Inc: A Guide for Incorporated Associations in Western Australia

 

Information status

All documents issued prior to 1 July 2017 were issued by the former Department of Commerce. Documents listed here are the latest versions available, but may be subject to review. For more information on this document, please contact online@dmirs.wa.gov.au.

INC. A Guide for Incorporated Associations in Western Australia is a comprehensive good governance guide for not-for-profit associations and clubs that:

Download the Guide

You may download a copy of INC. A Guide for Incorporated Associations in Western Australia but you should be mindful that this copy could become become out of date. To stay up to date, we recommend you also register to receive our newsletter. 

Introduction to the INC Guide

People often come together to form groups to pursue a range of common interests of a recreational, social, political, economic, cultural, spiritual or professional nature.  In Western Australia alone, there are over 17,000 of these groups that have registered as incorporated associations.

Many groups decide to register as a ‘not-for-profit’ incorporated association because it enables them to create a separate legal entity through which to conduct their activities.  There are several significant advantages:

  • the individual members limit their exposure to personal legal liability;
  • bank accounts can be opened in the name of the association; and
  • the association can apply for government grants and hold property.

INC: A Guide for Incorporated Associations in Western Australia has been developed as a comprehensive operational document to assist associations in performing their role effectively.

The purpose of this guide is to provide information on some of the key legal obligations and rights that apply to associations once they are incorporated under the Associations Incorporation Act 2015 (the Act).  

It also provides a basic introduction to various aspects of managing an association, for example:

  • conducting meetings;
  • record-keeping;
  • employing staff; and
  • engaging volunteers.

In effect, the guide may be used by members of associations as a reference source on good governance practices.

There are many government departments and non-government organisations that provide assistance to incorporated associations.  The guide also attempts to draw together these resources by providing examples, references and direct links wherever possible.

The Consumer Protection Division of the Department of Mines, Industry Regulation and Safety is responsible for regulating associations in Western Australia. 

Contact details for the Associations Branch of Consumer Protection are as follows: 

Locked Bag 14
Cloisters Square WA 6850

Telephone: 1300 30 40 74
Email: associations@dmirs.wa.gov.au
Web: www.commerce.wa.gov.au/associations 

Genesis

The guide was initially developed by the Gosnells Community Legal Centre Inc. (GCLC) and was first published in May 2005.  Consumer Protection has supported the guide from its inception and has actively promoted its use at association information sessions throughout the State.  In 2007, Consumer Protection agreed to take over responsibility for the further development and publication of future editions of this guide.  Consumer Protection acknowledges the extensive research and consultation undertaken by GCLC in developing the original version. 

Review of the Act

On 1 July 2016 the Associations Incorporation Act 2015 came into effect replacing the previous Associations Incorporation Act 1987.  The guide has been updated to reflect the new requirements. 

Associations Incorporation Act 2015

You can download a copy of the Act from the State Law Publisher’s website or you can contact (08) 6552 6000 to purchase a copy.

Download a copy of the Act

AssociationsOnline

AssociationsOnline is a secure online portal provided by Consumer Protection for incorporated associations, industry stakeholders and members of the public to check the status of an incorporated association, purchase copies of documents, submit a range of applications and update association contact information.

AssociationsOnline has been updated to meet the requirements introduced by the new associations’ law. The enhanced service with more automatic functions reduces the administrative burden on committee members and association officers by enabling them to manage their affairs online.

Throughout the guide you will be advised what applications may be lodged using AssociationsOnline.

Getting started

AssociationsOnline is the preferred method for submitting applications relating to incorporated associations to Consumer Protection and all users must be enrolled to access the system.

To enrol as a user visit AssociationsOnline and follow the prompts to 'Create an AssociationsOnline account'.

Once enrolled a user will be able to:

  • lodge an application to incorporate a new association;
  • link up to an existing association (by becoming a primary or authorised user);
  • lodge applications for linked associations including alterations to rules, extensions of time for Annual General Meetings and annual information statements; and
  • update and manage the contact details for their account and that of any linked associations.

Linked associations and user types

Two new user types have been introduced to manage an association – a primary and an authorised user. In order to lodge applications on behalf of an incorporated association a user must first link to their association and become either the primary or an authorised user.

It is recommended associations develop appropriate internal processes for nominating, approving, retiring and replacing their primary and authorised users in AssociationsOnline. It is important that appropriate records of the approved users are maintained.

Primary users

There can only be two primary users at a time per association and the person must either be a member of the association’s management committee, or authorised by the committee to act as a primary user on its behalf. Associations must ensure they retain records relating to this.

The primary user will be able to:

  • lodge documents on behalf of the association;
  • add and remove authorised users for the association;
  • manage their own personal details online, for example resetting their password and updating contact details, linking to and retiring from associations;
  • manage other user accounts attached to the association, for example inviting authorised users and managing requests to become authorised users; and
  • approve requests from people seeking to become authorised users for an association.

Authorised users

The system also allows for additional users to be linked to an association as authorised users. A person who is an authorised user must be nominated and approved by the committee but does not necessarily need to be a committee member.

Examples of authorised users include:

  • the association’s Chief Executive Officer or manager;
  • a legal or accounting professional acting on behalf of an association; or
  • a member of an affiliate or parent organisation.

An authorised user is able to:

  • lodge documents on behalf of the association; and
  • manage their own personal details online, for example resetting their password, updating their contact details and retiring as an authorised user.

The primary user is responsible for approving requests from people seeking to become authorised users for an association.

Linking to your association

Once you’ve enrolled as an AssociationsOnline user, the next step is to search for and link to your association.

To complete this process:

  1. Click the ‘Add an existing association’ button.
  2. Type in the name of your association and click search.
  3. Find your association in the search results list and click on the name.
  4. Tick the relevant box to nominate whether you want to become the primary user or an authorised user.
  5. Read and accept the user declaration and click ‘Go’.

If you’ve nominated to be the primary user (and there is no one currently in that role) you will be automatically linked to the association. If you have nominated to become an authorised user it will be up to the primary user to respond to and approve your request.

Once you’re linked to your association you will be ready to lodge applications on behalf of your organisation.

You can find more information about using AssociationsOnline in the help guide. There are also step by step videos available.

Sources and referencing

This guide is written primarily for people without a legal background.  Although a number of legal and non-legal sources have been used to write this guide, references have been kept to a minimum to ensure the content is easy to read.

A note on copyright

Throughout this guide, various websites have been referred to for additional information, forms and policies.  In most cases this information will be protected by copyright and may not be reproduced without permission of the copyright owner. The website will usually state if more copies can be made and distributed.  If in doubt contact the organisation concerned and ask for permission to use the material.

This guide has been provided free of charge and Consumer Protection permits its reproduction.

Copyright is covered in more detail in Copyright if you would like to read more now.

A final word

This guide deals with a large number of areas, involving in some cases quite complex laws and regulations.  The guide therefore simplifies a number of matters.  As a result, topics are explained in a general manner and do not include full details on all aspects of the relevant legislation.  Therefore, it cannot replace specific expert advice on your particular circumstances, which you should seek where required.

Disclaimer

The information contained in this guide is not intended to be legal advice and should not be relied upon as giving substantial legal advice, but as a legal awareness guide.

The guide does not provide a definitive statement of the effect or application of the various legislative schemes to which reference is made. While it provides a general overview, the law can change often and rapidly and you should always refer particular questions that relate to your association to a legal adviser.

The general overview of the law in this guide is based on material current at 26 August 2016.

Transitioning to the Associations Incorporation Act 2015

On 1 July 2016 the Associations Incorporation Act 2015 came into effect and replaced the Associations Incorporation Act 1987.  This special chapter highlights some of the new requirements and the actions to be completed during the transition period. 

Key points

  • All associations that were incorporated under the Associations Incorporation Act 1987 are now incorporated under the Associations Incorporation Act 2015.
  • Each association must review and update its rules by 1 July 2019 to ensure the rules comply with the requirements of the new Act.
  • Associations are now required to submit an information statement to Consumer Protection within 6 months after the end of every financial year.
  • New financial reporting requirements apply to accounts prepared for all association financial years commencing on or after 1 July 2016.

Notification of address

Notification of address

All incorporated associations must provide Consumer Protection with details of their current address by 29 September 2016.

To update the address a committee member or other authorised person should log into AssociationsOnline and complete the following:

  1. Search for and link to the record for the Association.
  2. Go to Manage My Account and scroll down to the list of linked associations.
  3. Check the address recorded for the Association. If the address information is incorrect click the update button and enter the new information.
  4. When finished click the update button to complete the process.

Financial reporting requirements

Under the Act the financial reporting responsibilities of an incorporated association will depend on the tier that it falls into and is based on the annual revenue. The tiered reporting system is intended to minimise the reporting burden for small associations while ensuring that larger associations are accountable for the significant resources they control.

The tiers are set as follows:

  • Tier 1: less than $250,000 in revenue.
  • Tier 2: $250,000 to $1,000,000 in revenue.
  • Tier 3: over $1,000,000 in revenue.

The new reporting requirements apply to the financial years of all association commencing after 1 July 2016.

See Tiered Financial Reporting for more information about these requirements. 

Information statements

Associations are now required to submit an information statement to the Commissioner for Consumer Protection every year. This statement confirms for the Commissioner that:

  • an association is still active and eligible to be incorporated;
  • the address details held by Consumer Protection are correct; and
  • the association has met its obligation to hold an Annual General Meeting for the year.

The statement needs to be lodged within six months after the end of an association’s financial year. So for associations operating on a 1 July – 30 June financial year the first statement should be provided by no later than 31 December 2016. But it is important to remember that associations are able to choose their own financial year so the due date for the information statement may differ between groups.

Lodging the statement

The statement can be lodged by either the Primary or Authorised user linked to the association’s account using AssociationsOnline.

There is a step by step video available if you need help lodging the statement using the system.

Updating the rules

Each association must update its rules to include the new Schedule 1 matters and ensure that the rules comply with the requirements of the new Act by 1 July 2019.

During the three year transition period, the association’s committee has the power to make any necessary alterations to the rules so they comply with the Act without requiring members to pass the changes by special resolution at a general meeting. 

If the association has taken the opportunity to complete a broader review of its rules and is making additional changes (i.e. more than what is necessary to ensure the rules are consistent with the new law requirements), it will be necessary to pass these changes by Special Resolution at a general meeting of members.

Below are some examples of rule alterations and how they may be approved. If there is any uncertainty as to which method should be used, it is recommended that the proposal be put to members and passed by Special Resolution at a general meeting.

Type of change

Can the committee make the change?

Adding a new clause showing the association’s financial year

Yes

Updating section numbers of the Act referred to in the rules

Yes

Adopting the new prescribed model rules

No – Special resolution only

Changing the name or objects

No – Special resolution only

Changing an existing quorum already provided for in the rules

No – Special resolution only

Reducing the percentage of members who need to sign a request for a general meeting to be called from 50% to 20%.

Yes

 

A step by step guide

The step by step guide below will help make reviewing the rules easier to complete.

More in depth information about these steps is available in Associations Transition Pack 3.

  1. Use the change of rules checklist to review the existing rules to identify what changes will be required.
  2. Decide whether the association will adopt the prescribed model rules or update the existing document.
  3. When the committee is satisfied the updated rules include all of the Schedule 1 requirements and meet the requirements of the new law it’s time to call to vote on the proposed document. See Altering the rules for more information about calling the meeting.
  4. Lodge the updated rules with Consumer Protection within 28 days after the meeting has been held. The change of rules can be lodged using AssociationsOnline.

There is a step by step video available if you need help using the system.

  1. Once Consumer Protection accepts the change of rules the association can start using the new rules.

Introduction to incorporated associations

What does incorporation really mean and what are its consequences? Can your association run a business and what does 'not-for-profit' mean in terms of the law? Before looking at the details of the day-to-day running of an association, it may be useful to review some of the legal matters that support incorporated status.  This section deals with the more significant of these, as well as what to do if the association is going to conduct any business activities.

Key Points

  • Incorporation creates a new legal entity with powers similar to those of a natural person.
  • An incorporated association can operate a business to help fund its objects or purposes provided that no funds or property are distributed to the members.
  • An incorporated association does not need to register a business name to conduct a business if it wants to trade under its incorporated name.  However, if the association wants to trade a part or all of its business under a different name, it will need to register the business name with the Australian Securities and Investments Commission (ASIC).
  • An incorporated association may have a common seal which is the official stamp of the association.  The common seal can only be used by those people authorised to use it in accordance with the rules.

Effect of incorporation

Once an association becomes incorporated it acquires a new legal status – it becomes a legal entity in its own right, separate from the individual members.  It usually has the following characteristics:

  • the association becomes a body corporate with perpetual succession (it may exist forever in its own right, even as the members of the association change);
  • the name of the association is the name stated on the certificate of incorporation and must end with the word 'Incorporated' or 'Inc';
  • members or officers of the association are generally not liable to contribute towards the payment of debts or liabilities of the association;
  • all rights and liabilities that were held by members or officers in their personal capacity in relation to the running of the activity now become the rights and liabilities of, and against the incorporated association.  However this does not relieve any person from liabilities incurred by or on behalf of the association prior to incorporation; and
  • the association may sue or be sued in its own corporate name.

Powers of an incorporated association

The effect of incorporation is to give an association a similar legal status to that of a natural person.

The Act specifically provides that an incorporated association may do all things that are necessary or convenient for carrying out its objects and purposes. It may:

  • acquire, hold, deal with and dispose of any real property (land) or personal property (goods, shares, etc.); 
  • open and operate bank accounts; 
  • invest its money; 
  • invest trust funds under Part III of the Trustees Act 1962; or in any other manner authorised by the rules of the association; 
  • borrow money upon such terms and conditions as the association thinks fit; 
  • give such security for liabilities incurred by the association as the association thinks fit  (eg a mortgage); 
  • appoint agents to transact any business of the association on its behalf; and 
  • enter into any other contract it considers necessary or desirable.

In addition, an incorporated association can do almost any lawful act so long as it is necessary or convenient for carrying out the association’s objects or purposes.

Not-for-profit

To become an incorporated association the organisation must be not-for-profit. 'Not-for-profit' refers to the membership, purpose and activity of the association. This does not mean that an association cannot make a profit from its operations.

Under the Act it is now acceptable for an association to trade with the public so long as the profits from those transactions are used to promote the objects and purposes of the association and individual members do not profit from the activities in any way.

This is different to a ‘for-profit’ company like Telstra or Qantas, where profits can be lawfully distributed to the members (ie shareholders) in the form of cash dividends.

An association that operates outside of these conditions is no longer eligible to remain incorporated under the Act, and may be cancelled or required to change its incorporation to a different type such as a co-operative or company.

Being a not-for-profit organisation allows incorporated associations to:

  • make a profit (eg by fundraising), as long as individual members do not receive any of the profit;
  • employ people (including members) and pay them wages or salary;
  • allow members to derive a monetary benefit from the association in circumstances where the member would be equally entitled to the benefit if he or she was not a member (eg members of housing associations being housed);
  • protect or regulate a trade, business or industry that members are involved in, as long as the association itself does not participate in the trade, business or industry (eg professional associations);
  • commercially trade with the public;
  • charge admission fees to events organised for the promotion of the association's objectives;
  • arrange competitions between members for prizes and trophies;
  • provide facilities or services for members (eg a bowling club running a bar); or
  • pay remuneration to a member in good faith for services provided to their association.

Potential business requirements

Registering a business name

If your association is going to operate any business component of its activities under its incorporated name, there is no need to register the association's name as a business name.

You will only need to register a business name if the association wants to trade under a different name (including a shortened version of the association name) for part or all of its business.

Having a registered business name does not mean that a group has become incorporated and created a separate legal entity. The two processes are separate.

A registered business name is a trading name under which an organisation, group of people or an individual can conduct their business activities within the state of registration.

An incorporated association will only have one name for the purposes of incorporation, but may conduct its businesses under more than one registered business name (provided business is being carried on under each of those names).

A registered business name cannot be the same name as the name of incorporation.

The business name registration service is managed by the Australian Securities and Investments Commission (ASIC).

It is possible to search ASIC’s register of business names, and register or renew a business name online. In most cases confirmation of your registration is received instantly. There is also a choice of registering or renewing a national business name for one or three years.

It is important to note that once registered a name cannot be changed. Should changes be required, the association’s existing registered name must be cancelled and a new one applied for at the regular fee.

More information

Contact the Australian Securities and Investments Commission on telephone 1300 300 630 or visit their website for more information. User guides relating to all services concerning business names are available from ASIC Connect help.

Operating interstate

As incorporated associations are created under State laws, you may encounter problems if your association wants to operate interstate or nationally.  A formal application for registration as a Registered Australian Body can be made to the Australian Securities and Investments Commission.

If approved, the association will gain recognition outside of Western Australia and be subject to the legal requirements of the Corporations Act 2001 when conducting business interstate.

More information

Contact the Australian Securities and Investments Commission on telephone 1300 300 630 or visit their website for more information.

Bank signatories

All associations need people who can sign on behalf of the association, set up accounts, sign cheques, etc. even if there is no intention to run a business.  Often these people are members of the management committee.  Sometimes the authorised signatories and signing procedures are nominated in the rules of the association.  If the rules do not cover this, the association needs to resolve who the signatories are and the requirements for signing documents and cheques. 

Usually a combination of 3-4 signatures is agreed upon to provide financial and security safeguards.  The necessary paperwork can then be set up with the bank or credit union.

Decisions regarding accounts and signatures should be properly resolved and recorded in the minutes.  Resolutions are dealt with in Meetings.

Common seal

A common seal is the official stamp or ‘signature’ of an association.  As a body corporate an association is entitled to a common seal.  The association must have a common seal if its rules require it to have one, and maintain a list of those office bearers who are authorised to use it.  The Act also requires the association’s rules to provide for the ‘custody and use of a common seal’.  Common seals are not expensive to purchase and can be obtained from most stationery shops or rubber stamp suppliers.

The Act specifies that a common seal is only required for contracts which, if made between natural persons, would be required to be made in writing and under seal.  In Western Australia it is not necessary for an incorporated association to use a common seal to execute contracts made between natural persons.

An incorporated association may decide to use the seal to execute contracts and other formal documents as the official signature of the association.  It is good practice to limit the use of the common seal through the association’s rules by requiring that the stamp only be used if the committee formally resolves to ‘affix’ it to a document.

The rules should clearly indicate whether or not the association must use the common seal when executing contracts.  The fixing of the seal should be witnessed only by those who are authorised in the rules to witness the sealing of the document.  Association rules usually require the sealing of a document to be witnessed by more than one officer bearer.

Becoming an incorporated association

Should your group or association become incorporated? 

Registering as an incorporated association is a popular and suitable option for many community and charitable groups because this structure is specifically designed for not-for-profit organisations and is simple and cost effective.

The decision to incorporate is not one to be taken lightly as it means the organisation enters into a regulated system with formal accountability requirements. This chapter sets out the steps that a group needs to take to become incorporated and lists the requirements for registration.  For information regarding the benefits and consequences of becoming incorporated refer to Introduction to Incorporated Associations.

Key Points

  • Only certain groups may qualify to register as an incorporated association.
  • To become incorporated an association must lodge an application with Consumer Protection. 
  • The association must develop a set of rules that comply with the requirements of the Act and make provision for all the matters included in Schedule 1.
  • The application must clearly state the name and purpose of the association and include a copy of the rules of the association.
  • The Certificate of Incorporation is proof of incorporation and must be kept in a safe place.

Which groups are eligible for incorporation?

To become incorporated Section 4 of the Act requires the following to be met:

  • the group must have at least six members who have voting rights under the rules;
  • be not-for-profit; and
  • formed for one or more of the following reasons:
    • religious, educational, charitable or benevolent purposes;
    • promoting or encouraging literature, science or the arts;
    • providing medical treatment or attention or promoting the interests of people who suffer from a particular physical, mental or intellectual disability or condition;
    • sport, recreation or amusement purposes;
    • establishing, carrying on or improving a community, social or cultural centre or promoting the interests of a local community;
    • conserving resources or preserving any part of the environmental, historical or cultural heritage of the State;
    • promoting the interests of students or staff of educational institutions;
    • political purposes; 
    • promoting the common interests of persons engaged in or interested in a particular business, trade or industry; or
    • any other purpose as approved by the Commissioner for Consumer Protection.

Steps to becoming an incorporated association

The procedure for registering an incorporated association is fairly simple and involves a few basic steps.

The key steps are:

  1. hold an initial meeting to obtain members’ approval for incorporation;
  2. determine a suitable name and check that the group is eligible for incorporation;
  3. develop your own set of rules or adopt the model rules;
  4. hold a meeting to formally pass a resolution to adopt the rules and approve the proposed name of the association; and
  5. complete and submit the application.

1. Hold an initial meeting

Before a group can proceed with an application for incorporation, it needs to determine whether or not the group wants to become incorporated and to decide who will be responsible for making the application. The group should hold a meeting with all members to vote whether it wants to incorporate.

If the members agree that the organisation is to become an incorporated association they need to:

  • authorise one or more members to prepare and submit the application for incorporation;
  • decide on a possible name for the association;
  • decide on the aims of the association; and
  • elect a member or committee to draft the rules.

2. Determine a suitable name and eligibility

Checking the name

The name of the association should reflect its objects and purposes. The Commissioner for Consumer Protection can reject a name if it is:

  • already in use;
  • offensive or undesirable;
  • likely to mislead the public; or
  • likely to be confused with the name of an existing body corporate or registered business name.

Please be aware that while a name may be available for use at the time of your enquiry it cannot be reserved or protected in any way. Final approval of the name will be subject to a formal assessment of the application for incorporation.

When the group authorises a person to apply for incorporation it might be advisable to provide that person with some additional name options in case your first choice is not available.

Approval of purpose

It is important to make sure that the objects of your association are consistent with the Act. If the purpose of the association is not one which is specified in section 4 of the Act, the association can only be incorporated if the purpose is approved by the Commissioner under section 4(a)(x).

This section allows for incorporation ‘for any other purpose approved by the Commissioner’.

There is a fee payable for this application.

3. Develop a set of rules

The Act requires an incorporated association to have a set of rules that govern the day-to-day management of the association.

Any association incorporated in Western Australia is required to make provision for specific matters in its rules. These matters are detailed in Schedule 1 of the Act and are included at the end of this chapter.

An incorporated associations rules must provide for the Schedule 1 matters as a minimum. Other rules may be permitted providing those rules do not breach any laws. For example, the rules cannot discriminate in membership on grounds prohibited by legislation (see Discrimination and Harassment).

There are no requirements about the length or complexity of rules for an incorporated association. To avoid misinterpretation the rules should be written in clear simple language.

