Not-for-profit organisations and the tax status of professional sport: Revisiting the exemption status of the Australian Football League and its clubs

Sport holds a unique place in Australian society. Underlying this position is the tax exemption given to sport under s 50-45 of the Income Tax Assessment Act 1997 (Cth). This exemption does not differentiate between community and professional sport. The Australian Football League (‘AFL’) and its 18 clubs all enjoy not-for-profit status under the s 50-45 sports exemption and do not pay income tax. This article will argue that the AFL and its clubs should not be tax exempt. The tax exemption was designed for community sporting clubs and leagues with low levels of income and not wealthy professional sports entities. In 2023 the AFL earned $1 billion in revenue and the clubs between $50 million and $105 million in revenue. Another justification for a change in tax status is the AFL’s and some club’s close relationship with the gambling industry and the receipt of significant income. It will also be argued that the government tax subsidy should not be used by the AFL to pay its executives over $11 million in salary. This article suggests reforms such as amending the s 50-45 exemption to only cover community clubs and leagues, taxing the commercial income of sports that relate to ordinary business income and treating sports as charities and requiring them to benefit the public.