operates under its Rules (or Constitution). The Club's Rules (or Constitution) have the relevant non-profit and wind-up clauses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 50 | Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-10 | Income Tax Assessment Act 1997 section 50-47 | Income Tax Assessment Act 1997 section 50-70 | Income Tax Assessment Act 1997 subsection 50-70(1) | Income Tax Assessment Act 1997 subsection 50-70(2) | Income Tax Assessment Act 1936 subparagraph 23(g)(v) | Australian Charities and Not-for-profits Commission Act 2012 subsection 25-5(1)

Reasons for decision: Summary: The Club is not exempt because its main purpose is member recreation rather than a dominant community service purpose that benefits the wider public. Any community are incidental to its primary purpose as a recreational club for members. | Detailed Reasoning - Detailed reasoning: Section 50-1 of the ITAA 1997 provides that the total ordinary income and statutory income of the entities covered by tables in sections 50-5 to 50-45 of the ITAA 1997 is exempt from income tax, subject to any special conditions. Item 2.1 in section 50-10 of the ITAA 1997 includes a society, association or club established for community service purposes (except political or lobbying purposes), provided it satisfies the special conditions in sections 50-70 and 50-47 of the ITAA 1997. To qualify for exemption, an entity must therefore: • be a society, association or club, • be established for community service purposes, and • satisfy all relevant special conditions. | Detailed Reasoning - Society, association, or club: The term 'society, association or club' is not defined in the ITAA 1997. The term is therefore construed according to the ordinary meaning of the words. In Douglas v Federal Commissioner of Taxation 97 ATC 4722 reference was made by the court to the definitions contained in the Concise Oxford Dictionary for each of these terms. Society, association, or club was accepted by the court as referring to a voluntary organisation having members associated together for a common or shared purpose (at 4726). In Pro-campo Ltd. v Commr of Land Tax (NSW) 81 ATC 4270 the court considered the meaning of 'society, club or association'. The court stated at 4279: In Theosophical Foundation Pty Ltd v Commr of Land Tax (NSW) [1966] 67 SR (NSW)...Sugerman JA stated at 82: A society, in the relevant sense, is a number of persons associated together by some common interest or purpose, united by a common vow, holding the same belief or opinion, following the same trade or profession, etc; an association'... The meaning of "society" as the Oxford English Dictionary definition shows can be the equivalent of "association" and I do not think that any relevant distinction in nature exists between the two. It merely seems to have happened that some organisations are called "associations", others are called "societies" but no meaningful difference can be detected between the two...Although clubs can in some respects and in some instances be seen to be distinguishable by reason of their purposes from societies or associations, they nevertheless fall squarely within the dictionary definition of "society" set out above. In short the three words are describing bodies made up of groups of persons who have come together to implement common purposes and objects... The meaning of society, association, or club as described above, emphasises a 'body of persons' and 'an organisation of people' with a 'common purpose'. Established for Community Services The Commissioner's view on the meaning of community services, as the term is used in section 50-10 of the ITAA 1997, is discussed in Taxation Determination TD 93/190 Income tax: what is the scope of the exemption from income tax provided by subparagraph 23(g)(v) of the Income Tax Assessment Act 1936? While subparagraph 23(g)(v) of the Income Tax Assessment Act 1936 (ITAA 1936) has been replaced by the equivalent section 50-10 of the ITAA 1997, the discussion in TD 93/190 is also relevant to the application of the newer provision. For the purposes of section 50-10 of the ITAA 1997 this term is to be given a wide interpretation, but altruistic purposes are an essential element of this interpretation. As noted in paragraph 3 of TD 93/190: Those words extend to a range of altruistic purposes that are not otherwise charitable, such as promoting, providing, or carrying out activities, facilities or projects for the benefit or welfare of the community or any members of the community who have a particular need by reason of youth, age, infirmity or disablement, poverty, or social or economic circumstances. As discussed in paragraphs 4 and 5 of TD 93/190 the provision does not extend to organisations that are established within the community but do not have altruistic purposes or are not of an altruistic nature. Common association as such is not considered altruistic, or the non-profit nature of any such association. Organisations that are established solely to advance the interests of their members are not motivated by an altruistic purpose and will not be established for community purposes. Only when the purposes of an association are altruistic can they be considered community service purposes. The Explanatory Memorandum to Taxation Laws Amendment Bill (No 2) 1990, the legislation introducing subparagraph 23(g)(v) into the ITAA 1936, provides further information on when an organisation's purposes can be considered community services: When purposes are directed to the benefit or welfare of members of the community in particular need, that need must arise by reason of youth, age, infirmity or disablement, poverty or social or economic circumstances. These causes of need are intended to be read broadly. Infirmity or disablement, for example, could be intellectual or physical, and could be congenital or the product of disease or of injury. Similarly, social or economic circumstances could include such varied matters are sex, living in a remote area, or inability to speak English. As