You may choose to adopt the Model Rules or draft your own rules, however the rules must:

  • be consistent with the requirements of the Act;
  • provide for all the matters set out in Schedule 1 of the Act; and
  • comply with any taxable status provisions the group is seeking (see Taxation for more information).

Using the model rules

The model rules are a complete set of rules prescribed by the Associations Incorporations Regulations that have been developed so that groups who do not want to develop their own rules have a set of rules available for use. The model rules meet all of the requirements of the Act and provide a suitable governance framework for an association.

If you choose to use the model rules, the only additional information that you need to provide to the Commissioner with your application is:

  • name of the association;
  • objects or purposes of the association;
  • quorum for a general meeting of members of the association;
  • quorum for a meeting of the management committee of the association; and
  • period of the first financial year of the association.

Please note that if the association changes any of the provisions in the model rules (with the exception of the matters above) it is no longer considered to be using the model rules.

Associations choosing to adopt the model rules will adopt the rules as in force from time to time, so any changes to the model rules after incorporation will automatically take effect in the rules of the association.   Associations will be advised of any changes by notification to their address for service – so it is important that this address is kept current (see Updating the association’s address)

Drafting your own rules

When developing a set of rules for the association you may wish to follow a systematic and democratic process such as:

  1. Draft the rules using the model rules as a guideline.
  2. Check the Schedule 1 requirements of the Act are met.
  3. Circulate the rules to the entire membership for consideration, discussion and feedback. You may also seek legal, tax or other professional advice.
  4. Decide on any changes and redraft the rules.
  5. Repeat points 3 and 4 until a final draft is produced.
  6. Call a meeting of the association’s membership to formally adopt the final set of rules.
  7. Send the rules to Consumer Protection along with the other documents for incorporation under the Act.

4. Hold a meeting to formally pass a resolution to adopt the rules and approve the proposed name of the association.

After a draft set of rules has been developed, a meeting to adopt the rules of the association and approve the proposed name should be held. The motions should be formally moved, seconded and recorded in the minutes (see Meetings for more information regarding motions).

5. Complete and submit the application

The application for incorporation can be submitted online using AssociationsOnline. The online application form requires:

  • the name of the association (including the word ‘Inc’ or ‘Incorporated’);
  • the main purpose of the association;
  • details of the applicant;
  • a copy of the rules developed by the association or a statement that the group will be adopting the Model Rules. If an association has developed its own rules it will also be required to complete a table identifying the Schedule 1 matters within the rules; and
  • necessary information about the proposed association name, objects, quorums and financial year.

Once all information is entered and uploaded, payment can be made using a secure payment system.

When submitting your application to Consumer Protection remember to:

  • complete the application in full and sign the declaration;
  • pay the correct fee;
  • attach a complete copy of the association’s rules; and
  • keep a copy of all documents submitted. Consumer Protection does not provide a final copy to the association.

The certificate of incorporation

The Commissioner for Consumer Protection will approve the application if satisfied the:

  • association is eligible for incorporation;
  • rules of the association conform with the Act; and
  • name of the association is appropriate in accordance with the Act.

If the application is approved, the Commissioner will incorporate the association by issuing a Certificate of Incorporation.  The Certificate will show the name of the incorporated association, the date of incorporation and the registration number – also referred to as the Incorporated Association Reference Number (IARN).  Associations may request the certificate be laminated for a small additional fee

The Certificate of Incorporation is an important document and must be kept in a safe place.

What happens if the application is not approved?

The Commissioner for Consumer Protection will not incorporate an association if in their opinion:

  • it is more appropriate the activities of the association be carried out by a body corporate incorporated under some other law (eg as a company under the Corporations Act 2001); or
  • the incorporation is against the public interest (eg a political organisation promoting political intolerance and discrimination).

If the application is not approved, the association has 28 days from receipt of the notice of refusal, to apply to the State Administrative Tribunal (SAT) to review the decision of the Commissioner.  Decisions made by the SAT may also be appealed in certain situations, usually on a point of law and/or to the Supreme Court.

State Administrative Tribunal

Postal Address: GPO Box U1991 Perth WA 6845
Telephone: (08) 9219 3111 or 1300 306 017
Website: www.sat.justice.wa.gov.au 
Email: Contact SAT by email

What are the costs of incorporation?

There is a one-off fee to become incorporated.  Once incorporated there are no annual fees.  Further additional fees may need to be paid by an association for things such as changes to rules.  For a complete list of fees please refer to the current Schedule of Fees.

Other costs can include: 

  • cost of legal advice, if required;
  • cost of meeting reporting and accounting requirements; and
  • obtaining a common seal. 

Schedule 1 - Matters to be provided for in the rules of an incorporated association

  1. The name of the incorporated association.
  2. The objects or purposes of the incorporated association. 
  3. The qualifications (if any) for membership of the incorporated association and provision for when membership commences and when it ceases.
  4. The register of members of the incorporated association.
  5. The entrance fees, subscriptions and other amounts (if any) to be paid by members of the incorporated association.
  6. The name, constitution, membership and powers of the management committee or other body having the management of the incorporated association (in this clause referred to as the committee) and provision for the following:
    1. The election or appointment of members of the committee.
    2. The terms of office of members of the committee.
    3. The grounds on, or reasons for which, the office of a member of the committee shall become vacant.
    4. The filling of casual vacancies occurring on the committee.
    5. The quorum and procedure at meetings of the committee.
    6. The making and keeping of records of the proceedings at meetings of the committee.
    7. The circumstances (if any) in which payment may be made to a member of the committee out of the funds of the association.
      Note: Any rules that provide for payment to a committee member from the association’s funds must state that this can only occur if the payment is authorised by a resolution of the association.
  7. The quorum and procedure at general meetings of members of the incorporated association.
  8. The notification of members or classes of members of general meetings of the incorporated association and their rights to attend and vote at those meetings.
    Note: The rules must provide for all members of the incorporated association to be entitled to receive notice of and to attend any general meeting of the association. 
  9. The timeframe and manner in which, notices of general meetings and notices of motion are to be given, published or circulated.
  10. The number of members expressed as a percentage of membership, who may at any time require that a general meeting of the incorporated association can be convened.
  11. The manner in which the funds of the association are controlled.
  12. The day in each year on which the financial year of the incorporated association commences. 
  13. The intervals between general meetings of members of the incorporated association and the manner of calling general meetings.
  14. The manner of altering and rescinding the rules and of making additional rules of the incorporated association.
  15. Provisions for the custody and use of the common seal of the incorporated associations, if it has one.
  16. The custody of books and securities of the incorporated association.
  17. The inspection by members of the incorporated association of records and documents of the incorporated association.
  18. A procedure for dealing with any dispute under or relating to the rules: 
    1. between members; or
    2. between members and the incorporated association. 
  19. The manner in which surplus property of the incorporated association must be distributed or dealt with if the association is wound up or its incorporation cancelled. An association’s surplus property can only be distributed to:
    • an incorporated association;
    • a company limited by guarantee registered under the Corporations Act 2001;
    • an organisation that holds a current licence under the Charitable Collections Act 1946;
    • an organisation that is a member or former member of the association and whose rules prevent the distribution of property to its members; or
    • a non-distributing co-operative registered under the Co-operatives Act 2009.

The management committee

Under the Act, the management committee is the group of persons that has the authority to exercise the powers and functions of the association and to manage its affairs.  This is an important provision because people who are identified as committee members have special responsibilities under the Act both as individuals and as part of the group.  

This chapter describes the role, functions, structure and liabilities of management committees of incorporated associations under the Act.

Associations usually refer to this group as ‘the committee’, but sometimes may use other names such as ‘the council’ or ‘the board’. 

Some large incorporated associations have both a board of governors and a management committee.  In this case, a distinction may be made between the role of the board and the role of the management committee:

The management committee:

  • derives authority to function from the board of governors;
  • is concerned with the implementation of policy and all the organisational and administrative activities that are carried out in order to achieve the objects of the association; and
  • attends to the day-to-day administration and activities.

The board of governors:

  • is concerned with policy-making and rule making;
  • focuses on the overall strategic direction of the association, compliance with the legislation and policy; and
  • oversees financial management, providing resources and promoting the objects of the association.

In associations where a board of governors and a management committee co-exist, it is essential for these two groups to work together.  Both need to understand and support the different roles and have a clear understanding of the various areas of responsibility and authority.

It is also important to be very clear about which group is the management committee for the purposes of the Act. 

The Act expects there to be only one management committee responsible at law and the rules must clearly identify which group it is.  In most associations one committee is responsible for both governance and management.

Key Points

  • An incorporated association must appoint or elect a management committee that is responsible for managing the affairs of the association.
  • The management committee must comply with the rules of the association and ensure that individual committee members comply with the rules.
  • The management committee has a duty to act in good faith and in the best interests of the association.
  • The management committee has a duty of care to ensure that its activities and the activities of the association are conducted with reasonable care, skill and diligence.

Membership of the committee

Efficient management committees are ideally made up of people with a range of skills, knowledge and experience that can add to the overall strength of the committee.  Members of management committees may also include people who represent certain groups or organisations providing a particular service such as those representing consumers, Indigenous interests, mental health services, disability services, youth services, etc.  Most associations strive to nominate their ‘ideal’ committee as few things create more difficulties than a dysfunctional committee.

The rules of your association will determine what qualifications a committee member must have, and whether a member of the committee must be a member of the association.

Under the Act a person is excluded from being on the committee without special approval from the Commissioner for Consumer Protection if they:

  • are bankrupt or their affairs are under insolvency laws;
  • have been convicted of an indictable offence in relation to the formation or management of a body corporate in the last five years;
  • have been convicted of an offence involving fraud or dishonesty punishable by at least three months imprisonment in the last five years; or
  • have been convicted of an offence under section 127 of the Act, where a person has allowed an association to operate while insolvent in the last five years.

It is the responsibility of each individual nominating for a committee position, rather than the association, to ensure that they are eligible.

A person fitting the above criteria who wishes to accept an appointment to a committee must submit an application for approval through AssociationsOnline to the Commissioner for Consumer Protection with the prescribed fee.

The association can take steps to ensure that all prospective committee members are aware of the requirements, and should also undertake those checks that the association believes are reasonably required to ensure that all committee members are appropriately qualified. 

For example, associations can raise awareness by adding a box to nomination forms requiring candidates to declare that they are not disqualified.  Depending on the nature of the association and the position, an association may also require incoming committee members to provide police clearance certificates. 

This is common in large associations where committee members are paid, but may not be considered appropriate or necessary in a smaller association where committee members are volunteers or are well known to one another.

Associations should ensure that the processes in place for the election of committee members meet the requirements of the new law and that all elected members are eligible to hold their positions.  

For example, associations may wish to add a tick box to nomination forms requiring candidates to confirm that they are not an undischarged bankrupt and do not have one of the current convictions specified by the Act.

The Act requires an incorporated association's rules to include provisions about the name, constitution, membership and powers of the committee responsible for the management of the association.  

The rules need to be clear about the committee’s membership, what it is to be named and what functions are permitted to be carried out.  The rules must also include provisions about:

  • the election or appointment of committee members;
  • terms of office of committee members;
  • how the office of a committee member will become vacant;
  • filling casual vacancies on the committee; and
  • the quorum and procedure at meetings of the committee.

The Act also requires associations to keep up-to-date records of the names and addresses of all members of the committee and any other office bearers.  Members of the association are entitled to inspect and copy the record on request, but are not allowed to remove the record.

Members have a right to know who their committee members are and if necessary how to contact them.  Well-managed associations ensure that this information is readily available to their members, often through newsletters or by other means.

Electing the committee

In most cases, committee members are elected at an annual general meeting.  The procedures for the election of management committee members and office bearers should be set out in the rules of the association.

The model rules also include provisions for the election of management committee members.

The role and duties of the management committee

Membership of a management committee is not necessarily onerous, but does carry a number of significant responsibilities. These responsibilities fall into two categories: those of the committee acting as a group and those held by its members as individuals.

In practice, each member should consider every group responsibility as an individual responsibility. As discussed later, when it comes to any failure to meet a responsibility, the Act places the liability on the individual not the group.

Group responsibilities

The role of the committee is to manage the association in accordance with the purposes or objects as stated in its rules. In undertaking this role, the committee must fulfil a number of legal responsibilities, including ensuring the association complies with:

  • its obligations under the Act (separately highlighted in a table at the end of this chapter);
  • its rules and any funding agreements or other contracts;
  • its legal responsibilities to any employees, such as complying with employment awards or agreements, paying tax and superannuation and providing a safe working environment (dealt with in later chapters);
  • its legal responsibilities to members, volunteers and any clients or customers who may use the association’s services;
  • an assessment has been made whether insurance cover is required and to what extent;
  • any other relevant laws or regulations are complied with; and
  • specific financial responsibilities include making sure that:
    • there is compliance with requirements under the Act in relation to financial accounting and reporting to members;
    • the association can pay all its expenses (it may assist to develop a budget annually);
    • the conditions of any funding agreement are followed;
    • the accounts are audited or reviewed if required by the association’s law, the members, rules or funding agreements; and
    • good risk management procedures are in place.
      For example, a requirement that two authorised signatories sign off on any association cheque and that another member or employee completes cheque account reconciliations.

Depending on the size and nature of the association other areas of responsibility may include staff management, development and implementation of policies and procedures and provision of quality services to members and/or clients.

Duties of officers

Association committee members owe the same duties to association members as company directors owe to members of a company.  These duties apply to committee members and other persons who influence the management committee but who do not hold a formal committee position e.g. senior employees or past committee members who are still actively involved in the association and influencing the decisions of the committee. 

The term ‘officer’ is defined as meaning any of the following:

  1. a member of the management committee of the association;
  2. a person, including an employee of the association, who makes, or participates in making, decisions that affect the whole, or a substantial part, of the operations of the association;
  3. a person who has the capacity to significantly affect the association’s financial standing;
  4. a person in accordance with whose instructions or wishes the management committee of the association is accustomed to act.

When committee members exercise their powers and responsibilities to act on behalf of the association, they must:

  • exercise their powers with due care and diligence;
  • ensure that any business decisions are made in good faith and in the best interests of the association;
  • act in good faith and in the best interests of the association;
  • not make improper use of information or their position for personal profit;
  • avoid any conflicts of interest;
  • exercise powers in accordance with the rules of the association; and
  • not allow the association to incur a debt when the association is insolvent or there are reasonable grounds to believe that by incurring the debt the association will become insolvent.

Duty of care and diligence

While discharging duty of care and diligence a committee member or officer should:

  • be prepared for meetings (reading any papers and the financial statements);
  • broadly understand the financial position of the association;
  • follow up on action items;
  • keep informed about the association’s operations and activities;
  • ask questions; and
  • take steps to ensure that the association meets its obligations under other laws. For example occupational health and safety, taxation and employment.

Duties relating to insolvency

A committee member has a duty to prevent an association incurring debts while it is insolvent or in situations where the debt would cause it to become insolvent. This duty is breached if:

  • an association incurs debt while it is insolvent or it becomes insolvent by incurring the debt;
  • before incurring the debt there were reasonable grounds to expect that the association was already or would become insolvent by incurring the debt; and
  • the person was a member of the committee at the time the debt was incurred.

Allowing an association to trade while insolvent is a serious matter with a high penalty. It should also be noted that a breach of this duty would not make a committee member personally liable for the association’s debt.

To fulfil their duty committee members should all work to ensure:

  • that accounts are kept of the transactions, financial position and performance of the association; and
  • the association’s solvency status is monitored on an ongoing basis.

These duties set the basic standards of acceptable conduct. A breach of a duty is a rare event and is usually accompanied by a significant degree of deliberate wrong doing or gross negligence.

Duty offences under the Act require deliberate misconduct and are only applicable in the case of serious and wilful abuse of the officer’s position.

If a committee member or officer makes a business judgement in good faith for a proper purpose they will not be liable for an offence even if the outcome for the association is not ideal.

Committee members must ensure they are fully informed about the association by keeping up to date with matters, attending meetings, reading agendas and minutes and asking questions. In the event of a problem, dispute or legal challenge committee members cannot claim they 'did not know' about the rules and activities of the association.

Individual committee members’ responsibilities

Complying with the rules

The management committee is responsible for implementing the association’s rules and ensuring that it meets its obligations under the Act. Committee members must comply with and act within the rules at all times.

All committee members should be supplied with an up-to-date copy of the association’s rules and be familiar with its main and most-used provisions. It may also be beneficial for committee members to bring the rules with them to every meeting. As a minimum, the Secretary should ensure that a copy of the rules is on the table at each meeting.

Conflicts of interest

Committee members must not put themselves in a position where there is a conflict between their duties and responsibilities to the association and their personal interests.

The Act requires members of the committee to disclose any material personal interest they may have in any contract, or proposed contract, entered into or being considered by the committee. A committee member has a material personal interest when that member has a personal interest in a matter which could be seen to compromise their ability to act in the interests of the association and make an impartial decision. The interest may be financial or non-financial. The interest may be financial or non-financial.

Examples of material personal interests include:

  • the committee member owns a business an association is seeking to contract with to supply it with goods or services;
  • a relative of the committee member submits an application for employment with the association; and
  • the committee member serves on the committee for two associations that are competing for the same tender or grant.

In a small, volunteer run association, it can seem difficult to manage these obligations while providing effective management, but members are entitled to expect that committee decisions will reflect the interests of the association rather than the personal interests of its committee members.  

It must be remembered that not all personal interests are ‘material’ in the context of the decision being made and common sense should apply. 

For example, in a junior sports club, committee members are likely to have children who participate and, as a result, an interest in matters such as team selection, coaching and scheduling of matches.  That would not ordinarily be a situation requiring declaration of an interest, but in the event that a committee member has a child who has been singled out for potential disciplinary action or for consideration for a substantial prize or sponsorship, then it would be appropriate for the committee member to declare a conflict of interest with regard to any consideration of that matter.

Disclosures must explain the nature and extent of the interest and be made as soon as the member becomes aware of it. Failure to declare an interest as soon as possible is a criminal offence and could result in a fine if convicted.

For example:

Brian sits on the management committee of an association. The association is planning to give small grants to local groups for tree planting programs. Brian is the president of the local tree planting co-operative which wants to apply for the funds. As the co-operative is a potential benefactor of the grant, Brian must tell the management committee of his involvement in the co-operative.

If a committee member declares an interest in a contract or proposed contract, the Act requires that:

  1. the disclosure must be recorded in the minutes of the meeting;
  2. the committee member with the conflict of interest must not discuss or vote on the contract; and
  3. the committee member with the conflict of interest must leave the meeting while the matter is being considered. If there are not enough members remaining to form a quorum, a special general meeting must be called and a resolution on the matter passed by the members.

In addition to the above, the member with the conflict of interest must also disclose the nature and extent of their interest in the matter at the next general meeting of the association.

A useful way to help committee members comply with these requirements is to make ‘disclosures of interest’ a standard item on the committee meeting agenda. In most cases there will be nothing to note, and will serve as a reminder to members of the need to remain aware of conflicts of interest.

Roles of particular office bearers

The Act does not assign specific responsibilities to individual committee members.  It is up to the association to decide what the role and responsibilities of each committee member will be, and to ensure that these are correctly set out in the association’s rules. The roles of some common office bearers are summarised below:

Chairperson (sometimes called the president)

The chairperson is usually the formal 'voice' of the association and is responsible for the overall coordination of the activities of the association.

The chair is responsible for:

  • chairing meetings;
  • signing documents on behalf of the association;
  • ensuring all relevant information is made available to committee members;
  • ensuring the association is run according to its rules and any other strategic plan that has been agreed to;
  • resolving disputes and grievances;
  • initiating projects;
  • overseeing activities and projects; and
  • representing the association at external meetings and events.

In the chairperson’s absence the vice-chairperson can represent the association and preside over meetings. See Meetings for the role of the chairperson in meetings.

Treasurer

The treasurer is responsible for managing the finances of the association. This involves:

  • maintaining all financial records;
  • monitoring the income and expenditure of the association;
  • keeping committee members informed of the financial position of the association;
  • preparing and presenting financial statements to the Annual General Meeting;
  • allocating funds;
  • developing budgets for new projects;
  • making payments and bank deposits;
  • preparing and managing the budget;
  • representing the association on funding applications; and
  • maintaining custody of all securities, books and documents of a financial nature.

Secretary

The secretary is responsible for day-to-day administrative tasks which include:

  • maintaining the register of members;
  • arranging meetings;
  • assisting the chairperson to prepare the agenda;
  • sending out notices for meetings;
  • keeping minutes and records;
  • attending to correspondence;
  • making sure all letters and other documents are properly filed;
  • organising activities and events;
  • preparing newsletters; and
  • maintaining custody of all books, documents, records and registers of the association.

Paying committee members

Out of pocket expenses

The Act allows a member to be reimbursed for any out of pocket expenses relating to the affairs of the association. It is normal to request that the member provide evidence of the payment such as a receipt before the refund is paid.

Honorariums

There may some situations were an association would like to pay a committee member an honorarium for the service they provide to the group. The Act does not refer to ‘honorariums’ and whether the payment is permitted will depend on the actual reason for the payment.

For example, an association cannot use honorariums as a way of distributing its income to members, but can make payments of wages or other remuneration to members, so these payments may be made if they represent remuneration for services actually provided to the association (even if the rate at which payment is made is less than the usual market rate). 

Important note

If any payments are to be made to committee members (apart from reimbursement of expenses) the rules must provide for approval of the payments by the members of the association.

Liability of management committee members

One of the benefits of incorporation is that members (including the management committee) and office bearers of the association are generally not liable for debts or liabilities of the association. However, this does not apply to liabilities incurred by or on behalf of the association before incorporation.

The most common form of liability an association incurs is liability under the contracts it enters into. An association may also incur liability under tort law, such as for negligent acts done by the management committee, employees or volunteers. An association can also be liable under criminal law, such as for fraud.

Management committee members are not immune from personal liability. There is a duty to fulfil the functions of their office to the best of their ability. If a committee member or officer acts in bad faith or contrary to the rules of association, he or she may personally be criminally prosecuted or be the subject of civil proceedings. An example is where an officer enters into a contract against the instructions of the management committee.

Likewise, if a management committee member acts negligently in the performance of his or her office, he or she may be held personally liable for any resulting loss or damage (See Insurance and Risk Management for information on insurance for office bearers/committee members).

It is possible for incorporated associations to adopt rules which indemnify committee members against breaches of their duties to the association and/or against liability to third parties. Before an indemnity is granted, the association should consider their objects and make an assessment of the risks the organisation may face.

Duty of care and risk management

Incorporated associations have a duty of care to ensure the activities of the association do not cause harm, damage or injury to any participant or recipient of its services, or any other person who is reasonably likely to be affected. If an injury is a foreseeable result of the association failing to exercise reasonable care in providing these services, then the association will be liable for any loss or damage suffered. For example:

  • while participating in a sporting event or school holiday program provided by the association; or
  • while attending a childcare facility provided by the association.

