Is My Sporting Club a Charity?

In Australia, registering as a charity provides tax exemptions and benefits for not-for-profit entities. Sporting clubs may not qualify, but can self-declare as not-for-profit to receive tax exemptions and government grants.

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In Australia, being registered as a charity has numerous advantages for organisations which are pursuing benefactory, charitable or not-for-profit purposes. Amongst other things, it qualifies them for tax exemptions, at both a State and Commonwealth level, and registration as a charity is therefore desirable for many bodies, and sometimes vital to their work. 

Sporting clubs, which generally engage in not-for-profit activity, many wish to qualify for these benefits. 

Under Australian law, the Charities Act 2013 sets out a number of charitable purposes, such as ‘advancing’ health, education, religion, culture, public welfare, and other purposes ‘beneficial to the general public’. If a not-for-profit entity has these purposes exclusively, it can qualify as a charity. 

In law, sporting clubs have historically not been considered to be charities under this test, and sport is not considered to be a charitable purpose. 

There is an exemption for organisations which provide sport as a means to other purposes, such as for therapy or in the context of care. Interestingly, one sporting organisation has been granted charity status: the Australian Sports Foundation. The ASF is a platform which aids private elite athletes to raise funds to participate in sporting competitions, such as by travelling to overseas international tournaments.  

It is perhaps curious that a distinction exists in respect of charity status between an organisation which supports sporting ventures, but not sporting clubs themselves. 

However, sporting clubs are nonetheless entitled to certain tax benefits even if they cannot register as charities.  

Sports clubs such as a local football club can self-declare as not-for-profit organisations, for which the primary requirement is that they do not make and distribute profits to owners or shareholders, but retain those profits for the purposes of furthering the club and its aims (i.e. by engaging a football coach or building a new building). 

Being a not-for-profit has two key advantages:  

  • Exemption from Commonwealth taxes (GST and income tax). This means that a club would not have to pay GST on purchases (effectively reducing the cost of club expenses on which GST is charged by 10%), and would not have to pay income tax. 
  • Qualification for certain government grants.  

A Club can preserve its corporate structure when it becomes a not-for-profit, and the change is therefore usually minimally inconvenient. 

If you or your sports club need advice on what status and benefits you might be able to qualify for, contact Warlows Legal today. 

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