Private ruling: Income tax exemption - animal racing
Date of advice: 4 April 2022
Published: June 2022
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Club continue to be exempt from income tax under section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a club established for the encouragement of animal racing under item 9.1(a) in section 50-45 of the ITAA 1997, during and after the proposed redevelopment of the racecourse site? | A1: Yes.

Relevant facts and circumstances: Background and history The Club is registered with ASIC as an incorporated association. The Club acquired a racecourse and adjoining land. The racecourse has continuously hosted race meets and trackwork. The Club has previously sold land to meet growing debt from sustained operating losses and establish an investment fund. The Club derives income from various sources including membership subscriptions, race day admissions, training subsidies and course usage fees, and sponsorships. The Club operates a licensed hotel and gaming venue situated on its land adjacent to the racecourse and trades 365 days a year. The Club's catering operation services race day patrons as well as non-race day events. The venue is available for hire for non-race day events including exhibitions, corporate functions, Christmas parties and weddings. The Club employs permanent and casual staff. The Club has members. Membership is open to any adult member of the public. There is an annual membership fee and a joining fee for new members. Members automatically receive full voting rights following 12 months of membership. The members of the Club receive no benefits other than those associated with racing i.e., the right to attend race meetings and the use of member facilities. Membership does not confer any special privileges in respect of the hotel or other non-race day catering and/or venue hire. Access is available to members on the same commercial terms as they are available to the public. The day-to-day business affairs of the Club are managed and conducted by the Chief Executive Officer and the Board of Directors. All Director positions are filled by a vote of members at the Club's annual general meeting. Current income tax exemption of the Club The Club has previously self-assessed as income tax exempt under section 50-45, item 9.1(a) of the ITAA 1997 as a club established for the encouragement of animal racing. Governing documents The Club wishes to amend its Constitution and wants to confirm that the amendments will not impact on its income tax exemption status. A current and proposed constitution (plus draft By-Laws) have been provided. Both the current and proposed Constitutions describe its objectives, which broadly include: • the encouragement of animal racing, and • provision of sporting, amusement, recreation, entertainment and social events. The Constitution and proposed Constitution provides that income and property are to be applied to the promotion of the Club's objects and prohibits distribution of income and property to members. The wind-up clause of the Constitution and the proposed Constitutions specify that on the winding up of the Club, assets remaining must not be distributed to members or former members and must be transferred to an entity with similar purposes which also prohibits the distribution of income to members. The draft By-Laws will come into effect when the Proposed Constitution is adopted and provide the governing rules for the day-to-day operations of the club. The Club has confirmed that it complies at all times with all the substantive requirements in its governing rules and at all times has applied its income and assets solely for the purpose for which it is established. The Club states that any profits generated by non-racing activities are ultimately applied towards the conduct of racing activities and the construction and upkeep of facilities for members, industry stakeholders and the public. Current financial position and plan for future The Club has experienced net operating losses for a sustained period. Figures provided show revenue and expenses allocated between the racing and non-racing operations. The forecasts for the 2022 budget have also been provided. The figures provided show that losses from the racing operations are partially offset and funded by the profits from the non-racing operations and that this is again expected to be the case in 20XX. The figures provided show that gross revenues from both racing and non-racing operations are declining. Race day attendance levels have not changed significantly over the past 14 years. The Club expects that improved racecourse facilities, along with the proximity of increased residents and a strong retail and commercial precinct will attract increased race day and event attendees and improve declining revenues. Investment fund Property was sold to retire debt, fund necessary capital repairs and upgrades. Members voted to include a clause within the Constitution limiting the use of the funds from this sale. One of the allowed uses is the maintenance, development and improvement of facilities at the racecourse or of any other property owned by the Club. This largely means that these funds cannot be used to support the long-term viability of the Club, other than by improving the facilities. Racing activities conducted and encouraged The Club has conducted animal racing continuously on the current site. There are currently up to 50 race meets a year and substantial trackwork. The Club states that racing remains the main focus, as evidenced by more than 50% of the revenue coming from the racing operations and the