Management committees need to ensure the standard of care provided by their association is reasonable in order to minimise the risk of liability. The committee should identify and evaluate the risks for all activities. In situations where there is a likelihood of harm or a greater risk of harm, a higher degree of care is required. For example a higher degree of care and supervision is required for young children taking part in physical games than for children sitting listening to stories being read.

An example of duty of care:

An association arranges a day of activities to celebrate Youth Day. Activities include:

  • Crazy sports.
  • Competitions that involve activities with some risk (eg darts).
  • Go-kart racing.
  • Animal rides.
  • Amusement park rides.

These activities all involve some foreseeable risk. The association has a duty to take reasonable steps to ensure all activities and rides are safe, appropriate for the age levels and properly supervised. Attendees and participants must be warned of any dangers.

It is important the association’s insurance policy covers such an event and if not, to take out additional insurance for the day (see also Public liability insurance in Insurance and Risk Management).

Codes of conduct

Increasingly, management committees are developing codes of conduct for management, staff and volunteers. A code of conduct defines the expectations about the behaviour of people involved in the association’s activities. While a code of conduct can theoretically cover a range of behaviours, it cannot be discriminatory, unreasonable or advocate unlawful activities.

A code of conduct for committee members might include:

  • complying with all policies, procedures and rules of the association;
  • attendance and participation in management committee meetings and the work of the management committee;
  • clarifying who has authority to speak on behalf of the association;
  • maintaining confidentiality;
  • behaving in a manner that does not obstruct the association's pursuit and fulfilment of its objectives;
  • behaviour that is respectful of diversity, is non-discriminatory and upholds the association's values (if defined); and
  • behaviour that does not abuse, physically, sexually or verbally any member of the association, staff, volunteers or members of the public.

Leaving the committee

The committee is responsible for maintaining the documents and records of the association, but these are the property of the association.  The act requires any committee member who has possession of these documents when he or she ceases to be a committee member to ensure that they are delivered to a current member of the committee as soon as possible.  See also Custody and handover of records.

Committee handover checklist

There are things that both new and outgoing committee members can do to make the handover of responsibility for managing an association as smooth as possible.

The following list is not exhaustive but may assist an association to develop a handover checklist for committee members:

  1. Hold a meeting of new and outgoing committees to familiarise new members with association’s policies, procedures and current issues.

    This would also be a good opportunity to provide the new committee with a summary of the association’s registration details, licences and reporting obligations (see Sample - about our association).

  2. Outgoing committee members must return all documents in their possession to the new committee as soon as practicable after the election. 
  3. Update bank signatories replacing outgoing committee members with signatories from the new committee.
  4. Update AssociationsOnline users by retiring any outgoing users and adding new primary users. The Manage users video will help you complete these changes. 
  5. Update contact details with external agencies and association stakeholders. For example:
    • Consumer Protection;
    • Licensing authorities;
    • Australian Taxation Office (ATO);
    • Australia Charities and Not for Profits Commission (ACNC);
    • Insurance providers;
    • Accountants, bookkeepers, reviewers and auditors;
    • Funding bodies; and/or
    • Parent/affiliated bodies.
  6. Update the record of office holders to reflect the new committee.
  7. Provide relevant passwords and log in information for any online accounts to the new committee.
  8. Update website to include details of new committee members, and any relevant contact details.

Orientation and training for management committee members

New management committee members need to know about their responsibilities and the workings of the association.  It is good practice to provide a structured, comprehensive and practical orientation to the activities, policies and structure of the association.  This may take the form of interactive workshops and seminars as well as informal individual discussions with outgoing members and experienced committee members.  

An orientation program might include:

  • association objectives and rules of the association;
  • legal responsibilities of committee members;
  • strategic and business planning;
  • policies and procedures;
  • current issues impacting on the association;
  • record systems;
  • occupational health and safety; and
  • financial management.

The Western Australian Council for Social Services Inc (WACOSS) provides training and resources for boards and committees on the function and elements of organisational governance.  

Contact WACOSS on (08) 9420 7222 for further information or visit their website at www.wacoss.org.au.

Orientation kits for management committee members are a useful way of providing newcomers with all the essential information.  The kits can be given to newly elected members and may contain:

  • information on the association, objectives, structure, activities and achievements;
  • the role of committee members;
  • a list of committee members and their contact details;
  • practical expectations (eg number of meetings, other tasks);
  • general requirements and expectations; 
  • the rules of the association;
  • a guide to meeting practices; and
  • policies and procedures.

This sample form can be used as a starting point to develop a summary sheet about your association.

Key obligations of associations under the Associations Incorporation Act 2015

Committee members of associations are required to take all reasonable steps to ensure that their association complies with all of these obligations.

Annual general meeting

Must be held each year within six months after the end of the association’s financial year.

Section 50 of the Act

Annual accounts must be prepared and presented to members at each Annual General Meeting.

Tier 1 – Sections 68 and 70 of the Act
Tier 2 – Sections 71 and 73 of the Act
Tier 3 – Sections 74 and 76 of the Act

 

Special resolutions

Special resolutions are needed to amend the rules, voluntarily cancel or amalgamate the association.

A special resolution must be approved by 75% of the members who attend and vote at a general meeting that has been properly convened under the rules.

Details of the special resolution must be lodged with Consumer Protection for it to have legal effect.

Section 51 of the Act

 

Records

Accounting records must be kept in such a way that true and fair accounts of the association can be prepared from time to time according to the requirements for the association’s financial reporting Tier.

Section 66 of the Act

An up-to-date members’ register must be maintained and made available to any member to inspect and copy on request.

Section 53 of the Act

The rules of association must be kept up-to-date and made available to any member to inspect and copy on request.

Section 35 of the Act

A copy of the rules must be provided to each member when they join the association.

Section 36 of the Act

A list of committee members and office bearers, together with their residential, postal, business or email address must be maintained and made available to any member to access or copy on request.

Section 58 of the Act

 

Notifying Consumer Protection

Notify Consumer Protection of any change in the association’s address within 28 days of the change occurring.

Section 175 of the Act

Submit annual information statements within 6 months after the end of each financial year.

Section 156 of the Act

 

Rights and responsibilities of members

All members have significant rights and responsibilities. The specific responsibilities that apply to committee members are outlined in this chapter.

Members' responsibilities

Members agree to be bound by the rules of the association unless those rules are inconsistent with the Act or some other legal obligation.

The agreed rules of an incorporated association set out the purposes of the association (referred to as objects in the Act) and the basis on which the association is to be run. In some circumstances members or others could take civil action against committee members or the association if it fails to comply with its rules.

Conduct of the association

As incorporated associations are traditionally regarded as essentially community-based organisations, they are largely independent of government intervention. Members have a crucial role in ensuring that their association conducts itself in a way that is acceptable to them. If members fail to ensure their association is run in a fair, democratic and financially accountable manner, the association may be one they no longer wish to be associated with.

False or misleading statements

All members are responsible for ensuring all documents lodged with Consumer Protection under the Act or presented at members meetings are accurate. If a person knowingly lodges a document that is false or misleading they commit an offence that can result in criminal prosecution and be subject to a maximum fine of $5,000.

Members' rights

The Act sets out some other important rights for members. Members cannot give up these rights by simply agreeing to association rules which are inconsistent with these.

All members have the right to:

Records

Inspect and copy the association's register of members.

Section 53 of the Act

Inspect and copy the association's rules.

Section 35 of the Act

Inspect and copy the association's record of office holders.

Section 58 of the Act

Receive a copy of the rules when they join the association.

Section 36 of the Act

 

Annual general meeting

Attend the annual general meeting.

Section 50 of the Act

Have financial accounts showing the financial position of the association submitted to them at the annual general meeting.

Tier 1 – Section 70 of the Act
Tier 2 – Section 73 of the Act
Tier 3 – Section 76 of the Act

 

Special resolutions

Have proper notice of and to attend any general meeting at which it is proposed to alter the association's rules.

Sections 30 and 51 of the Act

Have proper notice of and to attend any general meeting at which it is proposed to voluntarily cancel the association

Sections 51, 129 and 141 of the Act

Have proper notice of and to attend any general meeting at which it is proposed to amalgamate the association with another group.

Sections 51 and 102 of the Act

Record keeping

Good record keeping allows an association to document and retrieve information that can be used for the purposes of reporting, assessing, planning, monitoring and reviewing.  In addition, some records are required by legislation.  This chapter describes the kinds of records that should be kept, record keeping systems, storage and members’ access to these records.

Key Points

  • There is a wide variety of records an association needs to keep.
  • Members have a legal right to access the members’ register, record of office holders and the rules of association.  
  • Record keeping systems will vary from one association to another depending on the type of association, its activities and size. 
  • Records that are not active should be archived and kept for seven years.
  • Records can be stored off site by companies that specialise in document storage, management and retrieval

Types of records to be kept

Types of records to be kept

There are a number of records that an association should keep as a matter of good policy and sound administration.

Some records are required to be kept by law such as members' registers and employment and tax records.

Records required by the Act

The Act requires an association to keep the following records:

  • an up-to-date register of all members, including their nominated contact information;
  • an up-to-date version of the rules;
  • an up-to-date list of the names and addresses of people who are office holders under the rules of the association, including committee members, any trustees and those authorised to use the common seal;
  • accounting records that correctly record and explain the financial transactions and position of the association in such a manner that allows true and fair accounts to be prepared; and
  • every disclosure of interest made by a committee member to be recorded in the minutes of the meeting at which the disclosure was made.

The Commissioner for Consumer Protection can request an association to produce any or all of the records listed above. Under the Act members have the right to inspect and copy each of the first three records listed above (see also Members' access to the records below).

Minutes

Minutes of all meetings especially of the Annual General Meeting (AGM) and management committee should be recorded, approved and filed for easy retrieval (see also Meetings). Approved minutes provide an official record of:

  • attendance;
  • business discussed;
  • correspondence received;
  • reports tabled;
  • decisions made; and
  • resolutions adopted.

Recorded decisions should clearly state:

  • what decision has been made;
  • who will be responsible for its implementation;
  • when the decision is to be implemented by;
  • if the decision is to be reviewed, and if so, when and by whom; and
  • who should be notified of the decision and how.

In addition to minutes, it is also common practice for associations to maintain a register of all significant resolutions passed by the association.

Notices

The Act requires adequate notice of association meetings and special resolutions be given to all members and that notice periods be specified in the rules of association.

Meeting notices must be given in accordance with the association's rules and should include the time, date, place and purpose. Copies of notices showing the date of issue should be kept in case of later dispute. Notices are often filed with the related minutes.

Certificate of Incorporation

This certificate is issued when the association is first incorporated or if an association changes its name.

It is important the certificate is stored safely as it is evidence of the association's corporate status. The certificate can be required for example, when applying for funding grants or opening a bank account.

If the certificate cannot be located an association can apply through AssociationsOnline to have a duplicate certificate issued for a small fee.

Financial records

The Act requires records to be kept of the association's finances. Taxation and industrial legislation also require financial records to be kept.

Effective management committees need clear and accurate up-to-date financial information to keep well-informed and to ensure that the association and its services remain viable.

The requirements of the Act are quite specific:

  • associations must keep sufficient accounting (or financial) records so that the financial transactions and financial position of the association are correctly recorded;
  • these records need to be kept in a way that will allow true and fair accounts (or financial statements) to be prepared from time to time, and so that these accounts can be conveniently audited if required; and
  • the financial records are required to be kept for at least seven years.

Depending on the association's annual revenue there may be additional accounting requirements to be met. These requirements are discussed in detail in Accounts and Auditing.

Annual report

Many medium to large associations compile an annual report which is tabled at the AGM. An annual report summarises the main achievements and highlights of the past 12 months.

There is no set format for an annual report, but it can include the following items:

  • Chairperson's report.
  • Staff report.
  • Activity report.
  • Annual statistics.
  • Annual financial report.
  • Interest stories, highlights and low points.
  • List of staff, management and volunteers.

Where an annual report is produced, it is usual to include the annual financial report. As an annual financial report is required under the Act, it is a convenient way of ensuring that the association meets its obligation to submit its annual accounts to its members at the AGM.

Many associations distribute an annual report as a public relations exercise. Some funding agreements require annual reports.

Employment records

In addition to the records required by the Australian Taxation Office (ATO) and State and Commonwealth industrial laws (see Employment), associations may wish to set up employment‑related record systems. These could include:

  • records of all job descriptions, selection criteria, related industrial agreements, past advertisements and job position evaluations;
  • records of selection processes and outcomes;
  • formal records of any meeting or discussion related to issues of employee performance and position review;
  • formal documentation of all proceedings related to any employer/employee, employee/employee, or employee/third party grievance;
  • records on staff training and professional development; and
  • copies of all correspondence and memoranda relating to individual conditions of employment, changes or requests.

Safety records

Occupational health and safety assessments and data should be kept to record the association's management of its legal responsibilities to provide a safe workplace (see also Occupational Safety and Health and Workers' Compensation).

The following health and safety records should be kept in a separate file for easy access and reference:

  • complaints;
  • incidents;
  • risk management analysis;
  • training details;
  • safety committee minutes; and
  • copies of specific management committee resolutions.

Insurance records

Copies of all insurance policies should be kept in a secure place. Changes to policies should be updated on the files immediately they are received.

Insurance policies may require an association to keep specific records in addition to those already kept, for the purposes of validating a policy. Such records may include health declarations, assets register, numbers of volunteers and number of hours undertaking certain activities.

Associations must notify their insurer as soon as possible after the occurrence of certain events such as an accident, theft or fire. It is important associations keep copies of all notifications and correspondence to prevent the possibility of any dispute regarding an association's obligations.

Service delivery records

Some associations need to keep records of its service delivery and activities in order to:

  • acknowledge achievements;
  • minimise risk of professional negligence;
  • facilitate communications and change overs;
  • ensure industry or professionally‑based requirements are met; and
  • assist in evaluation and planning.

This may take the form of statistic sheets, case files or employee reports.

Funding arrangements may also require certain records to be kept and reported on. Failure to properly keep records or report as required (quarterly, annually etc.) may result in a breach of the funding agreement and subsequent loss of funding.

Members' access to the records

Except for those records association members have a specific right to access under the Act, members’ access to records is dealt with under an association’s rules. Access should be based on what the majority of members have approved. Other specific arrangements may need to be made for confidential materials such as staff or client files.

Incorporated associations should not be run as if its committee is a ‘secret society’. Mistrust and tension could be caused if the availability of information such as committee minutes or financial accounts to ordinary members is restricted without good reason.

Members’ register

The Act requires associations to maintain an up-to-date register of members, which must include each member’s name and one of the following:

  • residential address;
  • postal address; or
  • email address.

Where any change in the association’s membership occurs the records must be updated within 28 days of the change.

The Act gives members the right to inspect the register and make a copy of any part of its contents. A member does not have a right to remove the register from the association’s possession.

A refusal by some committees to allow access to the members register has in the past led to the prosecution and fining of a number of committee members.

Some people have held a belief the Commonwealth’s privacy legislation overrides this requirement of the Act, however the courts have not supported this view. It is clear committees do not have the power to deny members a fundamental right to access the member’s register.

It is easy to comply with the requirements of the Act, while at the same time minimising the concerns that people may have over their name and address being made available to other members, such as:

  • ensuring the register contains only each member’s name and their nominated contact information. If the association wants or needs to keep other information on its members (telephone numbers, spouse’s details, etc.), then develop a separate record that contains these details. This should be kept secure and confidential as it could be subject to privacy considerations (see Privacy and confidentiality of records). The simple register of names and nominated contact information is the only register that is required to be accessed under the Act.
  • making members aware that it is a legal requirement that their name and nominated contact information can be made available to other members. It is a good idea to advise people of this requirement when they apply to become a member such as on the application form. For current members, it can be useful to defuse some of the emotion by pointing out that their names and addresses are also obtainable through sources such as the electoral roll and the telephone directory. Alternatively members can give an email address or post office box address for the purposes of the register, although the cost of maintaining a post office box may not be justified for most.
  • not allowing members to record their contact address as c/- the association.
  • safe guarding the privacy of under-age members by creating a ‘non-member’ category for them such as ‘players’ for juniors in a sporting club. By making them ‘something other than members’ means their addresses are not available to other members through the association. Juniors as non-members are not able to join a committee and there is also doubt over whether it is legally appropriate for under-age persons to serve in that capacity. Creating a ‘non-member’ category would involve an amendment to the association‘s rules. This topic is dealt with in Altering the Rules.
  • the Act enabling associations to include a requirement in the rules that any member wishing to make a copy of or take an extract from the register of members – must provide a statutory declaration stating the purpose for which the information is required and the purpose is related to the affairs of the association. The provision of a statutory declaration demonstrates the good intentions of the requesting member. A sample statutory declaration is included at the end of this chapter.
  • the new law introducing an option for members to request their association provide them with a copy of the members register. Again the rules may require members to provide a statutory declaration. The management committee may also require members to pay a fee for the copy.
  • A person must not use or disclose any information in the register of members unless the purpose is directly to the affairs of the association.

For example the information cannot be used to send material for political, religious, charitable or commercial purposes.

Important!

If the association keeps a members register that includes information other than the names and nominated contact details, it might find itself in breach of privacy laws if the register is made available for inspection by members. (See also Privacy and confidentiality of records).

The best way to comply with both the Western Australian and Commonwealth legal obligations is to maintain the register or registers as described above.

Record of office holders

Associations are required to maintain an up-to-date record of the names and current addresses of:

  • all office bearers;
  • all committee members;
  • those members who are authorised to use the common seal; and
  • any persons who are appointed or act as trustees for the association.

The address recorded in the record office holders may be:

  • a residential, business or post office box address; or
  • an email address.

As is the case with the members’ register, members are entitled to view the record of office holders upon request and make a copy of all or part of the record. They may not remove the record for this purpose. Furthermore the inspecting member must not disclose or use the information unless the purpose is directly connected to the affairs of the association.

The record of office holders does not generate the same level of concern as the register of members. Many associations make this information freely available and without the need for a request by a member. Where members can easily contact their committee, the organisation runs smoother.

Rules of association

Every association must have a set of rules, often known as a ‘constitution’. The rules largely govern the way in which an association operates. The Act requires an association’s rules to be kept up-to-date. To ensure this, the rules can be amended by a special resolution of the members. This process is explained further in Altering the Rules.

The Act also requires a copy of the rules to be held by Consumer Protection as the 'official' version of the association’s rules. The rules lodged by an association with Consumer Protection (including any amendments) are the only effective rules of the association.

It is important to notify Consumer Protection of any amendment to the rules within one month of the date of the meeting where the special resolution was passed. If there is a dispute to which an amendment of the rules is relevant and Consumer Protection has not been notified, then it may not be possible to rely on the amendment to resolve the dispute.

The association must give each member a copy of the rules in force when their membership starts. Should a person wish to access the rules at any time during their membership they may:

  • request to inspect the rules and make a copy or take an extract; or
  • request that the association give them a copy of the rules or any particular part in force at the time of the request.

Privacy and confidentiality of records

The Commonwealth’s Privacy Act 1988 requires private sector and not for profit organisations to protect and safeguard their collection and use of personal information.  The Privacy Act includes thirteen Australian Privacy Principles setting out the standards, rights and obligations for the handling, holding, use, accessing and correction of personal information.  The Privacy Act is overseen by the Office of the Australian Information Commissioner.

Associations need to obtain and keep information on clients, members and employees etc. to provide good service and comply with legal requirements such as the member’s register and tax details.  Personal information must be kept private and confidential.  This information may not be used for any unlawful purpose or without the person's consent.

In the case of the register of members, the privacy legislation does not protect this information from other members.  Members do not need to give consent for another member to view the register.  The Australian Privacy Principles states that an organisation must not disclose personal information about a person unless the disclosure is required or authorised under law. 

The Associations Incorporation Act 2015 is the law in Western Australia that enables a member to access the members’ register as discussed above.  It is important the members’ register contains only their names and addresses and no other information!

Under the Commonwealth’s privacy laws where an association collects information on clients, employees, members and others, they have a right to:

  • have their privacy rights respected;
  • be assured their information will not be passed onto a third person without their consent;
  • know what information will be kept and why (this is why you need to tell members about the members’ register!);
  • know how information will be used;
  • know how they can access this information;
  • know how to correct an incorrect or misleading record; and
  • be assured that information will only be used for the purpose it was supplied.

Visit the website for the Office of the Australian Information Commissioner (OAIC) or telephone 1300 363 992 for more information. 

Custody and handover of records

The Act requires an association’s rules to include details of who will have custody and responsibility for keeping the records (described in this chapter).  These responsibilities are typically shared between the members of the management committee, for example the Treasurer may be responsible for custody of the financial records while the Secretary may keep everything else. 

If a person ceases to be a member of the management committee through the ending of their term, resignation or death, it is a requirement that any association records they hold be delievered to a current member of the association’s committee as soon as practicable. 

Record keeping and Consumer Protection

Annual information statements

The annual information statement is required to be lodged within 6 months after the end of the association’s financial year and includes:

  • confirmation of the association’s address
  • confirmation has at least 6 voting members
  • the date of the most recent Annual General Meeting; and
  • the revenue for the most recent financial year.

The annual information statement can be submitted using AssociationsOnline.

Updating the association’s address

There is no requirement to notify Consumer Protection of changes to office bearers.

It is important to ensure the association’s contact address remains up to date and correct.  The Commissioner must be notified of any changes to an address within 28 days.

The new address can be easily registered through AssociationsOnline and there is no fee for this service.

Record keeping systems

There are various manual (filing cabinets) and electronic (computer-aided) ways to record, store and retrieve information. Each association should work out and decide on a record-keeping system that suits its particular needs, circumstances and resources (availability of space or computers). The preferred system should be functional, accurate, reliable and user-friendly.

Record-keeping systems need to consider the:

  • nature of information to be stored and retrieved;
  • security and access of files and information (particularly computer records);
  • validity and reliability of the information collected and the system on which it is recorded;
  • resources and training required; and
  • length of time that the records should be kept (general legal requirement is seven years).

Electronic records

An electronic record is any information entered onto a computer system and used, stored and accessed via that system. Electronic records include document files, databases, spreadsheets, electronic mail and internet documents.

Electronic records need to be given special consideration.

For example without an appropriate security system an original document such as meeting minutes may be amended without authority and/or being readily detected.

Electronic records need to be kept securely and at the same time, be easily accessible for retrieval.

Tracking documents

Associations may consider developing a simple policy that prescribes how documents are to be identified. It is very easy for there to be suddenly two or more versions of a document and no one is sure which is the most accurate!.

