Taxation Ruling IT 332 - Deductions for club fees : racing clubs : section 51AB



Ruling: 2. From general observation, supported by an examination of some available background material, it seems likely that horse-racing clubs which operate racecourses in cities and large towns would have the following common features - 3. If this is a reasonable appreciation of the situation, there would be no warrant in the absence of exceptional circumstances for saying in relation to any such club that it - to quote the crucial part of the definition of "club" in section 51AB - "... was established, or is carried on, solely or principally for the purpose of providing facilities for the use or benefit of its members ...". It would be a more realistic approach to say that it was established, and is carried on, principally for the purpose of providing and operating a public amenity with the provision of facilities on the racecourse for the use or benefit of members being no more than an important adjunct. It is considered that the observations made by Owen J. in the course of his judgment in Adelaide Racing Club Inc. v FC of T, 114 CLR 517, support this view. 4. It may be accepted that a club which regularly conducts horse-racing of dog-racing meetings attracting extensive public patronage on a course that it owns or controls would not be a "club" as defined in section 51AB with the consequence that the section would not operate to prohibit the allowance of deductions in respect of fees paid for membership of the club. It should be emphasised, however, that a claim to deduct such fees should not be conceded unless the expenditure meets the tests for deduction under section 51. Cases in which racing club membership fees satisfy those tests would be rare. 5. Paragraph 4 may be qualified initially or at a later stage in relation to any particular racing club known to have unusual features likely to bring it within the scope of the definition of a "club" in section 51AB (e.g. a club that provides, in addition to normal race-day arrangements, day-by-day drinking etc. facilities for its members that are patronized by them to an extent that affects the relative significance of the public patronage of race meetings). COMMISSIONER OF TAXATION 2 April 1976




FACTS: 1. The relevance of section 51AB of the Income Tax Assessment Act to racing club membership fees has been considered following a suggestion that the section would not operate to prohibit the deduction of fees for membership of a club that regularly conducts horse-racing meetings on two racecourses in one of the capital cities. | Date original memo issued: 02.04.76


Legislative references: 51(1) 51AB
Case references: - Adelaide Racing Club Inc. v FC of T, 114 CLR 517
Subject references: CLUB FEES RACING CLUBS SUBSCRIPTIONS ENTERTAINMENT EXPENSES