non-racing operations funding its losses. Upgrade of racing infrastructure Faced with increasing costs and reducing revenues, to ensure the ongoing viability, the Club has devised a plan to upgrade and modernise its racecourse and facilities and to develop under-utilised land. This aims to improve the quality of the facilities for the trainers and jockeys and to improve the race day experience to attract increased visitation from existing and new racegoers. Details of the planned upgrades to racing infrastructure and budgeted costs have been provided. The total budgeted cost of works is in excess of the remaining investment fund, and it is also anticipated that the actual costs could be higher again. The Club has developed a plan (provided) to fund the capital improvements outlined above and further capital upgrades discussed below. Plan The Club has in the past sold off parcels of land to raise funds on an as-needs basis to meet debt obligations. The Club does not believe it can sustain this practice going forward and has devised a plan to unlock the value in the site to enable reinvestment in the facilities at the site for the benefit of animal racing and the members and public's participation and enjoyment of the sport in the future. That is, the overriding objective it to ensure the ongoing viability of the Club and the ongoing promotion and encouragement of the sport. An expression of interest issued asking for applications to partner with the Club to create an innovative, sustainable, integrated and connected residential and mixed-use development that complements the racing assets and supports the racing business. The tender process was run at arms-length and no director has any connections to the developers approached in relation to the plan and no director, member or associate are in a position to benefit directly or indirectly from the plan. There will be no discounts or other preferential outcomes offered to directors or members in relation to sale of property under the plan. Proposals were assessed within the oversight of an externally appointed independent probity advisor. A preferred developer has been selected. Stage one of the plan consists of the construction of apartments, a hotel and a connected retail and hospitality complex. Stage two includes residential dwellings. No land has or will be purchased by the Club as part of the redevelopment. All developments will take place on land already owned by the Club. The total area that will be rezoned, subdivided and sold is less than 13% of the total site. It is expected that the development activities will continue until 20XX/XX. The net gain for the Club from the development and sale of land under the plan will be applied (along with the totality of the investment fund) towards capital improvements to the racecourse facilities outlined above and to fund further capital upgrades along with investments in key assets providing income to the Club to fund racing into the future. Any excess funds will be invested in a long-term passive investment fund to create an income stream to fund the ongoing operating costs of racing at the site.

Relevant legislative provisions: Income Tax Assessment Act section 50-1 | Income Tax Assessment Act section 50-45 | Income Tax Assessment Act item 9.1(a) in section 50-45 | Income Tax Assessment Act section 50-70 | Income Tax Assessment Act section 50-47 | Charities Act 2013 section 12

Reasons for decision: Summary: Section 50-1 of the ITAA 1997 exempts from income tax the ordinary and statutory income of specific entities listed in Division 50. A society, association or club established for the encouragement of animal racing is included at item 9.1(a) of the table in section 50-45. That table specifies that an entity will qualify for the animal racing exemption where it: • is established for the main purpose of the encouragement of animal racing, and • meets the special conditions in section 50-70 of the ITAA 1997. Subsection 50-70(1) of the ITAA 1997 states that an entity covered by item 9.1 is not exempt from income tax unless the entity is not carried on for the profit or gain of its members and: • it has a physical presence in Australia and, to that extent it pursues its objectives and incurs its expenditure principally in Australia; or • it is a deductible gift recipient; or • it is prescribed by law in the Income Tax Regulations and it is located outside Australia and is exempt from income tax in its country of residence. Subsection 50-70(2) of the ITAA 1997 provides that the entity must: • comply with all the substantive requirements in its governing rules, and • apply its income and assets solely for the purpose for which the entity is established. Further, section 50-47 of the ITAA 1997 provides a special condition for all entities covered by section 50-1 of the ITAA 1997, being that if it is an 'ACNC type of entity', it is not income tax exempt unless it is registered under the Australian Charities and Not-for-profits Commission Act 2012 . | Detailed Reasoning - Society, association or club: The phrase 'society, association or club' refers to a voluntary organisation of people associated together for a common or shared purpose ( Douglas & Ors v Federal Commissioner of Taxation [1997] FCA 724, 97 ATC 4722, at [4726]). This description is consistent with the Macquarie Dictionary (Macmillan Publishers Australia, The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 27 August 2021) definition of each word: • Society '... an organisation of persons associated together for religious, benevolent, literary, scientific, political, patriotic or other purposes'. • Association '... an organisation of people with a common purpose and having a formal structure'. • Club '... a group of persons organised for a social, literary, sporting, political, or other purpose, regulated by rules agreed by its members'. A society, association or club may be constituted as an unincorporated association or be formally recognised by incorporation. The Club is an incorporated association with members. Both the current and proposed Constitutions describe its objectives, which broadly include: • the encouragement of animal racing, and • provision of sporting, amusement, recreation, entertainment and social events. The Club is managed by a Board, has a Constitution, and its members voluntarily associate together for a common purpose and common interest. Therefore, the Club is a society, association or club. | Detailed Reasoning - Animal racing: Taxation Ruling TR 2021/D6 Income tax: the games and sports exemption (TR 2021/D6), although directed at sporting club exemption, provides guidelines which are also applicable to animal racing clubs when determining income tax exemption. Animal racing includes horse racing, trotting and greyhound racing, and the racing of other animals. The Club operates a racecourse which it uses to run racing competitions. The purposes and activities of the Club are concerned with animal racing. | Detailed Reasoning - Established for the encouragement of animal racing: For a club to be established for the encouragement of animal racing, the main purpose of the club in the relevant income year must be the encouragement of animal racing ( Cronulla Sutherland Leagues Club v. Commissioner of Taxation [1990] FCA 108 ( Cronulla Sutherland ), per Lockhart J.) 'Encouragement' is not a defined term and takes its ordinary meaning. The ordinary meaning of encouragement (or the act of encouraging) has been described as stimulating by assistance or approval, including through direct or indirect means ( South Sydney Junior Rugby League Club Limited and Commissioner of Taxation [2006] AATA 265 ( South Sydney ), at [4]). The Club operates the racecourse and has continuously hosted race meets. It is accepted that the Club is encouraging animal racing. | Detailed Reasoning - Main purpose: Determining the main purpose of a club requires an objective evaluation of all material facts and circumstances. There is no set formula for weighing up the characteristics of a club to determine its main purpose. The subjective motives or intentions of the founders or members of the club are relevant but do not necessarily determine the main purpose of the club. The stated purpose of a club is also significant but not decisive. Other important considerations include the activities and history of the club and how the club is controlled ( Cronulla Sutherland , as per Lockhart J at 23 FCR 95-96). It is the main purpose of the club in the year under examination that is the relevant consideration. It is not enough to examine the purpose of a club at the time of formation (or in past years), as its main purpose may change from year to year. | Detailed Reasoning - Other purposes: A club that has both animal racing and non-animal racing purposes will not qualify for the animal racing exemption unless the non-animal racing purpose is: • merely ancillary and incidental to its animal racing purpose (that is, a purpose that is related to carrying out its animal racing purpose), or • secondary to its animal racing purpose (that is, a purpose that is independent to, but less important or less significant than, the animal racing purpose). A club can have both animal racing and independent non-animal racing purposes and still qualify for the animal racing exemption. For example, a club that provides secondary non-animal racing related services or facilities to members will not automatically be disqualified for the animal racing exemption. | Detailed Reasoning - Factors to be considered for determining main purpose: No one factor on its own will determine the main purpose of a club. A weighing of all the factors is needed. When considering the factors together, an objective conclusion must be reached that a club has a main purpose of animal racing. The following factors have been identified by courts and tribunals as relevant when considering purpose: • emphasis in the club's constituent documents that the main purpose is to encourage animal racing ( Terranora Lakes Country Club Limited v. Commissioner of Taxation [1993] FCA 80 ( Terranorra Lakes ); Re Tweed Heads Bowls Club v FC of T 92 ATC 2087 ( Tweed Heads ); St Marys Rugby League Club Ltd v Commissioner of Taxation [1997] FCA 581 ( St Marys ). • extent of animal racing activities ( Terranorra Lakes ; Tweed Heads; St Marys). • the conduct of activities directly related to animal racing ( Terranorra Lakes ; Tweed Heads; St Marys). • a high level of member participation in animal racing ( Case W114 89 ATC 891, at [894]; AAT Case 5452 (1989) 20 ATR 4125, at [4133;] Terranorra Lakes ; Tweed Heads ; St Marys . • promotion of the organisation to patrons and the public as one that encourages animal racing ( Terranorra Lakes ; Tweed Heads; St Marys). • involvement of the committee of management in the promotion of animal racing ( AAT Case 8267 (1992) 24 ATR 1068; Tweed Heads ; St Marys ). • the use of surplus funds for encouraging animal racing ( Cronulla Sutherland ; Tweed Heads ; St Marys ). • the provision of financial and in-kind support for encouraging animal racing ( Cronulla Sutherland) . Both the current and proposed Constitutions describe the Club's objectives, which broadly include: • the encouragement of animal