Accounting Theory 3Third, Sporting activities help in building social capital and promoting community spirit(Taxpayers Australia Inc, 2014, p. 690). Reasons why clubs have achieved large incomes from tax-free statusTax-free status for sporting clubs was meant to increase the funds for facilitating development and support for sport in Australia. The funds are meant to solely help in supporting the cause of sport clubs and the NFL and NRL are not allowed to distribute their surpluses to their members or invest the money in projects that promote the financial status ofindividual members. Therefore, critics should not focus on the amount of many held by sporting clubs through mutual funds as well as the impact of tax-free policy(Kohler, 2015, p.43). Rather, questions should be asked whether or not the clubs use the funds for intended cause. Clubs are free to engage in activities that increase their financial position as far as suchactivities are meant for developing mutual funds and not profit making. Without subjected to taxation and allowed to engage in activities to develop their mutual funds, clubs are more likely to achieve large incomes(Kohler, 2015, p. 56). A difference between profit-making and mutual funds is based on the fact that the latter cannot be directed towards benefiting individuals. When it comes to tax-free status, critics should not focus on the activities involved in raising the funds. The focus should be on using the funds to serve the ultimate purpose. The purpose of increasing mutual funds is to allow clubs to conveniently fund their sporting activities(Parker, et al., 2011, p. 5). Minimising the cost of funding sporting activities sports the purpose of the sporting clubs. Tax-free status is one way of ensuring that sporting clubs obtains significant amount of funds and resources to meet their objectives every year. In conclusion, tax-free status enjoyed by the NRL and NRL clubs should not be abolished because the funds cannot be used to finance private projects; the funds can only be distributed to funds sporting activities(Di Pietra, et al., 2014, p. 113).

Accounting Theory and Application - Assignment

Contribute Materials

Related Documents

Accounting Theory: Tax Exemption of Sporting Clubs and its Impact on Public Interest

Assignment on Accounting Theory

(Solved) Essay on Tax Exemption

+13062052269

info@desklib.com