My wife looks forward to the opening of the AFL season each year. She pays her club membership to secure admission to games and a token piece of merchandise in the form of a scarf or cap. We watched the first round of the season back in March 2020 on TV as the MCG was closed to spectators due to COVID 19. There has been no live footy since. Some clubs are now offering a tax deduction to their members and I have been asked how that works.
Club membership payments will be re-directed to the Australian Sports Foundation which is tax deductible. The member expresses a preference to ASF that the donation be applied to promotion of sport through the donor’s club.
For the gift to be deductible it will need to meet four requirements set out in Taxation Ruling 2005/13 which is the Australian Taxation Office guidance on how to make a genuine gift.
- You must pay over the money with no strings attached – that is no conditions.
- The payment must be voluntary – that is, you were not meeting a legal obligation to pay it.
- You paid it for the benefit of the recipient and the recipient had no obligation to you as to what to do with it.
- You got no material benefit or advantage.
The club may first take a sum from the membership payment to recognise benefits already received – such as merchandise.
The logistics are tricky. The gift must be given voluntarily with no benefit in return. ASF must decide how to apply it. Caroline Wilson writes in the Age that clubs are waiting on a ruling from the Australian Taxation Office.
The Clubs must explain to the ATO all the relevant details of the arrangements if they are to rely on the Ruling to enable members to get a tax deduction. If the actual arrangements are disallowed by the ATO, members will understandably be upset. If it works, it may be some consolation for a lost season.