racing, and • provision of sporting, amusement, recreation, entertainment and social events. The Cub has continuously hosted race meets and trackwork. The Club has members and membership is open to any adult member of the public. Members receive no benefits other than those associated with animal racing i.e., the right to attend race meetings and the use of member facilities. Members are not required to actively participate in animal racing. However, all members can spectate. The Club promotes itself to patrons and the public as a club that encourages animal racing. For example, on its website. The day-to-day business affairs of the Club are managed and conducted by the Chief Executive Officer and the Board of Directors. All Director positions are filled by a vote of members. All members are entitled to vote after 12 months of membership. That is, the Constitution does not require its members or committee members to be actively involved in animal racing. However, the website shows that the current committee members almost all have a long interest (in various forms) in animal racing. No evidence has been provided as to the provision of financial and in-kind support for encouraging animal racing above and beyond the operation of the racecourse itself. When considering purpose, it is how the surplus funds are used, or retained for future use, in line with the objects, activities and other characteristics of the club that matters. The Club has experienced net operating losses for a sustained period. The figures provided show that losses from the racing operations are partially offset and funded by the profits from the non-racing operations and that this is also expected to be the case in 20XX. Property was previously sold to retire debt and fund necessary capital repairs and upgrades to the racecourse. Members voted to include a clause within the proposed Constitution limiting the use of the investment fund. One of the allowed uses is the maintenance, development and improvement of facilities at the racecourse or of any other property owned by the Club. This largely means that these funds cannot be used to support the long-term viability of the Club, other than by improving the facilities. However, the Club continues to generate significant losses and states that this is unsustainable. Further, the figures provided show that gross revenues from both racing and non-racing operations are declining. The Club considers it vital to improve race day numbers to improve racing revenues and maintain the relevance of animal racing. The Club expects that improved racecourse facilities, along with the proximity of increased residents and a strong retail and commercial precinct will attract increased race day and event attendees and improve declining revenues. Faced with increasing costs and reducing revenues, to ensure ongoing viability, the Club devised a plan to upgrade and modernise its racecourse and facilities and to develop under-utilised land. This aims to improve the quality of the facilities for the trainers and jockeys and to improve the race day experience to attract increased visitation from existing and new racegoers. As the cost of the upgrade is in excess of the remaining investment fund, the Club has developed a plan (provided) to fund the capital improvements outlined above and further capital upgrades discussed below with the overriding objective being to ensure ongoing viability and the ongoing promotion and encouragement of animal racing. The plan envisages an arms' length partnership with a developer to create an innovative, sustainable, integrated and connected residential and mixed-use development that complements the racing assets and supports the racing business. A developer has been chosen. No director, member or associate are in a position to benefit directly or indirectly from the plan and there will be no discounts or other preferential outcomes offered to directors or members in relation to sale of property under the plan. Stage one of the plan consists of the construction of apartments, a hotel and a connected retail and hospitality complex. Stage two includes residential dwellings. The total area that will be rezoned, subdivided and sold is less than 13% of the site. The combination of the proposed projects is expected to consume all the investment fund and the profits from the plan. The result will be an upgraded racing infrastructure, along with investments in key assets providing income to the Club to fund racing into the future. Any excess funds will be invested in a long-term passive investment fund to create an income stream to fund the ongoing operating costs of animal racing. In summary, the Club uses funds from its commercial activities to partially offset losses from racing and in the past has sold land to cover debt and maintain racing facilities. The Club states this is no longer viable and intends to use it's currently retained funds to upgrade racing facilities. Further, it has devised a plan involving the development of and exploitation via sale or other means of land it holds that is superfluous to needs. This will cover the shortfall in capital required to fund the upgrade of the racing facilities and further investment in other non-racing assets allowing for the development of a mixed used residential and retail complex in the hope of attracting more race goers and people generally to the area. The idea is that in turn, this will provide an income stream to ensure the Club's viability and thus ability to continue encouraging animal racing into the future. The Club advises that any excess funds will be invested in a long-term