Question

Which of following organisations is least likely to be exempt from income tax?

(a)      A croquet club established to promote the sport of croquet where no entertainment is provided to members.

(b)      A tennis club established to promote the sport of tennis where the club has poker machines on the premises to assist in funding the sporting activities of the members.

(c)      A swimming club originally established to promote swimming, but the club currently has extensive entertainment facilities available to the general public and earns substantial amounts from the entertainment activities.

(d)      A darts club originally established to promote darts where the club runs lotteries to assist in funding the sport of darts.

(e)      A trotting club originally established to promote horse racing and which currently receives income from the sale of the rights to televise the races. The funds received for the racing rights are used to improve track facilities.

Answer 1

Ans:

Which of following organisations is least likely to be exempt from income tax?

(a) A croquet club established to promote the sport of croquet where no entertainment is provided to members.

(b) A tennis club established to promote the sport of tennis where the club has poker machines on the premises to assist in funding the sporting activities of the members.

C) A swimming club originally established to promote swimming, but the club currently has extensive entertainment facilities available to the general public and earns substantial amounts from the entertainment activities.

(d) A darts club originally established to promote darts where the club runs lotteries to assist in funding the sport of darts.

(e) A trotting club originally established to promote horse racing and which currently receives income from the sale of the rights to televise the races. The funds received for the racing rights are used to improve track facilities.

Summary:

All other clubs are using there funds/incomes for supporting the targeted sports which amount can be exempted as donations.

but in the case of the swimming club they started to provide entertainment facilities to the general publics and start to earning money but they didn't utilised single penny of that money behind their sports ..so it can not be exempted from tax, Because they are not supporting any sports with that income , so it's can not be exempted.