For example:

The Harmony Community Development Association’s policies state that all official documents, minutes, reports, records, forms and orientation documents must:

  • be clearly titled;
  • show authorisation;
  • show date of authorisation;
  • show date of review;
  • title original copies as 'Original Copy'; and
  • title any non-original document as 'Copy'.

A register of all official copies will be kept for reference purposes.

Bring-up systems

A bring-up system is any systematic method used to regularly check open files and review policy or management decisions. The system can be manual or computer based.

Many associations use bring-up systems to help ensure that policies, decisions and other important matters are kept highlighted and reviewed regularly. This system is a useful quality assurance and risk management tool.

For example:

The management committee of an association gives a review date for all policies developed. The date of review is entered into a register maintained by the secretary for each meeting. A policy 'coming-up' on the register as scheduled for review is then put on the next meeting agenda.

A computer bring-up system is used as the quality assurance mechanism for service delivery by community staff. Actions taken on a file are recorded and a bring-up date allocated before being given to administration staff for recording and filing. Each morning a staff member opens the bring-up list for the day, retrieves the files and places them on the desk of the employee who is working on the file. This reminds the employee that they had requested the file to be 'brought to the top of the pile' for follow up. It may be that a court date is getting near, or the employee wrote a letter four weeks ago and wanted to check if a response had been received.

Storage management

The way in which records are stored will depend on:

  • the purpose of the records;
  • the type of records;
  • how long records must be kept; and
  • access needs.

Records may be stored on-site at the association’s place of business. If there is insufficient and appropriate space, records can be stored off-site by storage companies. It is essential documents are stored in safe, secure and appropriate facilities. There are a number of factors to consider when deciding on a storage facility. Storage facilities should:

  • be conveniently located to the user;
  • comply with occupational health and safety standards;
  • comply with building standards;
  • have secure and controlled access;
  • be appropriate for the kinds of documents to be stored;
  • facilitate easy access and retrieval;
  • have containers that are suitable, durable and appropriate for the kinds of documents; and
  • protect documents from disasters such as fire and deterioration from direct sunlight.

Destroying and archiving records

Some records may be destroyed after their legal retention period has expired (in most cases this period is seven years).

Records should not be destroyed unless the association is absolutely certain that this can be done both safely and legally. An association should have a policy on storing and destroying records. No record should be destroyed without the appropriate authorisation.

If the records of your association have not been destroyed, you may wish to consider passing them to the Battye LibraryThe Library maintains an extensive archive of the social history of Western Australia and its people and has expressed an interest in the records of defunct associations.

Records that must be kept permanently should be archived and not destroyed. Records that have permanent value are historical documents, minutes of meetings and legal documents. Archived records can be stored on-site or at an off-site storage facility.

Sample Form - Statutory Declaration

Sample Statutory declaration

Sample Statutory Declaration for a member to request a copy of the register of members of an association.

Download the sample Statutory Declaration

Meetings

Meetings are an essential component of managing an incorporated association, whether the association is large or small.  They are necessary for communicating, organising, decision-making, problem-solving, keeping members informed and carrying out the objects of the association.  This chapter discusses the various types of meetings and outlines some important meeting procedures.

Key Points

  • A newly incorporated association must hold its first AGM within 18 months after incorporation.
  • The management committee must convene an AGM every calendar year within six months after the end of the association’s financial year.
  • Members must be given notice of all meetings in accordance with the rules.
  • Chairpersons need to be familiar with the important meeting procedures, for example quorum requirements, rules of debate, voting procedures and minute taking. These could be set out in the rules of association.

 

Types of meetings

There are various types of meetings that serve different purposes and have slightly different requirements.

Annual General Meeting

The Annual General Meeting (AGM) is a central part of an incorporated association's governance structure, as it holds an association accountable to its members, and in some cases the public. It is the only association meeting specifically provided for in the Act.

The association must hold its first AGM within 18 months of becoming incorporated. After the first AGM, incorporated associations must hold an AGM once in every calendar year within six months after the end of the association's financial year. An association’s financial year will be defined in its rules. Assuming an association's end of financial year is 30 June then it must hold its AGM on or before 31 December.

If for some reason, the association finds itself unable to hold its AGM within the legislated timeframe it should contact Consumer Protection immediately to seek an extension.

The Commissioner for Consumer Protection has the power to allow an incorporated association to hold an AGM outside of the six month period, but only if the request is made before that period expires.

For example, an association has a financial year that ends on 30 June. This means that the AGM can be held between 1 July and 31 December. If the Association is not able to hold the AGM until after 31 December, then an extension of time must be requested. The application must be received by the Department no later than 31 December.

An application for an extension of time to hold the AGM can be made by lodging the application using Associations Online.

Notice of an AGM should be sent to all members, irrespective of voting rights, in accordance with the association's rules. Invitations to AGMs may be extended to special guests and/or the public as a way of promoting the association and its achievements.

The business of the AGM generally covers financial reports and the election of the management committee and office bearers. The Act requires the annual financial accounts for the preceding financial year to be presented to members at each AGM.

This is an important obligatory provision – for further information see Members' rights to the financial accounts.

Whilst it is not mandatory under the Act for all associations to have the financial accounts audited every financial year, and to appoint an auditor at the AGM (see Accounts and auditing for information about requirements for different associations) it may be a stated requirement in the rules of the association. Where the rules stipulate an annual audit, the appointment of the auditor is usually decided at an AGM.

If the association's chairperson is standing for re-election, he or she will usually step aside as chair of the meeting and arrange for another officer to chair that section of the meeting and conduct the election.

An example of an agenda/notice of meeting for an AGM is shown below. Note that some rules of association set out the order of business to be followed. If so, the sequence shown in the rules should be followed exactly.

The Annual General Meeting will be held at the
Council Meeting Room on 15 February 2015 at 7pm.

Business

  • Chairperson's opening
  • Apologies
  • Minutes of previous meeting
  • Business arising from the minutes
  • Correspondence [sometimes omitted]
  • Chairperson's report
  • Treasurer's report
  • Election of committee members
  • Guest speaker
  • Motion on notice:

Mrs Smith to move: 'That the Association organise a fundraising event to raise money to donate to the local youth groups’.

  • Questions and discussion
  • Notice of motions for the next meeting
  • Next meeting
  • Close

Special (or extraordinary) general meetings

A general meeting other than an AGM is usually referred to as a special general meeting. These meetings are held to deal with specific motions or business. For example, to change the rules of the association, question the legality of a management committee decision or deal with a particular issue.

The rules of association generally set out the grounds for a special meeting being called (eg by petition of a certain percentage of the membership) and the notice period and procedures required.

Management committee meetings

Management committees will need to hold regular meetings in order to manage the affairs of the association. General meeting procedures apply to committee meetings. The management committee is also responsible for convening the AGM within six months after the end of the association's financial year.

General meetings directed by the Commissioner

In rare circumstances where there is a dispute affecting the association and the holding of a general meeting may assist to resolve the dispute, the Commissioner for Consumer Protection has the power under the Act to direct the association to hold a general meeting. It is important to note that this power would only be exercised in circumstances where the matter is affecting the overall conduct of the association’s affairs. Such powers would not be exercised to resolve private member disputes.

Members should refer to Resolving complaints and disputes for options to resolve these forms of disputes.

Meeting procedures

General requirements for a meeting

All formal meetings of the association must be properly convened in accordance with the association’s rules. All members must be notified of:

  1. what type of meeting is being held;
  2. the place, date and time of the meeting; and
  3. the business to be considered at the meeting, including the full text of all motions that will be put to members at the meeting.

When the meeting has commenced, it is important to first establish that there is a quorum to satisfy the quorum requirements in the association's rules.

If there are not enough members present at the meeting, it will be invalid and any motions passed may not be effective.

If there is a quorum, then all voting and passing of resolutions must be carried out in accordance with the rules and recorded accurately in the minutes.

Incorporated associations are intended to be run in a democratic manner. The way in which meetings are conducted can have a major effect on members’ perceptions of whether their association is democratic.

The following suggestions can assist in this regard:

  • correspondence to and from the association should be tabled at the meeting. Members in attendance should be given the opportunity to read the documents or if agreed, to obtain copies;
  • make sure everyone at the meeting gets a say. People who tend to dominate should be stopped and quieter people encouraged to voice their opinion;
  • no one wants to spend long hours at meetings. If there are a lot of people who want to speak in relation to the matters under discussion, it is useful to limit the amount of time each member has to speak; and
  • ensure there are clear decisions and that everyone understands the matters being discussed. It is especially important that the person taking the minutes has the opportunity to write down what is agreed. It can be a good idea to sometimes stop and check that everyone approves what has been recorded as the resolution passed. (For further information, see Minutes).

The chairperson is responsible for implementing these suggestions.

Notice and agenda of meeting

The purpose of a notice of meeting is to inform the members of when and where the meeting will be. The agenda informs the members of what is to be discussed and done at the meeting so that the members can decide:

  • whether or not they want to attend the meeting; and
  • if proxy or postal voting is allowed and they do not propose to attend in person, how to cast their proxy or postal vote.

Usually, the agenda is attached to or combined with the notice so members are informed of all the necessary details at once. Agendas, confirmation of meeting details and any reports should be sent out in advance to allow people time to read the documents. Where proxy or postal voting is allowed, proxy forms or voting slips should also be sent at this time.

The minimum time a notice may be sent before a meeting is set out in the rules of the association, and must be strictly adhered to. Inadequate notice of meetings may result in a meeting being invalid.

Notice periods vary in accordance with the type of meeting to be held. For example, a committee meeting may require only five days’ notice, whereas the notice period for the AGM could be as long as three weeks.

Note: all members who are entitled to attend a meeting must be given proper notice in accordance with the rules. And, all members are entitled to be invited to attend a special general meeting.

A typical agenda briefly sets out what matters will be covered and in what order.

If members are notified of the business to be conducted at the meeting, then the meeting must be confined to dealing with those particular matters. The chairperson should ensure any new agenda items raised during the meeting are put on the agenda for the next meeting and not discussed at the current meeting. This allows members time to consider matters properly and avoids disadvantaging members who have already voted by proxy or postal vote (where these methods of voting are allowed).

An example of a simple agenda:

Notice of meeting
A committee meeting will be held at the Council Meeting Room on 12 February 2013 from 6.00pm to 8.00pm.

Agenda

  • Welcome
  • Apologies
  • Declarations of interest (Refer to The Management Committee for a discussion of this item under ‘Conflicts of Interest’).
  • Minutes of previous meeting
  • Matters arising
  • Correspondence
  • Reports
  • Fundraising projects
  • General business
  • Next meeting
  • Close

Chairperson

A proper meeting must have a chairperson to chair the proceedings. The chairperson is required to control the meeting procedures and has the task of:

  • making sure proper notice is given and there is an agenda listing all items needing to be covered;
  • checking (and usually signing) the minutes of previous meetings;
  • keeping time (important – to ensure the meeting gets through its business in the allocated time);
  • dealing with the order of business;
  • facilitating discussion;
  • keeping order;
  • ensuring everyone has an opportunity to speak;
  • receiving motions and putting them to the vote;
  • declaring the result of any motions, such as what has been resolved;
  • making sure decisions are reached on issues discussed and that everyone understands what the decisions are; and
  • declaring the meeting closed.

The chairperson does not usually vote on a motion but is entitled to do so, as long as he or she is a member with voting rights. This ‘deliberative’ vote must be made at the same time as all other members vote. The rules may provide that the chairperson has an additional ‘casting’ vote if there is a tie in the vote.

Quorum

A quorum is the minimum number of people required for the meeting to be valid. The Act requires that a quorum be stated in the rules of the association for both general meetings and committee meetings. In the case of sub-committees, the management committee may set the quorum. The quorum may be set as a percentage of the membership rather than a set number, to allow for changing membership numbers.

If a quorum is not present, the meeting may:

  • be reconvened to another date; or
  • continue, with the chairperson declaring (and the minutes show) a quorum is not present. The decisions made at the meeting then carry the weight of recommendations to be ratified:
    • later during the course of the meeting (eg if another member arrives and a quorum is achieved); or
    • at the next convened meeting where a quorum is present.

Please note, the second option may not be allowed by some rules of association.

Motions and resolutions

A motion is a proposal that is put before a meeting for discussion and a decision. If a motion is passed it becomes a resolution. Resolutions are binding and should be recorded in the minutes.

An association’s rules will provide details about how motions should be dealt with and these should be observed.

It is best practice for motions to be placed on the agenda so members have adequate time to consider them before the meeting.

Putting forward and voting on a motion

  • A member of the meeting puts forward a clear and concise proposal for a decision or action to the meeting via the chairperson. This is called a motion.
    For example, 'I move that the Association donate $500.00 to Harmony Frail Care Centre for additional winter blankets'.
  • A second person agrees to 'second' the motion. This person is referred to as the seconder. This is not a vote in favour of the motion but a vote to have the motion put before the meeting. If a motion is not seconded, it lapses.
  • The Chairperson then opens up debate on the motion, often by saying 'does anyone wish to support/speak against the motion?' The mover of the motion can speak to the motion – outlining why he or she thinks the motion should be passed.
  • Discussion follows, generally in the format of alternating speakers for and against the motion.
  • After sufficient debate, the person who originally moved the motion has a right of reply.
  • The motion is read aloud and voted on.
  • If the motion is passed, it becomes a resolution. A resolution passed by a simple majority of votes (more than half of the members who cast a vote) is known as an ordinary resolution. Most resolutions in the life of an association will be of this type. 
  • The resolution is formally documented in the minutes along with the name of mover and seconder.
    For example, The meeting resolved to allocate $500.00 to Harmony Frail Care Centre. Moved: B White; seconded: C Green.

Resolutions become binding on the association as long as the people making the decision have the authority to pass them. It is a good idea to always follow up a resolution with a clear understanding of how the resolution will be implemented, by whom and by which date.

Generally, the chairperson does not put forward motions as they are primarily the facilitator of the meeting. However, they may put forward procedural motions that relate to the conduct rather than content of a meeting such as moving acceptance of the minutes.

Amending a motion or resolution

The mover with the agreement of the meeting can usually amend a motion. Alternatively, someone may wish to move an amendment to the original motion, which if successful creates a second motion.

Motions to amend motions can create confusing discussion if everyone is not clear on exactly which motion is being debated – the original motion, the amended motion, a motion to amend, or a motion to amend an amendment.

It is important the chairperson keeps proceedings as simple as possible. If a motion does not fully express the view of the meeting, it is sometimes easier to simply vote on it and let it be defeated.

Resolutions can be withdrawn or cancelled at the same meeting by following the same procedure that applies for moving and adopting a resolution.

Special resolutions

There are three occasions when the Act requires something more than a simple majority vote to pass a resolution.

These are:

  • a vote to amend the rules (or to change the name or objects) of the association;
  • a vote to apply for voluntary cancellation; and
  • a vote to amalgamate with another association.

Any of these require what is termed a special resolution, which needs a majority of 75% to pass.

To clarify, this means 75% of the members who are eligible to vote and actually do so in person (or by proxy or postal vote) at the meeting. It does not mean 75% of the total membership of the association.

There are several important requirements that need to be addressed in order for a special resolution to be lawfully binding on the association, and these are discussed in detail in Altering the Rules.

In the context of the present topic, please note it is generally not advisable to seek to amend a special resolution unless the amendment is so minor that it does not change the nature of the original. The motion proposing a special resolution is subject to specific notice requirements. A major change would potentially disadvantage those members not present at the meeting who may have made their decision not to attend on the basis of the advertised motion. Thus they have no opportunity to consider the amendment. Some authorities consider the present law in Australia as to whether special resolutions may be amended is confusing. It may be best to exercise caution and not allow any amendments.

If new motions or amendments cannot be taken from the floor, it may be necessary to provide notice of 2-3 different motions so that if one fails another may be looked at. This gives people time to consider alternative motions. If a motion is not moved it lapses.

Points of order

In general, the rules of debate are that someone should not be interrupted while they are speaking for or against a motion, unless:

  • there is a procedural motion passed to stop debate or ‘that the speaker no longer be heard’; or
  • the chairperson interrupts in the interest of orderly conduct; or
  • there is a point of order.

A point of order is addressed to the chairperson by someone standing up and saying 'point of order' or 'I wish to raise a point of order'. This means that the person making the challenge is saying the speaker should stop because he or she has breached a principle of ordered debate. The chairperson takes the point of order, listens to the reasons why the point of order has been raised and can ask for discussion on the order (for and against). Previous debate is stopped while the point of order is discussed. It is the task of the chairperson to rule on the point of order and his or her decision is final.

Examples where a point of order may be called are where:

  • the speaker is addressing issues outside the subject matter of the motion;
  • fair rules of debate are not being followed;
  • time limits have been reached;
  • a quorum is not present; or
  • the language is offensive or abusive.

Voting methods

When a meeting wants to decide on a matter, it does so by voting. Each member is entitled to one vote to indicate whether they are in favour of or against a motion. Various voting methods can be used such as a:

  • show of hands: members vote by raising their hand. The chairperson calls for those in favour of the motion to raise their hand and a count is taken. The process is repeated for those voting against. The method is suitable for small meetings as counting can become difficult with large groups;
  • voice vote: a simple method by which members indicate their vote by saying 'yes' or 'no' (historically ‘aye’ or ‘nay’). The decision is based on the volume of sound. The disadvantage of this method is there is no clear count of those in favour and those against;
  • rising method: members exercise their vote by standing up. The chairperson calls for those in favour of the motion to stand and a count is taken. The process is repeated for those voting against. For large groups this method makes counting easier than a show of hands;
  • Ballot: members indicate their vote in writing. This is generally used for very important matters (eg it is commonly used for the election of committee members) and when secrecy or confidentiality is required.

Once the vote has been taken, the chairperson or returning officer (an independent person) collects and counts the papers. The meeting may be adjourned while the counting is taking place;

  • poll: similar to a ballot in that the vote is written. It is technically the only form of voting that allows all proxy votes to be counted. Under common law, a poll is usually ‘demanded’. Many association rules do not deal with polls. The Act provides in the case of a special resolution, a poll may be demanded by at least three members, present either in person or by proxy;
  • proxy and/or postal votes: the rules of association may make provision for proxy and/or postal votes. A proxy vote is where someone else votes on behalf of another member who is unable to attend the meeting; or
  • chairperson's casting vote: if the votes are equal or tied the chairperson may exercise a second or casting vote to decide on a motion, but the rules need to provide for this. Although the chairperson may use the vote to decide either for or against a motion, it is preferable to give it against the motion.

The above comments apply primarily to general meetings of members.

Management committee decisions are often made by consensus. Where voting is required it is usually by voices or show of hands.

Proxy and postal voting

Proxy and postal voting can be used only if these forms of voting are specifically provided for in the rules of the association.

An association should carefully consider whether to allow proxy or postal voting in its rules. These are convenient methods of voting for members who cannot attend general meetings. The decision-making process is changed as members are not able to participate in the discussion and exchange of views at the meeting.

Members voting by directed proxy or postal vote must make their voting decision in advance of the meeting, based on the material that has been circulated rather than arguments put forward in the debate.

There is no doubt these voting methods involve additional work to implement. This must be weighed against extending the democratic process of the association to as many members as possible. There are many associations with members living all over the State for whom attending meetings on even an irregular basis is very difficult.

If proxy votes are allowed, a written proxy form must be completed giving the proxy authority to vote. Proxy voting can take two forms – the member can give the proxy authority to vote as he or she (ie the proxy) sees fit or provide specific authority for the proxy to vote only in a certain way. An example of a simple proxy format follows:

I, Sally Smith, being a member of the association, hereby appoint Peter Piper to vote as my proxy at the general meeting to be held on 4 July 2016.

An example of a proxy form that allows for both a general authority to vote, as well as a directed (or specific) authority to vote has been included at the end of this chapter.

Proxy forms are usually sent out with the notice of meeting and agenda papers, with the condition to be returned to the secretary well before the start of the meeting. This ensures their legitimacy for inclusion in the voting process during the course of the meeting.

Proxy votes can become problematic if one member holds proxies from two or more other members. As a general rule, proxy votes should only be used with a poll as this method allows all of the proxies to be tabled and accounted for in the vote.

A way to simplify proxy voting is to specify in the rules that a member can only hold one proxy vote at any particular meeting. This makes it easy to include proxies in the vote (eg on a show of hands) without the complication of holding a poll. This situation does not account for voting by ballot where postal voting can be useful.

Postal voting is where a member casts their own vote, rather than relying on a proxy. The vote must generally be directed to one or more specific resolutions such as a proposed change of the rules. It is frequently used to good effect in the election of committee members and office bearers. In this context, more members may be enticed to cast their vote than might be the case if the vote were restricted to those who actually attend the AGM.

Should postal votes or votes via email be allowed, the process for casting a vote should be considered such as using a formal ballot paper or a clear written indication of the voter’s intent. It is important to set a due date deadline for when these votes must be received. You should also consider safeguards to prevent fraud for instance a person casting more than one postal vote.

Minutes

Although not a specific requirement under the Act, it is considered essential to keep accurate minutes of all association meetings, whether general, committee or sub-committee meetings. Apart from being a record of what transpired, the minutes are also evidence and can provide protection for individuals who act on the decisions of the association.

A good process to ensure the minutes are accurate is to:

  • make sure that someone is nominated to take the minutes. Generally, this will be the association’s secretary and that responsibility will be allocated in the association’s rules.
  • keep a record of proceedings during the meeting. It is important the minutes record any resolutions or decisions made at a meeting. Minutes should be as brief as possible without jeopardising accuracy and credibility of the record. It is up to the association whether it also wants minutes kept of any discussion. Some associations like to have detailed minutes that show the main points of discussion before a decision is made, while others prefer brief minutes that record only the decisions and actions.
  • make sure that attendances and any apologies are noted. Usually done at the beginning of a meeting, although if people leave early or arrive late it is a good idea to also keep a note of this.
  • present previous minutes for approval. Often, draft minutes for the previous meeting will be circulated in advance of the next meeting, giving people time to consider whether the minutes accurately reflect their recollection of the meeting. The minutes should be presented for approval at the next meeting of a similar kind. For example, minutes of a special general meeting should not be approved by the committee, but at the next general meeting. AGM minutes are usually tabled at the next AGM for approval. Members should be given the opportunity to propose corrections to the minutes or to seek to have additional details of what occurred recorded. These can be allowed or disallowed on the vote of people who attended the previous meeting. Minutes should be approved on the basis that they are a correct record of the meeting.
  • identifying the approved minutes. After any approved changes to the minutes have been noted, it is good practice to have an office-bearer for the association sign that the minutes are the approved minutes of the meeting. If the rules of the association don’t allocate this responsibility, the chairperson of the meeting would sign and date the minutes. The chairperson should also initial any amendments and state that the minutes have been approved as a correct record of the meeting.
  • keeping the approved minutes. It is useful to keep the approved minutes in one place for easy access. Some associations keep the original copy pasted into a numbered ledger (book) and others use a ring binder. Storage may be dealt with in the association’s rules. It may be useful for your records, for originals, copies of any correspondence or other documents tabled at the meeting also are kept as attachments to the official minutes.

