Private ruling: Income tax exempt - encouragement of game or sport
Date of advice: 30 May 2025
Published: 28 July 2025
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the Club exempt from income tax pursuant to section 50-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as an association or club established for the encouragement of a game or sport as described under item 9.1(c) of section 50-45 of the ITAA 1997? | A1: Yes. The Club is a not for profit entity established for the encouragement of sport, has a physical presence and incurs its expenditure in Australia, complies with the substantive requirements in its governing rules, and applies its income and expenditure solely for the purpose for which it is established. The Club is not an ACNC type organisation.

Relevant facts and circumstances: The Club is currently registered as an association under the relevant state legislation. The Club is an Australian resident for taxation purposes and carries on its operations principally in Australia. The stated purpose of the Club in its constitution is to promote and encourage a specified sport, conduct social activities, and apply for and renew all necessary licences. Under the Club constitution any surplus, income or assets must not be distributed to members. On the winding up or dissolution of the Club any property remaining after satisfaction of debts and liabilities is to be transferred to an institution determined by the Club members or an institution with similar objects if no such determination is made. On winding up surplus assets of the Club must not be distributed to members and must be distributed to another entity with similar purposes. Under the constitution the Club has the power to do all things necessary to achieve its purposes. These include the holding of property, operation of accounts, invest monies and raise or borrow money, appoint agents and enter into contracts. The Club constitution mandates the holding of general meetings, including an annual general meeting. Special general meetings may be requested by members if the request is made by a specified proportion of the total number of members. Under the Club constitution the business of the Club must be managed under the direction of a committee. The powers of the committee include exercising all the powers of the club, appointing staff, and establishing subcommittees. The Committee may delegate to a member of the Committee, a subcommittee or staff, any of its powers and functions other than the power to delegate or duties imposed by legislation. The Committee is to be comprised of Club office holders and ordinary Club members: Under the Club constitution office holders include a president, a vice president, an executive officer, a treasurer and a secretary. The Committee is responsible for ensuring the Club complies with the act under which the Club is registered as an association. An executive Committee is to meet prior to Committee meetings so it can make recommendations on Club management to Committee meetings: The executive committee is comprised of selected office holders. The duties of office holders are prescribed by the constitution. The president or vice president are chairpersons for any general meetings. The Secretary must perform any duty or function required under the legislation governing incorporation as an association. The treasurer ensures financial records are kept in accordance with the legislation governing incorporation as an association, and financial statements are prepared for presentation to annual general meetings. Under the constitution membership of the Club is open to any person who supports the purpose of the Club, and members must pay an annual subscription fee. Members are entitled under the constitution to access minutes of general meetings and to vote at general meetings. A register of members is to be kept by the Secretary under the constitution. Under the constitution the committee must ensure financial statements are prepared on an annual basis in accordance with the requirements of the legislation governing registration as an association. Activities Activities undertaken by the Club in the relevant financial years include; • training for and fielding teams in regional, national, and international competitions and regattas • providing training, grants for equipment, and travel subsidies for individuals taking part in other national and international competitions. • providing facilities and equipment for members and others in the community who are interested in the specified sport. • providing training, including professional coaching, and facilities for school sport teams • maintaining club buildings and storage facilities for members use and as required by lease conditions • promoting and encouraging activity in the specified sport through the Club website, a newsletter, social media, and school programs The Club currently derives its income from membership, training, and competition entry fees, donations, grants, and interest. The Club applies its income and assets solely for purpose for which it is established. Assets of the Club include invested funds. These invested funds are to be transferred to another company set up with the principal objective of managing those funds and remitting a set minimum of the return on the invested funds Club each year. This transfer is to be made on approval by a general meeting of members.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 50-1 | Income Tax Assessment Act 1997 section 50-45