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Tuesday, 17 February 1987
Page: 89

(Question No. 4904)

Mr Tickner asked the Treasurer, upon notice, on 14 November 1986:

(1) Are horse and pony clubs taxed on income and investments without the benefit of the limitations and exemptions from taxation granted to greyhound racing, horse racing and trotting.

(2) Will he investigate this apparent anomaly with a view to correcting it.

Mr Keating —The answer to the honourable member's question is as follows:

(1) Sections 23 (g) (iii) and 23 (g) (iv) of the Income Tax Assessment Act provide for exemption from income tax of a society, association or club which is not carried on for profit or gain to its individual members and is established for, or has as its predominant activity, the encouragement or promotion either of an athletic game or sport in which humans are the sole participants or of animal races. Pony clubs, motor sports clubs and many other sporting clubs do not satisfy the criteria for those specific exemptions.

Nevertheless, as with non-profit clubs and associations generally, pony clubs do receive favourable treatment under the income tax law. They are free from tax on income received from members under the `principle of mutuality'. This principle recognises that members of an association, society or club do not make a profit from dealing collectively amongst themselves. Therefore, such organisations only pay tax on income from investments and from trading with non-members. In addition, a tax-free threshold of $4,416 per annum applies in determining tax payable. This threshold is phased out over the income range $416 to $2,542.

(2) Pony clubs have not been singled out for discriminatory income tax treatment. The tax treatment of pony clubs remains unchanged, as it has for many years. Indeed, many other types of sports and games clubs are also not covered by specific exemption provisions. These include clubs such as motor racing clubs, motor boat racing clubs, aero and aerobatics clubs, and equestrian clubs generally. The Section 23 exemptions referred to above also do not cover non-profit clubs and associations established for predominantly social purposes such as RSL clubs, clubs serving ethnic groups, workers' clubs etc., as well as sporting clubs whose predominant activities are judged to be the provision of amenities for their members rather than the promotion of an athletic sport or game.

Any extension of the exemptions, to pony clubs or others, would make it extremely difficult for the Government to refuse the numerous calls for similar exemptions that have been received from bodies representing other sports not presently receiving exemption and from non-profit clubs and associations generally. Such a development could have substantial budgetary consequences, which could not be contemplated in the current economic environment.