Reports

Tabling reports at a meeting are an efficient of facilitating discussion and decision-making. Even the smallest of associations can effectively make use of reports. For example, as a minimum most will usually want a Chairperson’s and Treasurer’s Report to be presented at each AGM.

Reports are more frequently submitted to management committee meetings by sub-committees or individuals to provide:

  • information (eg demographical composition of local area);
  • research (eg legal needs of newly arrived migrants);
  • analysis (eg cost benefits of contracting out bookkeeping); or
  • recommendations (eg recommendation on insurance cover).

Reports should:

  • be clearly addressed such as ‘To:, From:, Date: and Title’;
  • provide an introduction to the report (eg who wrote it, what the terms of reference were, membership of the sub-committee);
  • be written in clear simple language;
  • have a logical sequence to make it easy to follow;
  • use bullet/numbered points where possible to assist with quick comprehension and reference; and
  • have clear recommendations, if such are being made.

If possible written reports should be circulated in advance of the meeting. This shortens the meeting and permits more informed discussion.

When there is no universal support in a committee meeting for the majority position, a minority report can be provided stating the different or opposing views of the minority. This means the minority voice is not silenced by the majority and allows the association to hear different perspectives.

Reports from committees and individuals tabled at a meeting can be either adopted or received. A meeting adopts the report when it accepts the report's findings or recommendations.

A motion as such should be moved for example, 'That the report of the fundraising committee be adopted'.

If the management committee does not agree with the report, needs more information or time for further decision-making. The meeting can receive the report again via a formal motion (eg 'That the report be received') and motions dealing with specific recommendations can be dealt with at a later meeting.

Committees and sub-committees

Some management committees set up permanent or occasional sub-committees to assist them with their work.

Permanent (standing) committees are set up for the long term. Examples might include finance, fundraising or public relations committees.

Occasional committees are set up for short-term purposes and might include a strategic plan development committee, remuneration review committee or a policy specific committee.

The management committee may choose to have a report back from sub-committees as a permanent item on the agenda for their management committee meetings.

The general meeting procedures governing sub-committees would normally be the same as those governing the management committee.

Note: While subcommittees can be given delegated authority by management committees, ultimate responsibility lies with the management committee.

Sample Form - Appointment of Proxy

Sample Appointment of Proxy

Sample Appointment of Proxy for a member wishing to appoint a fellow member as proxy for a meeting.

Download the sample Appointment of Proxy

Altering the rules

Over the life of an association it is likely that rules will change, if only to keep step with changes in society.  For example, changes in social attitudes (and laws), discrimination or technological advances such as email could mean that some rules need to either be amended or improved upon.  Consumer Protection recommends as best practice, associations should review their rules every three to five years and amend them as needed.

The legal process for altering the rules of an association is relatively straight forward.  This chapter describes the requirements for altering the rules and for ensuring that those alterations are legally effective.

Key Points

  • An association can only change its name, objects or the rules of association at a general meeting by means of a special resolution.
  • Notice of each special resolution to be considered at the meeting must be provided to members in accordance with the existing rules. 
  • The special resolution(s) must be passed by a majority of 75% of members voting and be lodged with Consumer Protection within one month after being passed.
  • The Commissioner for Consumer Protection must approve all changes that are made to an association’s rules that result in a change of name or objects or purposes.

A step-by-step guide

An association can only change its rules by passing a special resolution at a general meeting. The Meetings section provides an introduction to the concept of a special resolution.

The main steps in changing an association’s rules are to:

  • determine what amendments are going to be made;
  • ensure the amendments comply with the Act and draft a new copy of the rules;
  • send notice to all members stating in full all proposed special resolutions to be voted on, the time and place of the general meeting where the proposed special resolutions will be moved;
  • convene general meeting of members to consider the amendments;
  • pass the amendments by one or more special resolutions; and
  • notify Consumer Protection of the changes within one month of the meeting.

What changes are needed?

There are many reasons why associations need to make changes to their rules. In most cases the rules no longer serve the changing needs of the association or they are ineffective in dealing with issues faced by the association or they are simply out of date.

Committee members normally have the task of planning changes to the rules of the association. Some useful resources available to assist in this task include:

  • The rules of every association incorporated in Western Australia are a public record available from Consumer Protection for either inspection or purchase for a fee. The rules of associations with similar objects or purposes to your own may provide helpful examples of new provisions or improved wording.
    An application for a copy of any association’s rules can be made using AssociationsOnline. Simply search for the association name and follow the prompts to submit the document request.
  • Schedule 1 of the Act lists all of the matters that must be provided for in the rules of all incorporated associations. These matters can also be viewed in the Act itself.

Using the Model Rules

The Model Rules are a complete set of rules prescribed by the Associations Incorporations Regulations. The Model Rules include provisions relating to all Schedule 1 matters except for:

  • the name of the association;
  • the objects or purposes of the association;
  • the quorum for a general meeting of members of the association;
  • the quorum for a meeting of the management committee of the association; and
  • the period of the first financial year of the association.

If an association decides to adopt the Model Rules it will only be necessary to prepare information in relation to these matters.

Note: If the association changes any of the provisions in the Model Rules (with the exception for the matters above) it is no longer considered to be using the Model Rules.

Do the rules comply?

All incorporated associations are expected to comply with the provisions of the Act and their rules must be consistent with those provisions.

To check that your association’s proposed rules will be consistent with the Act, in particular Schedule 1, refer to the checklist included at the end of the chapter on Becoming an Incorporated Association.

Where an association’s rules do not include all of the Schedule 1 requirements the relevant part in the Model Rules will automatically apply until corrected by the Association (please note this will not occur until after the end of the three transition periods).

Do the changes meet your association's other obligations?

Depending on the association’s activities there may be other matters that need to be included in the rules.  An association should be careful that any changes made to the rules do not affect its eligibility to hold certain licences, receive taxation endorsements or alter any funding arrangements were already in place.

In some situations, associations may also need to have the changes endorsed by outside bodies (for example a national body or other government department) before presenting them to members for a vote or lodging with the Department of Commerce.  

If in doubt, contact the relevant authorities to discuss the proposed changes.

Liquor licences

Associations who hold a liquor licence are required to include particular information in their rules and submit the rules to the Department of Local Government, Sport and Cultural Industries - Racing Gaming and Liquor.

Further information about the requirements under the liquor legislation is included in the Directors Policy, ‘Club Constitutions – Club and Club restricted Licences’ or by telephoning (08) 9425 1888.

Parents and citizens associations and school councils

All Western Australian Council of State School Organisations (WACSSO) affiliated associations are governed by a single standard constitution which has been approved by the Western Australian Minister for Education, which is required under sections 145 and 146 of the School Education Act 1999.

WACSSO is in the process of providing a revised constitution and will be providing instructions to affiliated associations shortly.  For information please contact WACSSO on telephone 9264 4000 or info@wacsso.wa.edu.au.

Taxation concessions

Groups holding charity tax concessions or other tax exemptions may be required to include certain information in their rules. If this applies to your association may wish to visit the ACNC website for more information.

Calling the meeting

To validate an alteration of the rules, the association must follow the correct procedure in calling a meeting.

Note: The meeting must be a general meeting. All members of the association, whether they have voting rights or not must be given notice of the meeting and invited to attend. Under the Act, the rules of an association cannot be changed without all members being advised.

The association must give notice to all members of the time, date, venue and purpose of the general meeting. A meeting may become invalid due to insufficient notice.

Sometimes the rules provide for a longer notice period for a meeting where a special resolution is to be considered. The notice should state in full the proposed special resolution(s) to be voted on at the meeting. It is good practice to also include an explanation of why the changes to the rules are being proposed to members.

Please note that it is important that the words ‘special resolution’ appear as part of the notice.

Again, if insufficient notice is given in accordance with all of the above, the special resolution will have no effect.

Occasionally associations may wish to make many changes to its rules making it complicated to list every change individually. In this case, it is appropriate to provide each member with a copy of the complete new rules as they will appear after approval. The notice of special resolution might then read: ‘It is proposed to adopt the attached rules in place of all of the existing rules of XYZ Association (Inc).’

If your association’s rules provide for proxy or postal voting the relevant forms need to be forwarded to members with the meeting notice. Meetings provides more information on this topic.

A special resolution

Firstly, the committee needs to ensure a quorum is present at the meeting. The special resolution(s) need to be moved in the same way as any other resolution.

For example:

'I move that rule 5 be changed to read ……..’

Moved: John Robertson

Seconded: Vicky Nichols

The association must ensure any resolution(s) to adopt altered rules is passed by the required majority. A special resolution needs at least 75% of members voting in person or (if permitted) by proxy or postal vote, to vote in favour of the rules being altered in the manner proposed.

Note: This means only 75% of those members present at the meeting who are eligible to vote is required.

A special resolution to alter the rules must be lodged with Consumer Protection to have effect.

Lodging the changes

For legal effect, an association must lodge any changes to its rules by special resolution within one month of passing the resolution with the Commissioner for Consumer Protection.

Changes to rules can be lodged through AssociationsOnline with the applicable fee. There is a step by step video available if you need help lodging the application using the system.

Associations not submitting changes on time may request the Commissioner allow the changes to be lodged outside this time limit by outlining the reasons for the delay.

Note: The Commissioner may agree to accept the request. Even with very good reasons, extensions are generally allowed for a maximum of three months. If the Commissioner does not agree to an extension it will be necessary to start the process all over again by calling another general meeting.

When sending amendments to Consumer Protection remember to:

  • Submit the documents within one month of the date of the meeting.
  • Complete the application in full and sign the declaration.
  • Pay the correct fee.
  • Attach a complete copy of the amended rules and complete the Schedule 1 matrix or statement that the association is adopting the model rules and providing the necessary information.
  • Keep a copy of all the documents submitted, including the proposed alterations to the rules. Consumer Protection does not provide a final copy to the association.

It is important to note that the new rules do not take effect until the notice is lodged with and confirmed by Consumer Protection.

Consumer Protection will send a confirmation of the lodgement and the date when the altered rules will take effect. This means that the new rules cannot be used until this notification is received. In the past, some associations have altered its rules in one part of a meeting, and then used the altered rules later on in the meeting, for example in an election of office bearers. It doesn’t work that way.

Altering the objects of the association

An association can alter its objects or purposes provided the legal requirements are complied with for passing the changes. These requirements are the same as those discussed above for changing the rules. An association’s objects form part of its rules, so a change of objects is effectively a change of rules.

A special resolution must be passed by at least 75% of members voting at a general meeting of the association held in accordance with the rules.

Remember, this does not mean 75% of all members of the association only of those present and eligible to vote.

If the special resolution is passed, the changes must be lodged with the Commissioner of Consumer Protection within one month of the special resolution in order for the resolution to have legal effect.

If the association is an enrolled user, the application can be lodged using AssociationsOnline. The application must be submitted with payment of the relevant fee.

The Commissioner is also required by the Act to approve the change to the objects or purpose. The Commissioner may instruct the association to publish a notice of the proposed change of the objects or purposes of the incorporated association before approving the change.

Should the Commissioner refuse to approve an alteration of the objects and purposes of an incorporated association. The incorporated association may within 28 days of receiving notice of the refusal:

  • apply to the State Administrative Tribunal (SAT) requesting a review of the decision of the Commissioner; and
  • make submissions in writing to SAT to support the application.

The SAT decision may be appealed in certain circumstances, usually on a point of law. Further information is available on the SAT’s website.

Changing the association's name

Sometimes associations decide they need to change the name of the association. Perhaps the name no longer reflects the nature of the group or there is a desire to change direction and marketing.

This decision should not be taken lightly, as it can have long-term effects on public perceptions. For some members, a name change is insignificant and may merely reflect a change in the way the association has moved. It may be considered a strategic, business or public relations decision. However, for an association with a long history the name is part of that history. Some members may no longer feel the association has a connection with them if the name is changed.

Requirements for changing the name

  1. The new name could be rejected if it is the same or very similar to another name.  Consumer Protection holds a register of names and can conduct a name search.  The Commissioner will only approve a name change if he or she is of the opinion that the name is appropriate.
     
  2. To change the name of the association requires a special resolution by the members passed at a general meeting. An association’s name actually forms part of its rules, so a change of name effectively requires a change of rules. The procedure is the same as that as previously discussed.
     
  3. Within one month of passing the special resolution, the association must lodge the notice of the special resolution with the Commissioner. Once again, associations can submit the notice to Consumer Protection using AssociationsOnline. A copy of the association’s rules with the new name should accompany the application.
     
  4. Legally, the association has not formally altered its rules and changed its name until the notice of the special resolution is lodged with the Commissioner and he or she approves the name change. The Commissioner may instruct the association to publish a notice of the proposed name change before approving the change.  Until the name is approved by the Commissioner in writing, DO NOT:
    • use the new name;
    • arrange for the printing of new signage, letterheads, business cards, etc.;
    • change bank account and/or insurance policy details;
    • notify the tax office (do you need a new ABN? - check);
    • notify essential services;
    • notify creditors; or
    • notify members, clients, customers, etc.
       
  5. The Commissioner will issue a new certificate to show the new name and date of registration.
     
  6. For a period of time the association may choose to include the old name on all correspondence (‘formerly XYZ Inc’) until people become familiar with the new name.

What happens if the name change is not approved?

The Commissioner will not approve a name unless he or she is of the opinion that the proposed name is an appropriate name under which an association might be incorporated under the Act.

As with the original approval of the name, the Commissioner for Consumer Protection may reject a proposed change of name if it is:

  • already in use;
  • offensive or undesirable;
  • likely to mislead the public; or
  • likely to be confused with the name of an existing body corporate or registered business name.

If the Commissioner refuses to approve the change of name the association may request a review of the decision by applying to the SAT. If seeking a review, sound reasons need to be given why the association wants to change the name.

The association must make the review application within 28 days of receiving notice of the refusal.

Sample Form - Notice of General Meeting to Alter the Rules

Sample Notice of General Meeting to Alter the Rules

A sample notice to use if an association is seeking to convene a general meeting to alter the rules of the association.

Download the sample Notice of General Meeting to Alter the Rules

Resolving complaints and disputes

During the life of an association there are bound to be times when a person has a concern about the running of the association. This chapter outlines some processes available to the committee and members for dealing with disputes.

Managing internal grievances and disputes as well as complaints from the public is an important task of the management committee. The committee has a duty to act in the best interests of the association and this may require they make decisions for the greater good of the association in achieving the objectives of the association.

Most concerns are resolved by simply contacting the appropriate person in the association or by discussing the issue with other members. Failure by an association to allow its members to be heard and ensuring their concerns are understood and given due consideration can result in relatively minor issues escalating.

Key Points

  • Disputes do happen in associations and it is advisable to have a simple procedure in place for resolving complaints.
  • Members and the committee share the responsibility for ensuring that the association operates in accordance with its rules.
  • Most concerns can be resolved through informal processes and members are encouraged to discuss their issues with the appropriate person within the association.
  • All incorporated associations are required to include a dispute resolution process in the rules which may be required to resolve more complex or serious matters.
  • The aim of a dispute resolution process is to reduce disharmony in an association and to provide a fair, consistent and timely approach to dealing with complaints and disputes.

Sources of disputes

Concerns about an association may be brought to a committee’s attention by:

  • members of an association;
  • employees of the association; or
  • external clients or organisations. 

Grievances arising from within the membership may relate to a range of issues including the conduct of individual members, the functioning of the management committee, how the association operates, membership and non-compliance with the rules of association.

In addition to these forms of internal grievances, employees, volunteers or members may initiate complaints against associations under specific Acts of Parliament governing such areas as employment, discrimination and incorporation/governance.  For example, a discrimination complaint may be possible under the Equal Opportunity Act 1984.

Where associations deal with the public by offering any form of service, there is also the potential for external grievances to arise for example, over the extent or quality of the service provided.

Enforcing the rules of an association

The rules of an incorporated association outline how the organisation will operate and manage its affairs. The rules represent a binding agreement between the association and its members.

Members and the committee share the responsibility for ensuring that the association operates in accordance with its rules. Disputes about the interpretation or application of the rules should be dealt with by the association using the internal dispute resolution processes.

Examples of matters which need to be dealt with by members include:

  • the admission or expulsion of members;
  • renewal of memberships;
  • the conduct of committee meetings; and
  • the inspection of records other than those referred to under the Act (being the register of members, rules and list of office bearers).

Dispute resolution procedures

In many cases, associations can resolve complaints and disputes internally and successful outcomes are usually achieved when the association has a well-publicised and simple procedure. The primary purpose of a dispute resolution process is to set out the steps to be followed in dealing with a grievance or dispute internally and to ensure a fair and timely response.  

The process does not need to be complex and a fair process can often avoid having to resort to more drastic measures such as calling general meetings or the suspension/expulsion of members. Given the potential expense, not just in monetary terms, but in time and effort as well, it is worth taking the time to develop a dispute resolution process that encourages people to use it as a first step.

Some disputes may be subject to procedures set out in existing awards, employment agreements or contracts.  This may apply to internal disputes either in conjunction with, or instead of a dispute resolution procedure. 

What to include in the rules

The Act requires that an association’s rules include a procedure for dealing with any dispute under or relating to the rules.  It is up to the committee and members to decide on the procedure to be adopted but care should be taken to make sure that the chosen process gives each party to the dispute an opportunity to be heard on the matter and ensure that there is an unbiased decision maker.

At a minimum it is recommended that the rules include procedures that:

  1. inform the member or association of the complaint including details of the issues along with copies of any supporting materials. Information about the possible outcomes of the complaint should also be included;
  2. invite the member or association to respond to the issues raised (this may include opportunities to make written submissions or speak at a meeting called to decide the issue);
  3. inform the respondent of the outcome of the complaint and any consequences or penalties; and
  4. inform the respondent of any rights to appeal the outcome and how these might be exercised.

If an association is unsure how to develop its own process it may wish to adopt the procedure included in the Model Rules. Rules 17 to 25 of the Model Rules outline the procedure for dealing with disputes and include:

  • a requirement for the parties to try and resolve the dispute themselves first;
  • powers for the committee to consider and determine the matter if a resolution cannot be reached by the parties; and
  • opportunity for a mediator to be appointed to assist in the matter. 

Resolving disputes internally

Informal communication is the most common method for resolving a problem. However if informal discussions fail, then it may become necessary to use the formal dispute resolution process outlined in the association’s rules.

Try to resolve the concern informally

  • The person making the complaint approaches the chairperson or a committee member to discuss their concerns and outline the outcomes being sought. It is often useful to put this information in writing to help ensure the issue is clearly explained.
  • The person receiving the concern may need to obtain further information in order to evaluate the issues and explore options for resolution. They may be able to provide an explanation or direct the person to additional information which addresses the concern. Alternatively, the committee might decide that the issue needs further consideration and look to make changes to how the association conducts itself.
  • The person making the complaint should be advised of their right to use the dispute resolution process in the rules if they are not satisfied with the decision and outcome of the informal process.

Using the process in the rules

It is important that the members and committee utilise the association’s dispute resolution procedures where the issues cannot be resolved informally. All incorporated associations are now required to ensure their rules contain a procedure for dealing with internal disputes involving members and the association (associations have until 1 July 2019 to update the rules to meet this requirement).

If the association’s rules don’t include a dispute resolution process yet the committee may wish to consider using the procedure in the Model Rules as an interim measure. This is better than delaying the complaint until the rules are updated but the agreement of both parties should be obtained first if this approach is taken.

If the dispute resolution processes in the rules are exhausted and the complaint remains unresolved it may be necessary for the parties to explore other options such as making an application to the State Administrative Tribunal for orders or calling a special general meeting of the membership.

Calling a special general meeting

The rules of an association may provide for members to call a special general meeting of the association. The rules will set out the minimum number of members that need to sign a request for a general meeting and you should also check the rules of the association to see if there are any specific timeframes to be followed. The request must state the purpose of the special meeting.

Upon receipt of a request for a special general meeting the committee should confirm that it meets the requirements of the rules and make the necessary arrangements to convene the meeting. If the request is deficient in some way, the committee should advise the requesting member of the deficiencies and provide guidance on the steps to be taken to correct the request.

If there is a collective grievance or dispute, the group should nominate a representative to present the grievance and represent the group at the meeting. Normal meeting procedures should be followed at the special general meeting in accordance with the rules of association (see Meetings).

Removal of a management committee member

Grievances and disputes may arise as a result of the conduct of one or more management committee members.  For example, a committee member may not be acting in the best interests of the association or a committee member may be causing discontent amongst the committee, making it difficult for the management committee to operate.

An association may generally remove a committee member by means of a resolution in a general meeting or a special general meeting.  If a member is to be removed, the chairperson (unless the chairperson is the one being removed, then the deputy chairperson), must inform the member of the motion to have the member removed and the reasons for the removal.

The committee member must be given the opportunity to submit a written response, giving reasons why he or she should not be removed.  The response is sent to all the members of the association or is read at the general meeting.  The resolution is put to the meeting and voted on.  The process for removing a committee member should be set out in the rules of the association.

The association should then take steps to appoint another member. This may be done by a vote of the members at the same meeting or the committee may fill the position using the casual vacancy process (the procedure to be used will depend on the association’s rules).

Suspension and expulsion

In some situations, it may be necessary for an association to suspend or even expel a member including a member of the management committee.  Members may be expelled for a number of reasons such as serious criminal conduct, failing to comply with the rules of the association and bringing the association into disrepute.  Expulsion should be seen as a last resort, when all other options to resolve the problem have been exhausted. 

The process for suspension and expulsion are normally set out in the rules of association and must be followed precisely.  Courts have on occasion ruled expulsions invalid where the process is not followed.  As a matter of natural justice, the member being suspended or expelled must be given a fair opportunity to be heard (to state their case) and to appeal against a decision.

Important information for members and committees

As a suggestion when working to resolve a complaint or dispute within an association (whether informally or using the dispute resolution process), committees and members should be mindful of the following:

For members

  • The committee should be given an opportunity to respond to an issue before the concerns are raised with external parties.
  • It is important to understand that committees are generally made up of volunteers with limited time and resources available to them. Be realistic about the timeframes in which your concerns can be dealt with.
  • If you intend to raise concerns or allegations about an individual you should always make sure you have some proof to support your claims.
  • Be respectful in your discussions and communications with the committee and association.

For committees

  • Members have the right to raise concerns about their association and seek the support of other members to effect change. Members should not be punished for speaking up about an issue.
  • The committee have a responsibly to ensure that complaints are given proper consideration and the process used to resolve the dispute is fair and unbiased.
  • If the concerns relate to a particular member of the committee it is not appropriate for that person to act as the decision maker for the complaint.
  • Complaints should be responded to in a timely manner and any agreed timelines should be followed.

