Taxation Determination TD 93/194







This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). | 1. A licensed club is only assessable on trading income which relates to non-members and on income received from sources outside its general trading activities. This is due to the principle of mutuality that recognises that any surplus arising from contributions to a common fund created and controlled by people for a common purpose is not income. ( Bohemians Club v Acting FCT (1918) 24 CLR 334; Sydney Water Board Employees Credit Union v FCT (1973) 73 ATC 4129; (1973) 4 ATR 157; (1968) 18 TBRD Case T55 .) | 2. Subsection 51(1) provides that expenditure incurred in gaining or producing assessable income is an allowable deduction, except to the extent that it relates to gaining exempt income or is of a capital, private or domestic nature. Accordingly, expenses incurred by a licensed club can be classified for income tax purposes as follows: | 3. Clubs may, for the purposes of calculating taxable income, adopt an alternative measurement technique where there is a reasonable basis to do so (e.g. better recording system of member/non-member spending) and provided it reasonably and accurately reflects the club's income for the year in question. | 4. A full discussion of these issues is contained in the Guidelines for registered and licensed clubs published by the Australian Taxation Office in May 1992. | Example: The club's activities for the year resulted in trading income of $100,000 and investment income of $5,000. The non-member ratio for the year was 25%. Total expenses for the year was $60,000, which was broken up as follows: | Gross income (from trading accounts) | Gross expenditure (from trading accounts) | donations and superannuation | expenses in relation to investment expenditure | non-member only expenditure | Non-member ratio (25% of 50,000) | epenses in relation to investment income | Commissioner of Taxation 7/10/93 | Previously issued as Draft TD 93/D148


Legislative references: ITAA51(1)
Case references: Bohemians Club v. Acting FCT (1918) 24 CLR 334
Subject references: clubs allowable deductions