Life’s not all fun and games

WA has the second highest participation rate in sport and physical activities across the country. If you are involved in a local sporting club, one thing you can’t afford to overlook is tax.

You need to think about your responsibilities in terms of income tax, GST, PAYG, FBT, and Super Guarantee.

The good news is your local club may be exempt from income tax, providing you can meet a couple of tests.

First, your club needs to be a non-profit organisation. You can still make a profit, but you can’t distribute it to owners, members, or other individuals. You need to use it to carry out the purpose of the club.

Secondly, your club needs to be established for the encouragement of a game or sport. This could include athletics, sports, animal racing and even less physical activities such as chess and bridge.

If you are exempt from income tax you won’t need to lodge an income tax return and you don’t need to notify the ATO of your exemption. But it is important to review your income tax status regularly, particularly if you make changes in the structure of your organisation or its activities.

The bad news is, despite being exempt from income tax, there are other obligations and taxes that apply.

Your local sports club may run a bar. If the annual turnover of your club will be $100,000 or more, you must get an ABN and register for GST. Below this level, registration is optional.

If you register, you can claim credits for the GST included in the cost of goods and services your club buys, but you will also need to add the government’s 10 per cent GST on all your taxable supplies.

If your annual turnover is below $100,000 and you choose not to register for GST, you can’t charge GST on your supplies, but according to the ATO you can still claim input tax credits on your purchases.

If you pay the person who runs the club bar you will need to register for PAYG. You need to withhold tax from payments made to your employees and send these amounts to the tax office.

Letting your employees use a work car for private purposes, providing a cheap loan to an employee, or paying their private health insurance also may be fringe benefits.

If your club provides fringe benefits to its employees, you may be subject to FBT, even though your organisation may be exempt from income tax.

Where the total taxable value of an employee’s fringe benefits is more than $1000 a year, you need to report them on the employee’s payment summary.

However, most income tax exempt organisations will qualify for a rebate if they have to pay fringe benefits tax.

All clubs, societies and associations that are employers are subject to the Superannuation Guarantee legislation. The super guarantee requires employers to pay super for their employees. This must be paid into a complying super fund, or a super guarantee charge will be imposed by the ATO.

There are some exemptions. If employees are paid less than $450 in a month you don’t have to provide super that month. And you don’t have to provide super for staff over 70 years old.

Most of us are now sun-smart when we go out to play, but local sporting clubs need to be tax-smart too.

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