law change on clubs distributing proceeds?

[oysterman]

A sports club I'm a member of is about to vote on a rule change proposed by the management committee to the effect that if it were to sell assets in the future, the proceeds would have to go to another institution/s with the same objectives as the club or to charity.

Has there been a law change to prevent clubs from dividing up such proceeds among the members?

If there has, would it affect the registration of a club if it didn't reflect such a change in its rules?

 

[Brendan Burgess]

This is a requirement for registering as a charity for tax purposes. But do sports clubs qualify as charities?

The Board of the club should be explaining why they are making such a rule. If the club has valuable property, they might be trying to deter carpetbaggers from joining and then winding up the club.

brendan

 

[csirl]

This is a requirement for registering as a charity for tax purposes. But do sports clubs qualify as charities?

There is no requirment to be registered as a charity.

The giving assets to another similar club on dissolution thing is a requirement for all non-profit organisations, not just charities. The reason being that if, on the dissolution of the club, its assets do not go to another non-profit with similar aims, then, technically speaking the club not non-profit as someone or some non-profit organisation would have increased its net worth (even if by trivial amount) by the acquistion of the assets.

Has there been a law change to prevent clubs from dividing up such proceeds among the members?

See above. If the assets are distributed to the members then the members have profited from the clubs activities, so the club is technically NOT non-profit i.e. is a commercial enterprise with consequential taxation responsibilities. I dont think its a case that the law has recently changed - has been around for years. Its more probable that your club has only become aware of this or has had it pointed out to it that it should make the changes in order to comply with the law.

Your club is doing the correct thing. There is a section in Revenue that deals with non-profit clubs and sports bodies & sets out the rules etc. Most National Governing Bodies of sport are registered with this section as being tax exempt.

 

[csirl]

P.S. The above applies to non-profit clubs. There are of course commercially run clubs who seek to make profits who are treated as any other business.

In general non-profit making voluntary club + nobody benefiting from assets on dissolution go hand in hand.