AFL Tasmania is at risk of being stripped of $100,000 in state government funding for failing to meet its obligations in the grant agreement.
AFL Tasmania is appearing before a parliamentary inquiry investigating AFL Tasmania's use of taxpayer money and is responding to allegations it misused taxpayer funds.
AFL Tasmania chairman Dominic Baker, who had earlier told media that the organisation was meeting all of its 43 key performance indicators set out in the funding agreement, admitted the state government was withholding $100,000 - a fifth of its annual grant.
The Department of Sport and Recreation advised AFL Tasmania it was not satisfied with progress on providing training in governance to community clubs in July and has still not paid the instalment.
Mr Baker said it was a matter of timing and refining the terms of the agreement and was confident the money would be provided in full.
"It was a little bit of a shock to us that the money was withheld because we thought we were working through those things quite well," Mr Baker said.