Charities Commission

Sports and recreation organisations

Updated March 2008

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The Income Tax Act 2004 provides a specific exemption for bodies promoting  amateur games and sports.
In assessing an application from a sports and recreation organisation, the Charities Commission will first look at the organisation’s purposes, and whether they are charitable. 

Do sports and recreation organisations have to register under the Charities Act?

As you may know, organisations established mainly to promote amateur games and sports have their own income tax exemption provision within the income tax legislation (see below). The Charities Act does not affect this exemption and these organisations will continue to be eligible for their income tax exemption.

From 1 July 2008, all organisations that wish to qualify for exemptions from income tax and gift and estate duty based on the grounds of charitable purpose will need to be registered with the Commission.

Can sports and recreation organisations apply for registration as charities?

The Charities Commission will register sports and recreation organisations, as long as they meet the essential requirements for registration as a charitable entity under the Charities Act, including having a charitable purpose.

In assessing applications, the  Charities Commission looks at an organisation’s purposes, and applies section 5 of the Charities Act to assess whether the purposes are “charitable purposes”. 

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 purpose is to:

• relieve poverty
• advance education
• advance religion
• or otherwise benefit the community.

In some cases, a specific Act of Parliament will state that the purposes of a particular organisation are charitable.

In addition, section 61A of the Charitable Trusts Act 1957 says that it is charitable to provide, or help to provide, facilities for recreation or other leisure time occupation, if the facilities are provided in the interests of social welfare and there is a public benefit. 

(This includes providing land, buildings, and equipment and extends to the organising of recreational activities.)

 “In the interests of social welfare” means that:

(a)  the facilities must be provided to improve the conditions of life for the people for whom the facilities are primarily intended and

(b)  either:

• those people need those facilities because of their youth, age, infirmity, disability, poverty, race, occupation, or social or economic circumstances; or
• the facilities are available to all members of the public, or to all male or all female members of the public.

Some examples of the charitable purposes of sports and recreation organisations that have registered with the Commission are:

To be beneficial to the community by …

• … establishing an athletic and recreation facility which will serve people with disabilities
• … providing recreational facilities [for the community]
• … improving the physical and psychological well being of people who have had breast cancer, by participating in dragon boat racing
  

To advance education by ...

• ... teaching ball-handling skills to school children

Registration requirements

To register, organisations have to:

• complete the prescribed application form, which includes information about their current and proposed charitable activities
• submit a copy of their rules, constitution, trust document or similar
• certify the officers of the organisation by completing a prescribed officer form.

Once registered, organisations need to:

• file an Annual Return within six months of their balance date
• notify the Commission within three months if certain information about their organisation changes.

Relevant tax legislation

The Income Tax Act 2007 provides a specific exemption for bodies promoting amateur games and sports as follows:

Income Tax Act 2007 — CW 46 Bodies promoting amateur games and sports.  An amount of income derived by a club, society, or association is exempt income if:

• the club, society, or association is established mainly to promote an amateur game or sport; and
• the game or sport is conducted for the recreation or entertainment of the general public; and
• 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.

Further information

For more detailed information about sports and recreation organisations and registration under the Charities Act, see our position paper Charitable purpose and sport and recreation organisations.

If you have any questions about your organisation’s entitlement to tax exemptions, please call Inland Revenue on 0800 377 774 or visit their website www.ird.govt.nz