Be respectful in your discussions and communications with the member or complainant.

Seeking external assistance

Most grievances and disputes can be resolved using internal procedures. Occasionally, these processes fail and a dispute can only be resolved using a process outside the association, usually by the Courts or an external mediator.

Professional dispute resolution services

An association can make use of professional mediation and dispute resolution services that are available.  These services provide intervention in the form of negotiation, mediation and arbitration.  This may avoid court action and the services are generally less time consuming and costly.

State Administrative Tribunal

Where a dispute between individual members or members and the association relating to the rules cannot be resolved through the dispute resolution process as set out in the rules, an application may be made for the dispute to be heard by the State Administrative Tribunal (the SAT).

The SAT has powers to:

  • refer the dispute for mediation;
  • give orders:
    • directing for the rules to be followed.
    • declaring and enforcing the rights and obligations between members.
    • declaring and enforcing the rights and obligations between the association and member.

There are fees associated with applications to the SAT and more information about the application and hearing processes can be found at www.sat.justice.wa.gov.au or by calling 1300 306 017.

You can also find more information in fact sheets Going to the State Administrative Tribunal and Mediation in the State Administrative Tribunal.

Courts

An application can be made to a court to settle certain disputes, for example, where a committee member has mismanaged association funds.  Resolving disputes through court action is likely to be costly and may not have the desired outcome.  Courts are generally reluctant to interfere with the internal management of associations, particularly where the members have the power to resolve matters themselves. You should seek your own independent legal advice about the avenues available.

Other government regulators

Depending on the nature of the concerns, some government departments may be able to provide assistance or advice. For example if the problem relates to:

If the association receives funding and your concerns relate to matters within the funding agreement you may wish to discuss the matter with the funding body. 

Consumer Protection

Consumer Protection’s role is to ensure associations comply with the Associations Incorporation Act 2015.  If there has been a breach of the Act, a formal complaint can be made to Consumer Protection.  For example, if the association fails to present annual accounts at its Annual General Meeting.

It is highly recommended that members and committees make all reasonable attempts to resolve any complaints themselves, whether informally or through the dispute resolution process in the rules, prior to lodging a formal complaint.

Lodging a complaint

Consumer Protection will only investigate where it appears a possible breach of the Act or the Regulations has occurred and information about what the Department will investigate is also included at the end of this chapter. Anyone thinking of lodging a complaint against an association should read this information carefully before submitting their complaint.

Consumer Protection will not:

  • Investigate a breach of the association’s rules. 

It is not Consumer Protection’s role to resolve internal membership disputes concerning the application of the rules of association that are outside the requirements of the Act.  The Association must deal with such matters using its internal dispute resolution processes.

  • Provide interpretation of the association’s rules

Consumer Protection cannot adjudicate on what an association’s rules mean.  This should be dealt with as provided under the rules or otherwise is for members to determine.

  • Investigate disputes between individual members of the association or an individual and the association. 

Consumer Protection cannot adjudicate on disputes concerning individual grievances.  If an association is unable to resolve the dispute using its own internal processes some matters may be considered by the State Administrative Tribunal.

If your concerns relate to a potential breach of the Act a Complaint Form for Incorporated Associations may be submitted along with copies of any supporting documents.  

What to expect

Consumer Protection assesses all complaints against the requirements of the Act and considers whether there is sufficient information and documentation provided to investigate the complaint further.  Priority is given to dealing with complaints according to the seriousness of the conduct identified.  Consumer Protection will send acknowledgment of the complaint and may request further information and documentation from the person raising the concerns.

An association will always be given an opportunity to comment on any allegations made in a complaint.

Please note, even in cases where it appears after investigation there has been a breach of the Act, if the breach does not appear to be deliberate or fraudulent and the association agrees to comply with its obligations in the future, Consumer Protection may form the view that formal action is not in the public interest.

Key provisions of the Associations Incorporation Act 2015

If your concerns do not relate to any of the matters listed below Consumer Protection is not able to consider your complaint. Please refer to the other sections of this chapter for information about the avenues available to resolve such concerns.

Meetings

Annual General Meeting to be held within 6 months after the end of the association’s financial year.

s50

Decisions of the committee

Committee members are required to disclose any material personal interests they have in matters being considered at meetings of the Association’s committee.

s42

Disclosed material personal interests to be recorded in the minutes.

s43

Committee member to leave the meeting while the matter is discussed and voted on.

s43

Committee member to disclose their material personal interest to the members at the next general meeting occurring after the relevant committee meeting where the matter was considered.

s42

Committee members and officers have duties to act with care and diligence and in good faith and for a proper purpose. Committee members and officers must not improperly use their position or information to gain an advantage or cause detriment to the association.

s44 - 47

Rules of association

The association keeps an up to date copy of its rules.

s35

Each new member of the association is provided with their own copy of the rules when they join the association.

s36

The rules are made available to members to inspect and copy if requested.

s35

A copy of the rules or any particular part is given to a member, free of charge, if requested.

s36

Changing the rules

Written notice specifying the proposed special resolution(s) to alter the rules and detailing the time and place of the general meeting given to all members in accordance with the rules.

s51

Proposed special resolution(s) passed by 75% majority of members who are eligible to vote at general meeting

s51

Amendments to the rules lodged with Consumer Protection within one month of passing the special resolution

s30

Register of members

The association to keep an up to date register of members

s53

The Register of Members is updated to include any changes in membership within 28 days of the change occurring.

s53

The Register of Members is made available to members to inspect  and copy if requested

s54

A copy of the Register of Members is provided to a member if requested in writing (subject to any requirements to pay a reasonable fee or provide of a statutory declaration).

s56

Accounting records and reporting

Accurate accounting records kept that record and explain the financial transactions

s66

Annual accounts prepared in accordance with the requirements of association’s Tier

s68,71,74

Annual accounts presented to the members at the AGM

s70,73,76

For Tier 2s – The annual accounts are to be reviewed

s72

For Tier 3s – The annual accounts are to be audited

s75

All financial records are to be kept for at least 7 years.

s67

Other record keeping requirements

The association keeps an up to date Record of Office Holders.

s58

The Record of Office Holders is made available to members to inspect and copy if requested.

s58

All records belonging to the association in the possession of an outgoing committee member are returned to the association as soon as practicable after their appointment ceases.

s41

Accounts and auditing

Some associations might operate on a small budget, while others manage budgets of millions of dollars.  An association may derive its funds from a number of sources, including government subsidies, sponsorships, donations, fundraising activities and membership fees. This chapter outlines what the Act requires in terms of accounting and auditing procedures. 

Key Points

  • An incorporated association must keep accurate and up-to-date financial records.
  • An incorporated association must present the financial statements to the members at each Annual General Meeting.
  • Financial reporting requirements are based on a three tiered system with responsibilities increasing based on an incorporated association's annual revenue.
  • Not all incorporated associations are required to audit their financial statements. However this is advisable as it makes for responsible financial management. Moreover, some funding bodies may require financial statements to be audited.

Accounting requirements

There are two things all incorporated associations must do to comply with the accounting requirements of the Act:

  • keep true and accurate accounting records that explain the financial transactions and the financial position of the association in a manner that can be conveniently and properly audited; and
  • submit accounts to the members at each Annual General Meeting. 

Taxation and industrial legislation may also require financial records to be kept.  In addition to these legal obligations, an association's management committee needs clear, accurate and up-to-date financial information to ensure the association is viable and operating efficiently. 

Procedures for keeping accurate accounts

How an association organises its accounts, payments and record keeping is up to the members (or more probably, the committee) and can vary depending upon the size and complexity of the association's financial situation. If your association is small, you may only wish to have a voluntary treasurer who 'keeps the books'. Alternatively, if the association requires more on-going, skilled accounting services, the association could employ its own in-house finance staff, or out-source the tasks to an accountant or book-keeper.

Written records will generally involve the use of cash payment books to record amounts the association pays, cash receipt books to record amounts received, GST tax invoices and tax records, salary records, bank reconciliation statements and other relevant financial documents.

Good financial practices

As a minimum, associations wanting to embrace good financial practices should give attention to developing policies and procedures in the following areas:

  • preparing an annual budget of expected income and allocated expenditure;
  • recording income received, including source, date and amount. Examples include grants, membership, donations, fundraising, sales of goods and interest;
  • developing a system to accurately, but speedily, record and pay necessary bills, including authorisation clearances and issuing invoices;
  • recording and authorising petty cash transactions;
  • where necessary, recording Australian taxation information, such as goods and services tax, superannuation, fringe benefits, income tax records and withholding payments;
  • where necessary, recording salary and leave payments, and reimbursements to employees. Time and wages records must be kept in accordance with the relevant award or industrial law;
  • undertaking bank reconciliations (i.e. checking association records against bank records);
  • recording expenditure against key area items. These areas are usually aligned to budget items (e.g. $200 for a newsletter against an annual association budget of $5000);
  • maintaining an up-to-date register of association assets; and
  • maintaining an effective and secure filing system for insurance policies, leases, contracts and funding agreements.

If the association has a significant turnover, an essential tool for the management committee is the monthly or quarterly cash flow statement. This will enable the management committee to ensure that the association is solvent – that is, it is able to pay its debts as and when they fall due.

Members' right to the financial accounts

The Act requires that association’s annual financial statements (or annual accounts) be presented to the members at each AGM. 

Members should have the opportunity to examine these accounts if they wish. Ideally, each member would receive a copy of the accounts, which could be  included in the association’s annual report (if applicable).  Where this is not feasible, time must be allocated for the treasurer or other committee member to present a summary of the accounts and explain the major items. 

This requirement of the Act does not give members any rights to view the financial records of the association, nor any of the accounts or statements that may be prepared for the committee during the year.  However, it is open to the association to make provision in the rules for access to these records or accounts if that is the wish of the members.

If, for any reason the annual accounts are to be audited, the audit report must form part of the statements presented to the members.  Some associations will invite the auditor to attend the AGM so that he or she can respond to enquiries from members.

Tiered financial reporting

Under the Act the financial reporting responsibilities of an incorporated association will depend on the tier that it falls into.  The tiered reporting system is intended to minimise the reporting burden for small associations while ensuring that larger associations are accountable for the significant resources they control.

Which tier applies to the association?

The tier an association falls under is based on its annual revenue.  The annual revenue is calculated based on the total amount of money received through the association’s activities during a financial year.

The tiers are set as follows:

Tier 1: less than $250,000 in revenue.
Tier 2: $250,000 to $1,000,000 in revenue.
Tier 3: over $1,000,000 in revenue.

Calculating revenue

Revenue is calculated in accordance with the Australian Accounting Standards and is the income that arises in the course of the ordinary activities of an incorporated association before any allowance is made for any relevant tax liabilities.

The following examples are likely to be revenue if they relate to the association’s ordinary activities:

  • fees and charges for provision of services;
  • interest earned;
  • government and other grants, donations, bequests, sales of goods and inflows from other fundraising activities.

The following is not included in the calculation of revenue:

  • gains from the sale of non-current assets (asset which is not easily convertible to cash and is not expected to become cash within the next year) eg club property;
  • unrealised gains (profit which has been made but not get realised through a transaction) eg revaluation of inventory or club property; and
  • amounts collected on behalf of third parties.

In the situation where an association has a one off increase in revenue such as the association applying for a special grant or fundraising for a particular purpose in addition to its usual activities.  It can apply to the Commissioner to be declared as a specific tier for that particular financial year.

This application must be made in writing no later than three months after the end of the financial year and should include details of the:

  • revenue for the previous financial year;
  • revenue for the current financial year;
  • one-off event that cause the revenue increase; and
  • projected revenue for the next financial year (for example a budget forecast).

The application will only be granted if the Commissioner is satisfied that the change in revenue is the result of unusual or non-recurring circumstances. 

Requirements for a Tier 1 association

To understand the reporting requirements of a Tier 1 association, the group must first establish whether it is operating on a cash or accrual basis of accounting.

Under cash accounting the income is recorded when it is received and the expenses when they are paid.

An association using accrual accounting will record the income the date it is earned (irrespective of whether the payment is actually received on that date) and the expenses when they are incurred. 

Accrual accounting is more common in organisations that deliver services in return for payment or receive grants to complete particular projects.

An association operating on a cash basis must prepare a financial statement that includes a:

  • statement of all the monies received and paid during the financial year;
  • reconciled statement of all bank account balances as at the end of the financial year; and
  • statement detailing the association’s total assets and liabilities as at the end of the financial year.

An association operating on an accrual basis must prepare a financial statement that may include:

  • statement of the income and expenditure for the financial year; and
  • balance sheet.

Auditing requirements for Tier 1 associations

A tier 1 association is not required to complete an audit or review of its accounts unless:

  • it is a requirement of the association’s rules that one be completed;
  • it is a requirement under the terms of the association’s funding agreement or licence;
  • the majority of members at a general meeting pass a resolution that an audit will be completed; or
  • the association is directed to do so by the Commissioner.

Requirements for a Tier 2 association

A Tier 2 association is required to prepare an annual report that complies with Australian Accounting Standards and contains all of the following:

  • the financial statements for the year;
  • the notes to the financial statements including all disclosures required by the accounting standards and information required to give a true and fair view of the financial position; and
  • the management committee’s declaration.

The Management Committee Declaration

The association’s committee must pass a resolution declaring whether:

  • there are reasonable grounds to believe that the association will be able to pay its debts when they become due and payable; and
  • the financial statements and notes have been prepared in accordance with the requirements of the Act.

The declaration included in the financial report must specify the date of the committee’s declaration and be signed by at least 2 committee members authorised by the management committee.

Review requirements for Tier 2 associations

All Tier 2 associations must have their financial reports reviewed.  The process of reviewing an association’s accounts is not as detailed as the process of completing an audit.  A reviewer will look over the association’s financial report and provide a statement whether anything has come to their attention which might suggest that the association’s report does not comply with the requirements of the Act.

In comparison, an auditor must collect evidence relating to the association’s financial records and transactions to satisfy themselves that the report is a true and correct reflection of the association’s finances.  This enables them to provide a formal opinion whether the accounts meet the relevant legal requirements.

A review may be conducted by:

  • a registered company auditor;
  • an audit firm; or
  • a current member of a relevant professional body such as the Institute of Chartered Accountants, the National Institute of Accountants or CPA Australia.

Before the appointed reviewer begins they must provide the committee with a written independence declaration and ensure their review is conducted in accordance with Australian Auditing Standards.

The reviewer’s report must include a statement whether they identified anything to suggest that the financial statements or report did not comply with the requirements of the Act.  If the reviewer believes that the financial statements or report do not meet the requirements of the Act, they must describe the matters and explain why they do not comply.

The reviewer is also required to write to the Commissioner advising of any suspected breaches of the requirements of the Act within 28 days of identification.

All Tier 2 associations are required to include a copy of the reviewer’s report with the financial report presented to members at each annual general meeting.

Auditing requirements for Tier 2 associations

The Act only requires a Tier 2 association to audit its financial report if:

  • the majority of members at a general meeting pass a resolution that an audit will be completed; or
  • the association is directed to do so by the Commissioner.

However if the association is required to report on its financial activities to another organisation such as funding bodies or licensing authorities, it should confirm with the organisations whether a reviewers report will satisfy these reporting requirements or whether an audit is required.

Requirements for a Tier 3 association

Tier 3 associations must prepare an annual financial report that complies with Australian Accounting Standards and includes the:

  • financial statements for the year;
  • notes to the financial statements; and
  • management committee’s declaration.

Unlike the other tiers, the Act requires all Tier 3 associations to ensure that their annual financial report is audited and a copy of the audit report is presented to the members at each annual general meeting.

Again the auditor must provide the committee with an independent declaration prior to commencing work on the audit.  The auditor must prepare a report which:

  • includes a statement whether, in their opinion the financial statements or report have been prepared in accordance with the Act.  If they are not of this opinion they must explain why.
  • describes any defects or irregularities identified in the financial statements or report;
  • includes any statements or disclosures required by the auditing standards; and
  • specifies the date the report was prepared.

If the auditor identifies any matters that they suspect breach the Act this information must be reported to Consumer Protection within 28 days of identification.

Auditing accounts

The Act does not require all incorporated associations to audit or review their accounts. An association may still require an audit to be carried out and this requisite would normally be specified in the rules. It is within the power of the members to pass a resolution that the accounts for a particular financial year be audited, especially if they had any reason to be concerned. Funding body agreements might also require the association's accounts to be audited to ensure that the funds provided are used according to the funding agreement and for the purpose stated in the agreement.

Reasons for auditing

Although it may seem like additional time, effort and expense to have an annual audit. There are a number of reasons why an association (or a funding body) would require records to be audited:

  • an audit of the financial records of the association ensures greater accountability to the members (and for some associations, the public);
  • the audit gives assurance that all funds received by the organisation have been correctly collected, documented and banked. It shows all monies spent by the organisation were for the purpose of the association, approved by the management committee, and documented. This also helps to protect management committee members against unfounded allegations of misconduct;
  • the audit provides an account of the assets of the association and verifies that records and registers are properly maintained;
  • the audit functions as a check and balance. It requires that the financial statements of the association be kept to a standard in order for the audit to occur and will indicate areas that may require improvement;
  • audited financial statements are required if the association has charitable status; and
  • funding bodies often require audited financial statements.

The role of the auditor

The purpose of an audit is to enable an auditor to express a professional and independent opinion on the financial statements of the association. It is the responsibility of the management committee to provide the financial statements.

It is not the task of the auditor to find all errors or fraud, therefore the management committee cannot rely on the auditor's work as a substitute for the performance of their own duties. Every member of the committee must pay close attention to the association’s financial statements at all times.

The auditor will, on the basis of the financial statements take reasonable steps to ensure that the:

  • accounting records of the association are adequate to prepare the financial statements;
  • financial statements are reliable;
  • results for the period are demonstrated in the financial statements; and
  • association's state of affairs for the period are disclosed.

The auditor's task is to provide a professional opinion on the state of the financial affairs of the association. Auditors have a legal responsibility for their opinion and can be held liable for negligence if the audit is not completed according to professional standards, or for damage to the association as a result of negligence.

Appointing an auditor

When appointing an auditor, a good place to start is by word of mouth – simply asking other associations whom they use. If using a professional auditor check their registration status. Accountants who are members of the Institute of Chartered Accountants, the National Institute of Accountants or the Australian Society of Certified Practising Accountants are required to meet the auditing standards set out by these professional bodies.

The management committee may appoint the auditor or reviewer required to meet the reporting requirements of Tier 2 and Tier 3 associations. The auditor or reviewer will remain in office until their report has been presented for consideration at the annual general meeting (or they resign).

If the association is required to appoint an auditor or reviewer for any other purpose such as at the request of the members, a resolution must be passed by the members at a general meeting. The appointed auditor or reviewer will then remain in office unless they:

  • resign;
  • are removed from office;
  • cease to be qualified to conduct audits or reviews;
  • die; or
  • become an insolvent under administration.

When the reviewer or auditor has been appointed ask for a letter of engagement from the person setting out:

  • what their responsibilities are;
  • what they will require to undertake the task (ie ask them to list what they require);
  • what it will cost; and
  • what the expected time frame is for completion.

This ensures that there is a clear understanding of the duties and responsibilities of the auditor.

To deal with any problem, ensure the auditor has the contact details of the treasurer and at least one other committee member in case the treasurer can't be contacted, someone else can.

Although the treasurer usually has responsibility for overseeing the financial statements, this is not their responsibility alone. Whilst the treasurer should be able to provide the auditor with additional financial information if required, the responsibility can be shared among other members.

To avoid a potential conflict of interest, appoint an auditor who is independent of the association. Do not appoint an auditor for the association who is:

  • a past or present member of the management committee;
  • a member of the association;
  • an employee, supplier of goods or services or a servant of the association; or
  • an employer, partner or family member of a member of the association’s management committee.

Resignation of an auditor or reviewer

An appointed auditor or reviewer may resign at any time by giving written notice to the association. If this occurs the association must lodge notification with Consumer Protection within 14 days.

Removing an appointed auditor or reviewer

To remove an appointed auditor requires members to pass a resolution at a general meeting of the association. The Act requires written notice of the intention to move such a motion to be given to all members at least two months before the meeting is held.

It is also a requirement that the committee send a copy of the notice to the auditor or reviewer and the Commissioner for Consumer Protection.

Once the notice has been received the auditor or reviewer has 30 days to make a written submission to the committee. If such a submission is received the committee must:

  • give a copy to all members at least seven days before the meeting; and
  • allow the auditor or reviewer to attend the general meeting and speak to the members prior to any vote taking place.

If the association does not complete the above actions the resolution to remove the auditor or reviewer will have no effect.

Rights of the auditor/reviewer

Under the Act an appointed auditor or reviewer is entitled to:

  • receive all notices and communications that are sent to members regarding general meetings of the association;
  • attend any general meeting of the association; and
  • be heard at any general meeting they attend where the business being discussed relates to their functions as the auditor or reviewer.

It is the responsibility of the association’s committee to ensure that the above rights are afforded to the auditor/reviewer. There are penalties under the Act for failing to do so.

Disclosure

The association is required to provide all the financial records of the association to the auditor.  All records should be complete.

Auditing practice identifies any material that is omitted or not disclosed as a misstatement if it would have influenced the auditor’s judgement.

What if the audit report is unsatisfactory?

There is always the possibility an auditor may present an unfavourable report identifying areas that the association needs to address.

If the association is not clear about what the auditor is saying, it should ask for further written clarification.  In presenting the audit report and findings to the AGM, the management committee should report on the auditor's recommendations and what action has been undertaken to address areas of concern.  To ignore an auditor's report is likely to place the association at risk and increase the exposure of individuals (particularly, the committee) to personal liability.

There may be irregularities in the financial statements of the association due to a number of factors, such as:

  • a lack of understanding in preparing financial statements;
  • a lack of understanding in assessing financial statements;
  • poor controls over money in and out; or
  • dishonesty.

If problems suggesting dishonesty are found in the financial records, the association should obtain prompt legal advice and attend to any immediate matters such as freezing accounts, securing assets, investigation, contacting the police and/or the insurer.

Disclosure

The association is required to provide all the financial records of the association to the auditor.  All records should be complete.

Auditing practice identifies any material that is omitted or not disclosed as a misstatement if it would have influenced the auditor’s judgement.

What if the audit report is unsatisfactory?

There is always the possibility that the auditor may present an unfavourable report, identifying areas that the association needs to address.

If the association is not clear about what the auditor is saying, it should ask for further written clarification.  In presenting the audit report and findings to the AGM, the management committee should report on the auditor's recommendations and what action has been undertaken to address areas of concern.  To ignore an auditor's report is likely to place the association at risk and increase the exposure of individuals (particularly, the committee) to personal liability.