passive investment fund to create an income stream to fund the ongoing operating costs of animal racing. It is accepted that the Club uses surplus funds to encourage animal racing. | Detailed Reasoning - Activities and purpose: The activities undertaken by a club are an important consideration in determining whether it qualifies for the animal racing exemption. However, activities considered in isolation do not demonstrate the purpose of a club. Activities are commonly a means to an end. Activities can serve the purpose of encouraging animal racing and other independent non-animal racing purposes. All the club's activities must be objectively weighed against the objects, history and control of the club to determine the main purpose for which it is established in a particular year. An activity like the organisation of, or participation in, animal racing competitions can be readily understood as advancing a purpose of encouraging animal racing. Where a club derives its revenue from commercial operations, the club needs to objectively determine the extent to which commercial operations are a means to the end of advancing the animal racing purpose or are advancing some other purpose ( Commissioner of Taxation of the Commonwealth of Australia v Word Investments Limited [2008] HCA 55 ( Word Investments ; Terranorra Lakes ). Direct or indirect activities that indicate the encouragement of animal racing can include: • forming, preparing and entering teams and competitors in competitions • coordinating activities • organising and conducting races • improving the abilities of participants • improving the standard of trainers and coaches • providing purchased or leased facilities for the activities of animal racing for the use of club members and visitors • encouraging increased and wider participation and improved performance • marketing • initiating or facilitating research and development, and • facilitating the activities above by making a financial or in-kind contribution to an organisation that performs them. Nonetheless, a club can have both animal racing and independent non-animal racing purposes and still qualify for the animal racing exemption. For example, a club that provides secondary non-animal racing related services or facilities to members will not automatically be disqualified for the animal racing exemption. What is critical is that the non-animal racing purpose is: • merely ancillary and incidental to its animal racing purpose (that is, a purpose that is related to carrying out its animal racing purpose), or • secondary to its animal racing purpose (that is, a purpose that is independent to, but less important or less significant than, the animal racing purpose) (Lockhart J in Cronulla Sutherland at 4225). Where the main purpose becomes the carrying out of those other activities, a club is not exempt. Nor is it exempt if it continues to be involved in the animal racing to a substantial degree but is equally involved with another purpose or purposes. As Lockhart J said in Cronulla Sutherland at ATC 4225; ATR 312: But if it has two co-ordinate objects, one of which is outside the exemption, the exemption cannot apply because it would be impossible to say that one object is the main or predominant object. In Tweed Heads , the taxpayer was a lawn bowls club which had indoor and four outdoor bowling greens. The club participated in and organised large number of tournaments each year. The club building was substantial and the catering and entertainment facilities were extensive. The club's main source of revenue was derived from poker machines which were used predominantly by the 400,000 annual visitors to the club. In a judgement by Dr P Gerber at 92 ATC 2099 he stated: ...I am satisfied that the club, from its very inception, has been and is dedicated to a very substantial degree to the promotion of lawn bowls and, latterly, to indoor bowls. True it is that some elements of the Club's activities- leaving the poker machines aside for the moment- are social and cannot, as such, be characterised as "promoting the athletic game of bowls", but that is true of virtually all sports clubs. Be that as it may, I am left in no doubt that the Club has as its main or dominant purpose, the promotion and encouragement of the bowling. Whilst the Club undertakes activities that encourage animal racing, it also undertakes non-animal racing activities by providing food and beverage facilities to members and the public. As was noted above, the Club has continuously hosted race meets at its racetrack. It encourages animal racing on its website and currently hosts a number of race meets and trackwork each year. However, the Club also operates a licensed hotel and gaming venue situated on land adjacent to the racecourse and trades 365 days a year. The Club's catering operation services race day patrons as well as non-race day events. The venue is available for hire for non-race day events including exhibitions, corporate functions, Christmas parties and weddings. The Club employs permanent and casual staff, some of whom are involved in racing related activities and some who are employed for non-racing activities. Further, over the next eight years, the Club also intends to rezone, subdivide and develop approximately 13% of its land by entering into a development agreement with a developer to create an innovative, sustainable, integrated and connected residential and mixed-use development that complements the racing assets and supports the racing business. This will include the construction of apartments, a hotel and a connected retail and hospitality complex and residential