Sports and recreation organisations
Updated September 2007
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The Income Tax Act 2004 provides a specific exemption for bodies promoting amateur games and sports.
Do sports and recreation organisations have to register under the Charities Act?
From a tax point of view, there is no need for amateur sports or recreation organisations to register with us.
As you may know, organisations established mainly to promote amateur sports have their own income tax exemption provision within the income tax legislation (see below). There will be no direct impact on these organisations as a result of the Charities Act and they will continue to be eligible for their income tax exemption.
Relevant tax legislation
The Income Tax Act 2004 provides a specific exemption for bodies promoting amateur games and sports as follows:
Income Tax Act 2004 — CW 39 Bodies promoting amateur games and sports
An amount of income derived by a club, society, or association is exempt income if:
(a) the club, society, or association is established mainly to promote an amateur game or sport; and
(b) the game or sport is conducted for the recreation or entertainment of the general public; and
(c) no part of the funds of the club, society, or association is used or is available to be used for the private pecuniary profit of a member, proprietor, shareholder, or associate of any of them.
Can sports clubs register anyway?
Any organisation that considers it has charitable purposes and is established for “public benefit” (not just for the benefit of its members) may apply for registration with the Commission.
From July 2008, all organisations that wish to be eligible for charitable tax exemption from Inland Revenue will need to be registered with us.
What does “charitable purpose” mean?
Charitable purpose has a special meaning in the law that is more limited than the meaning people generally give to those words.
To have a charitable purpose, the rules or governing document of an organisation must clearly state that its work:
- relieves poverty
- advances education
- advances religion
- or otherwise benefits the community.
For an organisation’s purposes to be charitable, its aims must also be for a public purpose. The benefit must be available to a large part of the community and the activities must not result in the private benefit or profit of any individual.
The relevant section of the Charities Act relating to the meaning of charitable purpose is section 5. See our information sheet Charitable purpose for more details.