It may be that there are irregularities in the financial statements of the association, due to a number of factors, such as:

  • a lack of understanding in preparing financial statements;
  • a lack of understanding in assessing financial statements;
  • poor controls over money in and out; or
  • dishonesty.

If problems suggesting dishonesty are found in the financial records, the association should obtain prompt legal advice and attend to any immediate matters such as freezing accounts, securing assets, investigation, contacting the police and/or the insurer.

Taxation

Incorporated associations, like any other organisation or corporation, are subject to taxation.  However, not-for-profit organisations, such as incorporated associations may be eligible for certain taxation concessions.  Taxation is highly complex and, therefore, this chapter will provide only a very basic overview of taxation obligations and concessions. The types of tax and exemptions that may be applicable to an association will also be discussed. 

It is important to seek expert advice and help when dealing with taxation because it is so specialised and constantly changing. 

For detailed information on taxation for not-for-profit organisations, visit the Australian Taxation Office (ATO) website at www.ato.gov.au/nonprofit. The website contains most, if not all, of the information that you will ever need regarding your association’s tax obligations. 

The ATO also operates a non-profit infoline 1300 130 248.

Key Points

  • Incorporated associations are subject to taxation unless a relevant tax exemption applies.
  • Incorporated associations may be eligible for certain taxation concessions that apply to not-for-profit organisations.  The availability of such concessions may require that the association satisfies certain criteria and be endorsed by the ATO.
  • Incorporated associations that employ staff are subject to PAYG withholding obligations, and may be subject to paying fringe benefit tax.
  • Incorporated associations are required to pay goods and services tax on some goods and services, and they are exempt from others.  This is a complex area of taxation and associations should seek professional advice.

 

Taxation concessions available for some associations

Tax concessions are available from the ATO for a range of not-for-profit organisations, including charities, public benevolent institutions and other types of incorporated associations. Concessions include exemption from income tax, rebates to reduce fringe benefits tax (FBT) payable, and goods and services tax (GST) concessions.

Not-for-profit status

To qualify for these tax concessions, an organisation must be a not-for-profit organisation. A not-for-profit organisation is one that does not operate for the financial gain of its members. (See Incorporated Associations for more information on being a not-for-profit association.) Incorporated associations are by legal definition not-for-profit organisations, and therefore many will be eligible for one or more tax concessions.

To benefit from any tax concessions, an organisation must be able to show that it is a not-for-profit organisation. One of the distinguishing features of a not-for-profit association is that its rules contain a not-for-profit clause.

For example, the Act requires an incorporated association to include in its rules a provision along the following lines:

The property and income of the association shall be applied solely towards the promotion of the objects or purposes of the association. No part of that property or income may be paid or otherwise distributed, directly or indirectly, to members of the association, except in good faith in the promotion of those objects or purposes.

Associations that do not have an equivalent clause in their rules may not be eligible to remain incorporated, and will not be able to demonstrate their not-for-profit status to the ATO.

Access to some ATO tax concessions also requires an association to have an appropriate dissolution clause in its rules. The association must be able to demonstrate that it is a not-for-profit organisation, both while operating and when winding up.

An example of a dissolution clause that is acceptable to the ATO, and that is also lawful under the Western Australian association’s legislation, is:

In the event that the association is dissolved, any surplus property that remains after the dissolution and the satisfaction of all debts and liabilities shall be transferred to another association, incorporated under the Act, that has similar objects and that is not carried on for the profit or gain of its individual members.

Please note that it is important that the dissolution clause will only allow for a transfer to another association incorporated in Western Australia. The words “incorporated under the Act” provide for this requirement.

Charities

Many incorporated associations are also charities. In broad terms, a charity is a fund or an institution that pursues one or more charitable purposes that are of public benefit. According to the ATO, for an organisation to be a charity, it must:

  • be an entity that is also a (charitable) trust fund or institution (simply being incorporated does not necessarily make an association an institution as far as the ATO is concerned);
  • be not-for-profit;
  • exist for the benefit of the public or the relief of poverty; and
  • have a sole purpose that is a charitable purpose under the law.

Clearly, not all associations fit the ATO requirements to be recognised as charities.

Examples of Charities Examples of Non-charities
Alzheimer's association
Women’s shelters
Crisis accommodation services
Disability resource services
Public libraries, museums and art galleries
Alcohol and drug education bodies
Citizens advice bureaus
Parents and citizens groups
Refugee relief bodies
Conservation groups - not for political aims
Guide dog associations
Animal rights groups
Political organisations
Lobbying groups
Social, sport and recreational clubs
(with some exceptions)
Playgroups
For-profit child care centres
Professional associations
Educational trusts
Resident action groups
Cultural organisations
(with some exceptions regarding
  Indigenous associations)

 

Charitable purpose

In terms of Australian taxation law, charitable purposes are those directed towards:

the relief of poverty. Associations formed for relieving poverty will be charitable, as long as the benefit is provided to persons in a particular class and not for the benefit of a particular poor person.

  • the advancement of education. Associations that are formed to advance knowledge and provide for greater educational opportunities will be charitable;
  • the advancement of religion. Not all religious institutions are charitable. To qualify for a charitable status, an association must have a religious purpose that is for the benefit of the community. For instance, religious associations formed to convert people will not be charitable;
  • the provision of child care services on a not-for-profit basis. (This is a relatively recent addition by the ATO to the meaning of charitable purposes); and
  • other purposes that are beneficial to the community. An association may be charitable if it is formed for purposes that are beneficial to the community.

    Examples include the protection of animals, promotion of health and welfare, caring for the aged, and the preservation of cultural sites and historical buildings. While a group's objectives may be 'beneficial to the community', this does not necessarily make it a charity.

Sporting, recreational, cultural, social, political or promotional purposes are not considered charitable.

Associations that are primarily for the benefit of their members are not charitable.

Please note that the meaning of charitable purposes as outlined above is not the same as the meaning of charitable purposes under the charities legislation of Western Australia (the Charitable Collections Act 1946). The ATO meaning is much broader, which means that an association could be considered a charity for tax purposes, but might not require a charitable collections licence under Western Australian laws (see Fundraising).

Australian Charities and Not for Profit Commission

The Australian Charities and Not-for-profits Commission (ACNC) is the independent national regulator of charities. The ACNC has been set up to achieve the following objects:

  • maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency;
  • support and sustain a robust, vibrant, independent and innovative not-for-profit sector; and
  • promote the reduction of unnecessary regulatory obligations on the sector.

Role of the ACNC

The ACNC:

  • registers organisations as charities;
  • helps charities understand and meet their obligations through information, guidance, advice and other support;
  • maintains a free and searchable public register so that anyone can look up information about registered charities; and
  • is working with state and territory governments (as well as individual federal, state and territory government agencies) to develop a 'report-once, use-often' reporting framework for charities.

The ACNC is responsible for determining charity status for all federal tax purposes. As part of its status determinations, the ACNC also decides whether a charity is a public benevolent institution (PBI) or health promotion charity (HPC).

The ACNC will be responsible for administering tax concessions relevant to charities, including:

  • income tax exemption
  • Fringe Benefits Tax (FBT) rebate or exemption
  • Goods and Services Tax (GST) charity concessions
  • Deductible Gift Recipient (DGR) status.

The ACNC’s relationship with other government agencies

The Australian Taxation Office (ATO) remains responsible for deciding eligibility for charity tax concessions and other Commonwealth exemptions and benefits.

There are also many other government agencies that regulate charities and other not-for-profits. For example, government agencies may provide grants and other funding. They may also regulate particular services provided by charities, such as aged care or education.

In Western Australia the Department of Commerce regulates Incorporated Associations and Charitable Collections Licences.

Important: It is relevant to note that charities or organisations that solicit charitable donations in Western Australia are still required to obtain a Charitable Collections Licence from the Department of Commerce.

Registration with the ACNC DOES NOT preclude this requirement. See Fundraising for more information.

Is your Association or Charity Registered with the ACNC?

If your organisation was recognised (endorsed) by the Australian Taxation Office (ATO) as a charity able to receive charity tax concessions before 3 December 2012, it was automatically registered with the Australian Charities and Not-for-profits Commission (ACNC). This means you don't need to re-register.

The ACNC now registers organisations as charities while the ATO remains responsible for deciding your organisation's eligibility for tax concessions.  You can check if your organisation has been automatically registered by searching the ACNC Register.

You can also check whether your organisation is registered as a charity and which tax concessions your organisation currently receives from the ATO on ABN Lookup.

As part of the automatic registration process, your charity's information has been transferred from the ATO and the Australian Business Register to form its initial entry on the ACNC Register.

Applying for tax concessions from the ATO

Registration with the ACNC is voluntary. However, ACNC registration is now a prerequisite for charities to access charity tax concessions.

A charity must be registered with the ACNC before it can receive any charity tax concessions from the ATO. Many charities may also be eligible to apply for deductible gift recipient (DGR) status. Some DGR categories are only available to registered charities.

You can apply for charity tax benefits including DGR status with the ATO when applying to register with the ACNC.

After the ACNC has decided your charity status, they will pass on your application for tax benefits including DGR status to the ATO. The ATO will decide whether your organisation is eligible.

The ACNC offers a number of key services, including charity registration, a searchable charity register listing registered Australian charities, education and guidance materials. You can keep up-to-date with changes to the ACNC by subscribing to the ACNC Commissioner's weekly column.

For more information concerning Charities and Taxation, visit the ACNC website at www.acnc.gov.au.

Types of tax concessions

All charities that register with the ACNC and some incorporated associations can apply for the following tax concessions.

Income tax exemptions

Income tax applies to any taxable income received by an organisation. All charities registered with the ACNC may apply for income tax exemption, which means your charity may not have to pay income tax.

Only certain types of not-for-profit organisations are exempt from paying income tax. Charities and PBIs are generally exempt from income tax, but this is not automatic. As already noted, both charities and PBIs are required to apply to the ATO for endorsement as a tax concession charity. Endorsement as a tax concession charity provides exemption from income tax, as well as several other tax concessions (referred to in the following pages).

Your association needs an Australian Business Number (ABN) to apply for endorsement. If it already has an ABN, then you can request an endorsement application pack from the ATO on 1300 130 248, or visit the ATO website.

If your association does not have an ABN, you will need to apply for one - details are provided at Registering with the ATO. On the ABN application, you can advise the ATO that your organisation wants to be endorsed and the Tax Office will forward the endorsement application pack.

An incorporated association that is not a charity or PBI may still be exempt from income tax under another category. In this case, the association does not need to apply to the ATO, but can conduct its own assessment (ie self-assess) to determine whether or not it is eligible for tax exemption.

For an exemption to apply, the association would need to fall within one of the following categories, each with its own further requirements:

  • community service organisations;
  • cultural organisations;
  • educational organisations;
  • employment organisations;
  • health organisations;
  • religious organisations;
  • resource development organisations;
  • scientific organisations; and
  • sporting organisations.

In addition, the association may also have to pass at least one of these three tests:

  • have a physical presence in Australia and conduct its activities "principally" in Australia;
  • qualify to be endorsed as a deductible gift recipient; or
  • be prescribed by law in the income tax regulations.

If an association is exempt under one of these categories, it will not have to pay income tax nor lodge income tax returns. If the association does not qualify for exemption, then it is taxable and must lodge tax returns each year. However, even taxable not-for-profit associations may be entitled to special rules for calculating taxable income, lodging their tax returns and special rates of tax.

The ATO website also has useful information about self-assessment.

Registering with the ATO

To be able to comply with taxation obligations and to apply for taxation concessions, an association may need to register for an ABN.

An ABN is an identifier that an incorporated association would use to:

  • register for GST and claim input tax credits;
  • register for PAYG withholding;
  • deal with investment bodies;
  • apply to the ATO for endorsement as a deductible gift recipient or a tax concession charity;
  • deal with other government departments and agencies; and
  • deal with the ATO on other taxes.

An association must have an ABN in order to be endorsed as a tax concession charity and/or a deductible gift recipient (DGR). (DGRs are explained in Fundraising.)

When applying for an ABN, an association is able to register for GST, PAYG and FBT all on the same application form. A Tax File Number will also be issued with the ABN.

How to apply for an ABN

Registration with the ATO is conducted through the Australian Business Register (ABR).  You can apply:

  • Electronically though the Australian Business Register (www.abr.gov.au);
  • By downloading an application form from the ATO website;
  • In paper form through the Tax Office 1300 130 248; or
  • Through a tax agent.

Goods and Services Tax (GST)

Goods and Services Tax (GST) is a tax on transactions. Where goods and services are sold, the amount received for the sale may be subject to GST. Similarly, where goods and services are purchased, the purchaser may be able to claim a GST credit for the GST included in the amount paid. Charities that are registered with the ACNC may apply to access a number of  GST concessions if they are also registered for GST.

The GST is a broad-based tax of 10 per cent on the sale of most goods, services, real property or other things consumed in Australia.

GST is a tax on transactions that is paid at each step in the supply chain.  GST-registered businesses (or those required to be registered) are liable for GST on the goods and services they supply, which they generally aim to recover from the buyer or recipient by 'grossing up' the sale price of their goods and services. These businesses can also generally claim back the GST they paid on business purchases or supplies as input tax credits.  An input tax credit is what you claim to get back the GST you pay on the price of goods and services you purchase for the business or association.  The cost of GST flows along the supply chain and is finally included in the price paid by the end consumer.  End consumers can't claim input tax credits, so while the liability for paying the GST rests with GST-registered businesses and organisations, the economic cost is intended to be borne by the end consumer.

The most obvious GST concession for not-for-profit associations is a higher GST registration threshold. Associations must register for GST only if their annual turnover is $100,000 or more, but can choose to register if their annual turnover is lower.  Other organisations or businesses must register for GST if their annual turnover is $50,000 or more.

Associations that are also charities can access a broader range of GST concessions including:

  • GST-free status for non-commercial activities;
  • GST-free sales of donated second-hand goods;
  • GST-free status for raffles and bingo tickets;
  • Sales in connection with certain fund-raising events may be input taxed (that is, no GST liability is imposed, however no input tax credits will be available for purchases made in respect of those sales); and
  • GST credits for volunteer expenses.

Remember that an association that is a charity must be endorsed by the ATO as a tax concession charity in order to access any of these additional concessions.

More information on GST concessions and how to register for GST may be found on the ATO website.

Fringe Benefits Tax (FBT)

Fringe Benefits Tax (FBT) is a tax paid on any benefits that an employer provides to their employees outside their salary or their superannuation, such as the use of a work car, phone or any other benefit.

If your organisation is a registered charity (other than a registered charity that is an institution established by a law of the Commonwealth Government, a state or a territory) it may apply for the FBT rebate (capped at $30 000).

If an association provides fringe benefits to its employees, the association may be liable to pay FBT. This is quite separate from income tax, and even if the association is exempt from income tax, it may still incur an FBT liability.

Benefits exceeding the total value of $2000 in an FBT year (which runs from April 1 to March 31) must be reported on an employee’s payment summary as a 'grossed-up' amount.  Grossing-up means increasing the value of the benefit to reflect the gross salary that the employee would have to earn to buy the benefit using after-tax dollars. These amounts must also be reported to the ATO.

Please note that reimbursing an unpaid volunteer for out-of-pocket expenses does not make them an employee. Generally, benefits provided to volunteers do not attract FBT.

The FBT concessions that will apply to some incorporated associations include:

  • an exemption from FBT; and
  • the FBT rebate.

Associations that are public benevolent institutions or health promotion charities may be eligible for an exemption from FBT. The exemption is subject to a cap on the annual fringe benefit amount that can effectively be paid to an employee. For the latest threshold cap that applies to your association, consult the ATO. If the cap is exceeded for any employee, the association would be liable for FBT on the excess.

Associations that are ‘rebatable employers’ may be entitled to a rebate on the gross FBT payable. Rebatable employers are certain non-government, non-profit organisations. Organisations that qualify for the FBT rebate include:

  • certain religious, educational, charitable, scientific or public educational institutions;
  • trade unions and employer associations;
  • not-for-profit organisations established to encourage music, art, literature or science;
  • not-for-profit organisations established to encourage or promote a game, sport or animal races;
  • not-for-profit organisations established for community service purposes
  • not-for-profit organisations established to promote the development of aviation or tourism
  • not-for-profit organisations established to promote the development of Australian information and communications technology resources, and
  • not-for-profit organisations established to promote the development of the agricultural, pastoral, horticultural, viticultural, aquacultural, fishing, manufacturing or industrial resources of Australia.

Remember, an association that is also a charity (including a PBI) must be endorsed by the ATO as a tax concession charity in order to access the FBT exemption or the FBT rebate.

More information on FBT and how to register for FBT may be found on the ATO website.

Deductible gift recipient (DGR) status

As well as applying for the tax concessions listed above, charities can apply for DGR status when registering with the ACNC.

The benefit of being a deductible gift recipient is that donations made to your organisation may be tax deductible. If a donation is tax deductible, donors can deduct the amount of their donation from their taxable income when they lodge their tax return.

Donors can find out more about making tax deductible gifts and contributions on the ATO's website.

If your organisation is a charity that wants to apply for DGR status, you will need to be registered with the ACNC first.

If your charity is already a DGR, check the ACNC Register to see if it has automatically been registered with the ACNC. If it is not registered, you will need to apply to register with them so you can continue to receive tax deductible donations. You must do this by 2 December 2013.

All DGRs should review whether they are required to register with the ACNC by following the guidance provided by the ATO. For a short summary, you can also read the factsheet on DGR’s.

Public benevolent institutions (PBI)

Some incorporated associations that are charities will also qualify for public benevolent institution (PBI) status. This is different from being classified as a charity.  Only some charities will be classified as PBIs.  A PBI has to be a not-for-profit institution set up for the relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. For PBI status, the emphasis is on the provision of a service directly to those people requiring 'benevolent relief' in order to meet their particular needs.

Examples of public benevolent institutions are: women's refuges, hostels for homeless people, disability support, crisis care and emergency relief services.

Not-for-profit associations that do not provide direct benevolent relief will not be assessed as public benevolent institutions, despite their good deeds. 

Examples of associations that are generally not regarded as public benevolent institutions are: social groups, associations that charge a fee, self-help groups, Boy Scouts and Girl Guides, cultural groups, hobby clubs and conservation groups.

More detailed information can be accessed about PBIs on the ACNC website.

Tax concessions from state and local governments

There are a number of tax concessions available to charities from state and local governments. Your organisation does not need to be registered with the ACNC to receive state or local government tax concessions.

Concessions may be available on taxes like stamp duty (a tax on some financial and property transactions), payroll tax (a tax on wages that exceed a certain threshold paid by employers) and land tax (a tax on land owners). Each state and territory has different requirements for accessing these concessions.

Local governments may also give concessions to charities (for example, on rates).

Western Australian tax concessions

For information about payroll and land taxes, stamp duty and compliance:

Department of Finance (WA)
GPO Box T1600, Perth WA 6845
General Enquiries: (08) 9262 1400
Country Callers: 1300 368 364
Website: www.finance.wa.gov.au
Online contact form: Make an enquiry

Exemptions from state taxes

Exemptions from state taxes apply to range of eligible bodies, including certain incorporated associations.

For example, under section 40(2) of the Western Australian Pay-roll Tax Assessment Act (2002), most of the salaries and wages paid by a range of bodies may be exempt from pay-roll tax. These bodies include:

  • religious or public benevolent institutions; 
  • private hospitals run by not-for-profit organisations; and
  • schools and colleges (at or below secondary level) run by not-for-profit organisations.

Charitable organisations may apply to the Commissioner of State Revenue for an exemption from pay-roll tax (under section 41).

Pay As You Go (PAYG)

All organisations, including incorporated associations that employ staff are subject to PAYG withholding obligations from salaries and wages paid to employees.  Associations that are exempt from income tax are not exempt from PAYG.  Associations are required to withhold an amount from an employee's pay and send this to the ATO.  The amount of money that is withheld depends on how much the employee earns and the information the employee has provided in the Tax File Number Declaration.

Fundraising

Associations are set up to achieve a range of objectives, which can include a wide diversity of activities.  As long as the association meets the requirements of being not-for-profit and only undertakes activities in its state of incorporation, the members and management committee are generally free to determine what type of activities are undertaken. 

Associations do not have an unrestricted right to fundraise, even if it is for not-for-profit purposes. This chapter provides information on the legal requirements that associations must take into consideration when planning and carrying out their fundraising activities.

Many associations undertake some form of fundraising in order to help finance their not-for-profit activities, for example, running a raffle, conducting a door-knock, selling food or collecting clothes. 

Examples:

  • The Harmony Community Development Association Inc. holds an annual street collection, organises charity sports events and runs a bingo evening for senior citizens.
  • Kick-it Inc. runs soccer coaching and competitions for under 12 year olds.  The group also undertakes fundraising and runs education sessions in local schools.
  • Sam Point Neighbourhood House Inc. runs educational programmes, school holiday activity programmes, single parent camps and an unemployed workers co-operative.
  • Friends of Lake Boro Inc. publishes a local newsletter, conducts busy bees and collects donations at shopping centres.
  • Care-in-Care Inc. is a large organisation with over 60 staff, delivering services for low-income earners across Perth.  Services include counselling, education, legal advice and emergency relief.  The centre also has two op shops, a refuge and an inner city canteen for homeless people.

Key Points

  • Incorporated associations that wish to raise funds from the public for a charitable purpose must have a licence. 
  • Permission for raising funds in shopping centres must be obtained from the shopping centre management.
  • Fundraising in streets and public places in the metropolitan area requires a street appeal permit.
  • An association must obtain a licence from the local council for a food stall and a licence from the DRGL for a licence to sell alcohol.
  • Additional insurance may be required for fundraising events.
  • Obtaining endorsement from the ATO as a DGR could assist eligible associations with fundraising.

Regulation of fundraising activities

Fundraising activities in Western Australia are potentially restricted by one or more pieces of legislation and regulations, including:

  • the Charitable Collections Act (1946), which regulates fundraising when it is for a charitable purpose;
  • the Street Collections (Regulation) Act (1940), which, as its name implies, regulates all fundraising in the form of street collections;
  • the Gaming and Wagering Commission Act (1987), which imposes controls on fundraising activities such as raffles, bingo and all forms of gambling; and
  • the Liquor Control Act (1988), which imposes controls on fundraising events where liquor is to be sold.

The Acts that might regulate your association’s fundraising depends on what purpose the funds will be used for. For instance, if the fundraising is for a charitable purpose, then your association will need to hold a licence under the Charitable Collections Act.

What constitutes a charitable purpose can be a bit confusing, as there are significant differences between its common law meaning, its meaning under Commonwealth tax legislation, and its meaning under the Charitable Collections Act 1946.