dwellings. The net gain and existing surplus funds will be applied towards capital improvements to racecourse facilities, fund further capital upgrades and provide income streams. Any excess funds will be invested in a long-term passive investment fund to create an income stream to fund the ongoing operating costs of animal racing. The Commissioner is satisfied that these non-animal racing activities are currently undertaken in furtherance of the Club's racing purpose (they provide funding for the animal racing activities and facilities) and are not the main purpose of the Club. The Commissioner accepts that the main purpose of the Club is to encourage animal racing. | Detailed Reasoning - Non-profit: To qualify for the animal racing exemption, a club must not be carried on for the purposes of individual members' profit or gain, either while the club is operating or on its winding up. Club members may receive communal membership benefits, such as the use of the facilities, that are incidental to the club's objects. This will not prevent the club meeting the not-for-profit requirement. The club may also pay members reasonable remuneration for services they perform for the club. Clubs can use various mechanisms to ensure they meet the not-for-profit requirement. 'Not-for-profit' clauses in governing documents are the most common way. These prevent the distribution of profits or assets for the benefit of particular persons while the club is operating and on winding up. To meet the not-for-profit requirement, a club's actions must also be consistent with its non-profit clauses which prohibit distributions for the private benefit of its members. The Constitution and the proposed Constitution both prevent distribution to members while the Club is operating and on winding up. There is nothing to indicate that the Club does not operate in accordance with this prohibition. The Club is not carried on for the profit or gain of its individual members. | Detailed Reasoning - In Australia: The Club is a resident of, and is located in, Australia. The Club carries on its activities in Australia. It pursues its objectives and incurs its expenditure in Australia and therefore satisfies this requirement (Taxation Ruling TR 2019/6 Income tax: the 'in Australia' requirement for certain deductible gift recipients and income tax exempt entities ). | Detailed Reasoning - Comply with all the substantive requirements in its governing rules: Paragraph 9 of Taxation Ruling TR 2015/1 Income tax: special conditions for various entities whose ordinary and statutory income is exempt , provides that an entity's 'governing rules' are those rules that authorise the policy, actions and affairs of the entity. Paragraphs 18 and 19 of TR 2015/1 explain that the substantive requirements in an entity's governing rules are those rules that define the rights and duties of the entity and include rules such as those that: • give effect to the object or purpose of the entity relate to the non-profit status of the entity • set out the powers and duties of directors and officers of the entity • require financial statements to be prepared and retained • set out the criteria for admission as a member of an entity • require an entity to maintain a register of members, and • relate to the winding-up of the entity. From the supporting evidence provided, there is nothing to suggest that the Club does not comply with the substantive requirements set out in its current Constitution. | Detailed Reasoning - Apply its income and assets solely for the purpose for which it is established: Paragraphs 33 to 35 of TR 2015/1 provide that an entity must solely apply its income and assets for the purpose for which the entity is established. However, where the misapplication or misapplications of part of the income or assets are immaterial in amount and are a one-off misapplication or occasional misapplications, the income and assets condition will still be satisfied. The earlier discussion shows that the Club applies its income and assets solely for the purpose for which it was established. The Club satisfies the special conditions in section 50-70 and section 50-47 of the ITAA 1997. | Detailed Reasoning - Section 50-47 of the ITAA 1997: Section 50-47 of the ITAA 1997 provides a special condition for all entities covered by section 50-1 of the ITAA 1997, it states: An entity that: (a) is covered by any item; and (b) is an ACNC type of entity; is not exempt from income tax unless the entity is registered under the Australian Charities and Not-for profits Commission Act 2012. Broadly, an entity that can be registered as a charity with the Australian Charities and Not-for profits Commission (ACNC) is an 'ACNC type of entity'. The Charities Act 2013 (CA) sets out the requirements to be a charity. Section 12 of the CA provides purposes that are 'charitable purpose' and includes purposes such as advancing education and advancing health. The encouragement of animal racing is not a charitable purpose. The Club has a purpose of encouraging animal racing which is a non-charitable purpose. As such, the Club is not capable of being a registered charity and is not an ACNC type of entity. Section 50-47 of the ITAA 1997 does not apply to the Club. | Detailed Reasoning - Conclusion: The Club is a society, association or club established for the encouragement of animal racing as it is: • is established for the main purpose of the encouragement of animal racing, and • meets the special conditions in section 50-70 of the ITAA 1997. Therefore, The Club's ordinary and statutory income is exempt from income tax by virtue of section 50-1 of the ITAA 1997.