REPORT: Stop the AFL's Tax Free Corporate Status

[NoobPie]

How about you read Wookie's post. Its long but very interesting. And makes many, many points on where the AFL differs from what generally applies to not for profits.

Had a read of it. It is actually not Wookie but a cut and paste of a blog article

I'm not sure what you expect me to take from that though? The guy is making a very technical case against the AFL's tax free status which, me not being a tax lawyer / accountant, I am unable to contest. In practice though, I think basic principle that the AFL is a not for profit means the AFL is a not for profit however that is facilitated legally (including pragmatic treatment by the tax commissioner bestowed to all such sporting organisations).

The key is 1) there is organisational purpose that is not making profits and 2) there are no dividends paid to share holders / owners. The blogger who wrote that article is trying to characterise club distributions to its not-for-profit member clubs as dividends which is absurd whether he is right or not about his legal interpretation. Clearly the tax commissioner thinks so as well.

He claims that Collingwood never sent him an AGM notification when he was a member which is probably because he wasn't a social club member (which is the requirement to be a capital M member) at Collingwood.


Bottom line is though that there is still no way the AFL (and presumably the NRL) could be made to pay tax in a credible and legal way that does not radically shake up sporting, and many non-sporting organisations tax statuses

 

[HairyO]

Are all sporting organisations in Australia not for profits?

 

[jatz14]

Are all sporting organisations in Australia not for profits?

There are clubs that are owned, and are bought and sold, so i think it would be hard to call them non profit. Didn't the Chinese just invest in the South Australian soccer club?

 

[Rob]

Are all sporting organisations in Australia not for profits?

No. There are plenty of privately owned sporting clubs and organisations.

V8 Supercars are probably the highest profile privately owned for profit sports organisation, and there are heaps of NRL/A-League/NBL teams that are also privately owned. Most of them would make losses so wouldn't pay any tax anyway.

Let's clarify something - there are plenty of not for profit organisations that are *not* exempt from income tax. As an example, one of the biggest is the Panthers entertainment group. That doesn't mean they pay tax on their profit, but they do (or should, I don't know what their taxable income is) pay tax on profit that comes from outside it's members. If you've ever gone to one of those pokie palaces as a non member, you'll need to sign in and they keep a record of it, that's because they need to estimate how much of their income comes from non-members.

 

[BringBackTorps]

He claims that Collingwood never sent him an AGM notification when he was a member which is probably because he wasn't a social club member (which is the requirement to be a capital M member) at Collingwood.

There is a very important distinction between most Vic. AFL Clubs, & other professional sporting Clubs in Australia (eg A League Clubs -& some RL & RU Clubs).
Most of the latter are truly franchise operations, privately owned, "for profit" organisations, whose owners are unassailable, & which can be dissolved at their owners' whims. No legal permission required by their members.

For Vic. AFL Clubs, it is my understanding members (whether full social club members only, I'm not sure) can call an EGM to seek a spill of the Board -where members can vote on their replacement. Thus, ultimate power rests with the members. IIRC, NMFC reverted to this structure c.2008.

It is probable, though, that GWS & GC's members don't have these same voting powers. Their Clubs are ultimately controlled by the AFL.
I'm not sure of the status of WC & Freo -are they legally controlled by the WAFL? Does the SANFL have similar status?

 

[threenewpadlocks]

There is a very important distinction between most Vic. AFL Clubs, & other professional sporting Clubs in Australia (eg A League Clubs -& some RL & RU Clubs).
Most of the latter are truly franchise operations, privately owned, "for profit" organisations, whose owners are unassailable, & which can be dissolved at their owners' whims. No legal permission required by their members.

For Vic. AFL Clubs, it is my understanding members (whether full social club members only, I'm not sure) can call an EGM to seek a spill of the Board -where members can vote on their replacement. Thus, ultimate power rests with the members. IIRC, NMFC reverted to this structure c.2008.

It is probable, though, that GWS & GC's members don't have these same voting powers. Their Clubs are ultimately controlled by the AFL.
I'm not sure of the status of WC & Freo -are they legally controlled by the WAFL? Does the SANFL have similar status?

This should answer your questions:

 

[BringBackTorps]

This should answer your questions:

I never knew the AFL legally controlled Adelaide & Port Adelaide. I vaguely remembered the SANFL pulled all the strings.
Is this widely known in SA -& how do the Croweaters feel about it !?!

Also, I thought the WA Govt. ultimately controls the WAFC -so the Govt. (not WAFL) has ultimate control over WC & Freo?

 

[jatz14]

F

I never knew the AFL legally controlled Adelaide & Port Adelaide. I vaguely remembered the SANFL pulled all the strings.
Is this widely known in SA -& how do the Croweaters feel about it !?!

Also, I thought the WA Govt. ultimately controls the WAFC -so the Govt. (not WAFL) has ultimate control over WC & Freo?

From the WAFC website.

The West Australian Football Commission (WAFC) is the caretaker of football throughout the State and is responsible for the overall development of the game.

The WAFC’s role includes ownership of the State’s two AFL teams – the West Coast Eagles and Fremantle Football Club, guiding the West Australian Football League (WAFL), overseeing community football, managing umpiring, and driving participation through game development and the talent pathway.

The WAFC is a not for profit sports association. It is incorporated under the Associations Incorporation Act and governed by a voluntary Board of Commissioners that oversees the operation of all football activities throughout the State. The WAFC features more than 100 employees spread across the State.

 

[The_Wookie]

This should answer your questions:

 

[Prince Imperial]

The last time I looked at the constitutions it was apparent that the two member elected positions at Ade, PA and Syd were subject to AFL approval.

I know the AFL loves control, but there's no apparent reason why these three clubs should not immediately be transitioned to fully independent member owned clubs.

I've never been able to find online the AFL's own constitution or information on what clubs are eligible to vote to elect commissioners. It would seem perverse and bad governance that the five AFL controlled clubs could have any say.

 

[The_Wookie]

The last time I looked at the constitutions it was apparent that the two member elected positions at Ade, PA and Syd were subject to AFL approval.

I know the AFL loves control, but there's no apparent reason why these three clubs should not immediately be transitioned to fully independent member owned clubs.

I've never been able to find online the AFL's own constitution or information on what clubs are eligible to vote to elect commissioners. It would seem perverse and bad governance that the five AFL controlled clubs could have any say.

the Links to the AFL Articles and Memorandum of Association have been available on bigfooty for some time

http://footyindustry.com/files/afl/Australian Football League Articles of Association (1993).pdf
http://footyindustry.com/files/afl/Australian Football League Memorandum of Association (1993).pdf
http://footyindustry.com/files/afl/AFL Articles of Association (1993) Annex A.pdf

 

[Prince Imperial]

the Links to the AFL Articles and Memorandum of Association have been available on bigfooty for some time

http://footyindustry.com/files/afl/Australian Football League Articles of Association (1993).pdf
http://footyindustry.com/files/afl/Australian Football League Memorandum of Association (1993).pdf
http://footyindustry.com/files/afl/AFL Articles of Association (1993) Annex A.pdf

Thanks Wookie. Assuming there have been no amendments since, this does suggest that all clubs elect the Commissioners.

The whole governance structure seems very circular and problematic. The AFL (controlled by the Commissioners) appoints the boards of five of the clubs who in turn have a 5/18 say in who are appointed Commissioners. The Commissioners and the directors of the five clubs have a vested interest in appointing each other.