noted in paragraph 6 of TD 93/190 organisations established for 'political or lobbying purposes' are excluded from exemption from income tax under this provision. The Explanatory Memorandum to Taxation Laws Amendment Bill (No.2) 1990 explains what is meant by the term 'political or lobbying purposes: Political or lobbying purposes include standing candidates for election, campaigning for changes to the law or to government policy, and the like. Community service organisations may engage in political or lobbying activities, provided these are no more than merely incidental to other purposes beneficial to the community. But a body will be unable to claim exemption from income tax under this subparagraph if its only undertakings for the benefit of the community are political or lobbying ones. Paragraph 7 of TD 93/190 states that 'the purposes for which an organisation is established are demonstrated by its current operations and activities, which may show different purposes to those suggested by a cursory reading of its constitution'. In a discussion on determining the purpose of an organisation Taxation Ruling TR 2011/4 Income tax and fringe benefits tax: charities makes a distinction between main or predominant purposes, incidental or ancillary purposes, and independent purposes in the context of determining charitable purposes. The Commissioner's view on how these terms are to be understood is set out in paragraphs 27, 28, and 29 of TR 2011/4: 27. A purpose is the 'main or predominant or dominant' purpose of an institution if any other purpose the institution has is no more than incidental or ancillary to that purpose. 28. A purpose is incidental or ancillary to a charitable purpose if tends to assist, or naturally goes with, the achievement of the charitable purpose. It does not mean a purpose that is minor in quantitative terms. 29. A purpose is independent rather than incidental or ancillary if it is an end in itself, or of substance in its own right or is not intended to further a charitable purpose. While these explanations are given in the context of determining charitable purposes they are based in case law and applicable to determining the purpose of an organisation under any section of Division 50 of the ITAA 1997. Further guidance on determining the purpose of an organisation when the stated objects serve more than one purpose can be found in case law. In considering this issue in Royal Australasian College of Surgeons v Federal Commissioner of Taxation 68 CLR 436Latham CJ observed that: ... the question-difficult or easy to answer-must always be-what is the true nature and the objects and activities of the particular society? If these objects and activities are of a mixed character then the question must be decided according to the prevalent or main character. On reviewing previous case law on the question, the court in this case adopted an approach that examined not only constitutional objects, but also the manner in which an organisation fulfills its objects, the sources of its income and how that income was used. In this case the High Court found that while membership of the College conferred benefits on members it was doing more than promoting their professional interests and was actively engaged in the promotion of science. Factors in this decision included the value to the practice of surgery of activities including the dissemination of professional information and the intended establishment of a school to meet the need for the further professional development of practitioners and research into surgical practice | Detailed Reasoning - Application to your circumstances: The Club's main or dominant purpose is to provide recreational and social benefits to its members. This is supported by the Club's stated objects, which include promoting recreational activities and providing social activities for members. While the Club undertakes activities that may provide some broader community benefit, these activities are incidental to the Clubs primary purpose. Membership-based participation at activities and social events are their primary focus rather than the broader public. They do not demonstrate that the Club is established for an altruistic purpose directed at the community or a section of the community in need, as required by TD 93/190. The Club is therefore best characterised as a member-focused recreational organisation, rather than an organisation established for community service purposes. This is consistent with the Club's objects. As the requirement to be established for community service purposes is not satisfied, it is not necessary to consider in detail whether the special conditions in sections 50-70 and 50-47 of the ITAA 1997 are met. Question 2 | Summary: The voluntary work undertaken on Activity A is not income tax exempt. | Detailed Reasoning - Application to your circumstances: As explained in Question 1, the Club is not exempt from income tax. To be exempt the Club must fall within a recognised category under Division 50 of the ITAA 1997 and satisfy all relevant requirements, including the applicable purpose and operational tests. The Club does not satisfy these requirements and is therefore not exempt from income tax. The voluntary work undertaken on Activity A does not alter this position. While the Club contributes to the construction and maintenance of Activity A, this work is undertaken on a voluntary basis by members and does not change the fundamentally member-focused nature of the Club's activities. Accordingly, the activities do not constitute a separate entity, and standalone are not capable of generating exempt income. Rather, Activity A forms part of the Club's broader activities. These activities do not change the Club's overall purpose or character, nor do they establish that the Club is organised for an altruistic community service purpose within the meaning of TD 93/190. Accordingly, the voluntary work on Activity A is not income tax exempt in its own right, and any income derived by the Club remains assessable income.