The definition in the Charitable Collections Act 1946 is wide and includes providing assistance to the ill, infirm, poor, or unemployed persons, and to hospitals, kindergartens and infant health care centres. It also embraces various other social welfare and benevolent activities.

However, what is not covered by the definition is just as important. For example, the support of schools or sporting activities is generally not a charitable purpose. So fundraising by a Parents and Citizens Association wanting to buy new computers for its primary school is not regulated by the Charitable Collections Act 1946 and the association would not need to be licensed. But, if your association is raising funds to assist homeless ‘street kids’, then this is fundraising for a charitable purpose and the association would need to apply for a licence.

If you are unsure if your fundraising is for a charitable purpose, you can contact the Charities Area at Consumer Protection on (08) 6251 1407.

Australian Charities and Not-for profit Commission (ACNC)

The Australian Charities and Not-for-profits Commission (ACNC) is the independent national regulator of charities. The ACNC has been set up to achieve the following objects:

  • maintain, protect and enhance public trust and confidence in the sector through increased accountability and transparency;
  • support and sustain a robust, vibrant, independent and innovative not-for-profit sector; and
  • promote the reduction of unnecessary regulatory obligations on the sector.

The role of the ACNC

The ACNC:

  • registers organisations as charities;
  • helps charities understand and meet their obligations through information, guidance, advice and other support;
  • maintains a free and searchable public register so that anyone can look up information about registered charities; and
  • is working with state and territory governments (as well as individual federal, state and territory government agencies) to develop a 'report-once, use-often' reporting framework for charities.

The ACNC is responsible for determining charity status for all federal tax purposes. As part of its status determinations, the ACNC also decides whether a charity is a public benevolent institution (PBI) or health promotion charity (HPC).

The ACNC will be responsible for administering tax concessions relevant to charities, including:

  • income tax exemption;
  • Fringe Benefits Tax (FBT) rebate or exemption;
  • Goods and Services Tax (GST) charity concessions; and
  • Deductible Gift Recipient (DGR) status.

The ACNC’s relationship with other government agencies

The Australian Taxation Office (ATO) remains responsible for deciding eligibility for charity tax concessions and other Commonwealth exemptions and benefits.

There are also many other government agencies that regulate charities and other not-for-profits. For example, government agencies may provide grants and other funding. They may also regulate particular services provided by charities, such as aged care or education.

In Western Australia the Department of Mines, Industry Regulation and Safety regulates Incorporated Associations and Charitable Collections Licences.

Important: It is relevant to note that charities or organisations that solicit charitable donations in Western Australia are still required to obtain a Charitable Collections Licence from the Department of Mines, Industry Regulation and Safety.  Registration with the ACNC DOES NOT preclude this requirement. See Fundraising for more information.

Is your Association or Charity Registered with the ACNC?

If your organisation was recognised (endorsed) by the Australian Taxation Office (ATO) as a charity able to receive charity tax concessions before 3 December 2012, it was automatically registered with the Australian Charities and Not-for-profits Commission (ACNC). This means you don't need to re-register.

The ACNC now registers organisations as charities while the ATO remains responsible for deciding your organisation's eligibility for tax concessions.  You can check if your organisation has been automatically registered by searching the ACNC Register.

You can also check whether your organisation is registered as a charity and which tax concessions your organisation currently receives from the ATO on ABN Lookup.

As part of the automatic registration process, your charity's information has been transferred from the ATO and the Australian Business Register to form its initial entry on the ACNC Register.

Applying for tax concessions from the ATO

Registration with the ACNC is voluntary. However, ACNC registration is now a prerequisite for charities to access charity tax concessions.

A charity must be registered with the ACNC before it can receive any charity tax concessions from the ATO. Many charities may also be eligible to apply for deductible gift recipient (DGR) status. Some DGR categories are only available to registered charities.

You can apply for charity tax benefits including DGR status with the ATO when applying to register with the ACNC.

After the ACNC has decided your charity status, they will pass on your application for tax benefits including DGR status to the ATO. The ATO will decide whether your organisation is eligible.

The ACNC offers a number of key services, including charity registration, a searchable charity register listing registered Australian charities, education and guidance materials. You can keep up-to-date with changes to the ACNC by subscribing to the ACNC Commissioner's weekly column. For more information concerning Charities and Taxation, visit the ACNC website at www.acnc.gov.au.

Fundraising for charitable purposes

Fundraising for charitable purposes in Western Australia is regulated by the Charitable Collections Act 1946. If the charitable fundraising involves a street appeal, then the Street Collections (Regulation) Act (1940) also applies. The Minister for Commerce administers these Acts through the Charitable Collections Advisory Committee, which in turn operates in conjunction with Consumer Protection.

What are the requirements for fundraising?

Your association will need a charitable collections licence if:

  • the purpose of its fundraising falls within the definition of charitable purpose under the Charitable Collections Act (1946);
  • it intends to collect or obtain money or goods (such as aluminium cans or used furniture or clothing); or
  • conducts fundraising for that charitable purpose.
  • The following activities are considered to be a collection under the Charitable Collections Act 1946 and require a licence:
  • the sale of items such as badges, flowers, tokens or any other device for any charitable purpose;
  • charging an entrance fee for functions (such as sports events, fêtes, and concerts) where it is implied that any part of the fee will be applied to a charitable purpose; or
  • advertising a function where it is implied that any part of the proceeds will be donated to a charitable purpose.

For more information about conducting charitable collections refer to the information sheet Charitable Collections – Getting Started.

How does an association obtain a licence?

Technically, an association applies to the Minister for Commerce for permission to fundraise, and the Minister refers the application to the Charitable Collections Advisory Committee.  In practice, however, the application is lodged with the Charitable Collections Licensing section at Consumer Protection and the Committee then makes its recommendations with regard to licensing. 

An application may take up to eight weeks to be processed. A licence is normally issued for three years and may be renewed.  More information about licensing requirements is available from www.commerce.wa.gov.au/charities or by reading Charitable Collections- A guide to licensing.

Fundraising under an existing licence

There may be times when your association wants to conduct a one off or short term appeal for a charitable purpose.

For example to raise money to help someone in need in the community, to assist in disaster relief efforts or for someone who needs urgent medical treatment.

The requirements of the Charitable Collections Act 1946 will still apply but it may not be practical to apply for a licence. It may be better to obtain authority from an existing licence holder to collect under their licence.

For more information visit www.commerce.wa.gov.au/charities.

Reporting requirements

Licensees are required to submit audited financial reports to the Committee at the end of their financial year.  The reports must contain detailed information about the money or goods collected and the way they were distributed.

Code of Conduct

A Voluntary Code of Practice for public fundraising has been developed by Consumer Protection. It provides helpful guidelines to fundraisers on how to conduct fundraising in a responsible and accountable manner.

Other requirements relating to selected fundraising activities

Street collections

The Street Collections (Regulation) Act 1940 applies to any organisation conducting a street collection. However, it only regulates street collections in the metropolitan area. Associations in regional areas should check with their local council.

A permit is required for any street collection in the Perth metropolitan area, regardless of whether or not the proceeds are to be used for a charitable purpose.

For example, a T-Ball club wanting to hold a street collection to raise funds for equipment would need a permit, even though the purpose of the fundraising is not considered charitable.

Please note that the definition of ‘public street’ includes private land that is used by the public for pedestrian traffic. The car parks and footpaths outside a shopping centre are therefore considered to be a street for the purposes of street collections.

An application for a permit can be made to Consumer Protection. The application must set out details on the purpose and locality of the street collection, and any other relevant information. Consumer Protection requires at least six weeks’ notice to allow time for the permit to be prepared and signed.

A report on the amounts received and expenses incurred must be sent to the department within 30 days of the street collection.

Guidelines for street collections:

  • Submit an application form to Consumer Protection.
  • Allow six weeks for the application to be processed.
  • There is no fee.
  • Only one street appeal is allowed for each applicant per year.
  • The permit does not cover collections on private property, such as inside shopping centres.
  • Collectors must wear an identification badge.
  • Collectors may not be paid.
  • Only children over the age of 16 are allowed to collect during a street appeal.
  • If an association wants to set up stalls, it must obtain a separate permit from the relevant local council.

For more information contact:

Department of Mines, Industry Regulation and Safety - Charities Area
Locked Bag 14
Cloisters Square Perth WA 6850
Tel: (08) 6251 1407
Web: www.commerce.wa.gov.au/charities
Email: charities@dmirs.wa.gov.au

See the Consumer Protection website for more information about street collections or download the application form.

Door-to-door collections

Associations that are licensed to raise funds from the public for charitable purposes may carry out door-to-door collecting from households. Collectors are allowed to collect between the hours of 9am and 6pm on Mondays to Saturdays only and must wear an identity badge. Children under the age of 16 may not act as door-to-door collectors.

More information on some of the requirements of collecting from private residences is available on Consumer Protection’s website.

An association that does not hold a charitable collections licence may also collect door-to-door, provided that it does not collect for a charitable purpose. For example, P&C and sporting associations would typically not need a licence. As such, the requirements of the Charitable Collections Act do not apply to these groups when collecting door-to-door. It is worth remembering, however, that the best donors are happy donors, and following the Consumer Protection guidelines will help to ensure that your collectors will be welcomed next time they knock on the door!

Fundraising in shopping centres

Shopping centres are good places for raising funds because of the large numbers of people passing through. Associations that wish to fundraise in a shopping centre must obtain permission from the shopping centre management office, but at the moment no other permits are required.

Shopping centres have their own policies on providing space for fundraising. As shopping centres are so popular and space is limited, it is essential to plan well in advance. It can take 12 months to obtain a space. Shopping centres will generally require public indemnity insurance (refer to Insurance and Risk Management).

A voluntary Code of Conduct has been developed by Consumer Protection that provides guidelines to fundraisers and shopping centre managers to deal with requests for space in shopping centres for fundraising.

Lotteries and games

Lotteries (raffles) and games, such as bingo, are popular fundraising activities. The Gaming and Wagering Commission Act 1987 provides permits to charitable groups, community based organisations and sporting bodies for the purpose of raising funds from gaming related activities.

The gaming activities covered by the Gaming and Wagering Commission Act 1987 include:

  • standard lotteries;
  • continuing lotteries;
  • trade promotion lotteries (e.g. a colouring in competition or entries drawn randomly from a barrel);
  • video lottery terminals;
  • bingo;
  • two-up;
  • sweepstakes;
  • gaming functions; and
  • football tipping competitions and minor fundraising activities.

Associations wishing to raise funds from one of these activities will in most cases need to obtain a permit from the Department of Local Government, Sport and Cultural Industries - Racing, Gaming and Liquor (RGL). Funds raised must be for charitable purposes, or for a purpose that is not for private gain or a commercial undertaking. In making an application for a permit, your association will be required to provide a copy of the rules of association or certificate of incorporation to show that they are a genuine group.

There are different application forms, conditions and fees for each lottery and gaming activity. It is important to complete the correct form/s, which can be obtained from RGL or downloaded from its website.

Minor fundraising activities, which include football tipping competitions where the total prize money is less than $10,000 and raffles under 24 hours' duration, do not usually require a permit.

However, check with RGL if you are not sure whether or not you require a permit for your activity or you could be liable for a fine.

Department of Local Government, Sport and Cultural Industries - Racing, Gaming and Liquor
PO Box 6119
East Perth, WA 6892
Tel: (08) 6551 4888

Selling food at fundraising events

Selling food is a very popular and profitable way of raising funds, whether it is a cake sale, a sausage sizzle, an occasional food stall or a large food and wine festival. However, preparing and selling food requires very careful handling and preparation for reasons of hygiene and safety. The following laws regulate fundraising activities, involving the preparation and supply of food in Western Australia:

  • the Health Act 1911;
  • the Health (Food Hygiene) Regulations 1993; and
  • the Australia New Zealand Food Standards Code.

Associations that are planning to organise temporary food stalls need to obtain a permit from their local council. Councils will also probably be able to provide the association with general guidelines on preparing and selling food. Ask to speak to the environmental health officer.

The following aspects need to be considered when planning a food stall and submitting an application for a permit:

  • the type of food products to be sold;
  • the people who will be preparing and selling the food;
  • equipment required;
  • purchasing and transporting the food;
  • the nature of the facilities to be used;
  • procedures and equipment for handling food;
  • temperature control of hot and cold food;
  • presentation and storage of food;
  • labelling food;
  • cleaning requirements and equipment; and
  • rubbish and waste water disposal.

Food Standards Australia New Zealand have produced a number of fact sheets for charity and community based organisations on matters relating to food safety, including a specific fact sheet on sausage sizzles and barbeques.

Serving alcohol at fundraising events

If the fundraising activity or event also includes selling and supplying alcohol, it will be necessary to obtain a liquor licence. The DRGL grants licences under the Liquor Control Act 1988 which regulates the:

  • sale, supply and consumption of liquor;
  • use of premises on which liquor is sold; and
  • services and facilities provided in conjunction with the sale of liquor.

Incorporated associations organising fundraising events at which liquor will be sold will need to apply for an occasional licence. This is a licence for people/associations that do not hold any other licence under the Liquor Control Act 1988.

An occasional licence permits the sale of liquor at a function, which means a 'gathering, occasion or event, including a sporting contest show, exhibition, trade or other fair or reception, at which liquor is sold and supplied.

Applying for an occasional licence to sell alcohol

  • You can download an application kit from the occasional licence section of the DRGL website or complete the application online.
  • The form must be completed and submitted with the prescribed application fee.
  • Written consent must be obtained from the owner or person having control over the premises where the liquor will be sold.
  • If the function is to be held outdoors, a map of the licensed area must be submitted.
  • Local council consent is required for the use of public land.
  • The local police must be informed of the proposed function if more than 100 people are expected.

Other matters for consideration

Commercial fundraisers

Commercial fundraisers are not presently required to be licensed under the Charitable Collections Act 1946. Any agreement between an association and a commercial fundraiser is subject to contract law, and associations should seek legal advice before entering into agreements.

Consumer Protection has developed some guidelines for consideration by associations contemplating entering into an agreement with a commercial fundraiser. These guidelines are available on Consumer Protection’s website.

Bequests and gifts

Some incorporated associations obtain funds though gifts and bequests. A bequest is a gift of property in a will. While this is a valid means of acquiring funds, it is very important for associations to ensure that gifts and bequests have been given to the association without any undue influence or coercion. If challenged, courts will look very closely at gifts and bequests received by associations to ensure that they were given freely and with the person's full knowledge and intention. It will be more difficult for associations to claim gifts and bequests that are given by elderly people, people with intellectual disabilities and people with limited experience and education.

If an incorporated association is planning to raise funds through a request for gifts and bequests, it is essential to discuss the project with a solicitor and to have the solicitor draft all the necessary documents (e.g. letters of request, forms and promotional material) in order to avoid legal pitfalls. It may also be beneficial to apply to the Australian Taxation Office for endorsement as a Deductible Gift Recipient (DGR).

And remember, if the request for gifts and bequests indicates that the funds will be used for a charitable purpose, the association will need a charitable collections licence before it commences mailing out any material.

DGR status

Incorporated associations that qualify as a DGR can receive tax-deductible gifts. This can make them more attractive to donors wishing to claim an income tax deduction for the gift, for example, sponsors and private donations.

To be a DGR, an association must either be:

  • listed in income tax law as a deductible gift recipient; or
  • endorsed by the ATO as a deductible gift recipient.
  • ATO endorsement requires the association to:
  • be covered by one of the eligible categories (e.g. an animal welfare charity);
  • have an Australian Business Number (ABN);
  • maintain a gift fund into which all gifts are deposited;
  • make provision in the rules that, upon dissolution, all property (including the gift fund) be given to another deductible gift recipient;
  • provide in the rules that the Tax Commissioner will be informed of material changes to the rules and winding-up;
  • be located in Australia; and
  • make application to the ACNC for deductible gift recipient status, as this is not automatic.
  • Some associations may not have deductible gift recipient status as a whole, but its smaller units may be eligible.

More information concerning Deductible Gift Recipients can be found on the ATO website. You can also download an application form to apply for endorsement as a Deductible Gift Recipient. Information on how to apply for an ABN is provided in Taxation.

Insurance

A fundraising activity may involve the need to take out specific, one-off insurance, if the event is not going to be covered by existing policies. Before you go ahead with an event, find out what your association's insurance policy covers and what additional cover is required. Personal injury, product liability and cover for volunteers are particular areas to consider.

If using sub-contractors, check what insurance they have. If an association contracts a local church group to make lamingtons for sale and a disgruntled member of the public sues because the lamingtons made him/her sick, the association may be as liable as the church group, which may or may not have insurance.

Insurance topics are covered in more detail in Insurance and Risk Management .

Local authorities

Certain activities may require local government approval for fundraising. This is likely to be the case when using a public space and/or in relation to local health, noise, safety or traffic by-laws.

A case study

An association has planned the following fundraising events:

  • a children's colouring-in competition for International Environment Day;
  • a raffle to raise funds for the annual camp for children with disabilities, with tickets to be sold in local shopping centres; and
  • a Harvest Festival to celebrate harvest time. The Festival will have food and wine stalls, games and craft stalls.

The association will need to:

  • obtain a licence for charitable fundraising;
  • apply for a trade promotions lottery licence for the colouring-in competition;
  • apply for a standard lottery licence for the raffle and apply to the shopping centres for space and permission to sell tickets;
  • apply for an occasional liquor licence to sell alcohol at the festival; and
  • apply for a temporary food stall licence to sell food.

Grants

Funding is important to support industry and provide active opportunities for the Western Australian community. It is very likely that an association will want to apply for a grant at one time or another over the course of its life. Applying for and receiving grants can contribute towards the costs of all kinds of initiatives and assist the furtherance of an association’s objects. Many government departments and private sector organisations offer funding to not-for-profit and community groups to assist these groups achieve their aims and purposes.

Key Points

  • Applying for and receiving grants can contribute towards the costs of all kinds of initiatives and assist the furtherance of an association’s objects.
  • Lotterywest provides a variety of grants to not-for-profit organisations in Western Australia. These grants support initiates that are for charitable or benevolent purposes.
  • Grant programs are available from both State and Commonwealth agencies and there are a variety of search programs and guides that will assist associations finding the right grant.

Lotterywest grants

Each year Lotterywest supports hundreds of community groups and incorporated associations in Western Australia with grants totalling over $100 million. Lotterywest uses the profits derived from the sale of games such as Lotto and Scratch’n’Win to fund these grants.

Grants are available to not-for-profit organisations and local government authorities to support charitable or benevolent initiatives with a public benefit within Western Australia.

For more information about available grants and application processes contact Lotterywest:

Tel:           133 777
Toll free:   1800 655 270
TTY:          (08) 9340 5236
Web:         www.lotterywest.wa.gov.au/grants
Email:       hello@lotterywest.wa.gov.au

Preparing grant submissions

Writing competitive grant submissions that will result in a successful grant application can be a daunting task. If an association has any queries regarding the requirements for a specific grant or information regarding the application process it is recommended that they contact the organisation responsible for the grant.

Organisations such as the Western Australian Council of Social Services Inc (WACOSS) provide training courses specifically designed to teach groups how to write successful submissions, develop project proposals and package a submission that positively represents the organisation.

Finding the right grant for your association

Any association seeking grant funding will need to find out what programs are available and which will be best suited to the needs of the group. Grant programs are available from both State and Commonwealth agencies and there are a variety of search programs and guides that will assist associations finding the right grant.

State grants

Department of Local Government, Sport and Cultural Industries

  • Sport and Recreation through grants and scholarships, provides funding to organisations that facilitate sport and active recreation. There are a wide range of avenues to obtain funding including sport and community organisations, facilities and special funding for regional areas. 

    Visit the Funding, grants and scholarship page of Sport and Recreation’s  website for full details of opportunities available. 

  • Local Government and Communities provides one-off grants to community sector organisations and local governments to plan and implement projects, events and initiatives that help to improve the lives of West Australians.  Click here to go to the Local Government and Communities website.
  • Culture and the Arts distributes funding to organisations including small businesses, Local Government authorities and not-for-profit organisations.  Visit www.dca.wa.gov.au/funding for more information regarding the grant programs offered, eligibility requirements and application processes.

Employment

Incorporated associations, regardless of their size, need people to carry out the business and activities of the association. Those associations that have the funds often employ staff to undertake specific tasks, while others without the financial resources may have to rely entirely on volunteer workers. Many associations rely on both employees and volunteers. 

When employing people, incorporated associations generally need to be aware of employment law and any relevant industrial agreement or instrument with which they are required to comply. This chapter provides some general information on recruitment and appointment of employees, employment contracts and employment law.

Key Points

  • Incorporated associations that engage employees should have clearly formulated selection criteria and job descriptions.
  • When engaging employees, it is important to understand what industrial awards and agreements (if any) apply and which employment laws are relevant to that employment.
  • In relation to the above point, an incorporated association may be a ‘constitutional corporation’ subject to Commonwealth, rather than State, industrial relations jurisdiction.
  • If the management committee is required to terminate an employee's contract of employment, it is essential to understand how to terminate the employment in accordance with the contract and in accordance with fair procedures to ensure the termination is lawful and fair.
  • Incorporated associations must keep records relating to employment, including payment of wages, leave, tax records and superannuation records.

Recruiting and appointing employees

Employees may be employed by incorporated associations to undertake a range of duties, including:

  • service delivery to undertake those activities to which the association has committed as a means of furthering its objectives. For example, community educator, advocacy caseworker, policy worker, recreation coordinator, personal care worker, youth worker, counsellor, crisis worker, refuge worker, information provider (including over the telephone);
  • administration and support to assess, develop and maintain the administrative infrastructure required for the association to conduct its business. For example, reception, financial reporting, accounts, corporate documentation, media and public relations, records, data systems, office management;
  • management to manage the day-to-day operation of the association. This may include one or more levels of management or coordination. For example, manager, coordinator, supervisor, team leader, executive officer.

Sometimes, employees will be given responsibilities across different areas. For example, a manager may also have service delivery responsibilities, a senior caseworker may be given the task of supervising junior workers or all employees may have joint responsibility to share administrative duties.

Types of employment

There are a number of different working arrangements that employers can apply when engaging workers. Incorporated associations should consider what type of employment they wish to offer as it may affect the terms and conditions of employment.

  • Full time: employees generally work between 38 and 40 hours per week on a regular, ongoing basis. Benefits such as paid sick leave, annual leave, holiday pay, long service leave and carers usually apply.
  • Part time: employees generally work regular hours each week but fewer than full time employees. Part time employees are usually given the same basic entitlements as full-timers, based on hours worked (this is called pro-rata).
  • Casual: employees are usually employed on an hourly, daily or weekly basis and don’t usually get paid sick leave or annual leave.
  • Fixed term: employees are employed to do a job for an agreed length of time. Many employers hire fixed term employees to do work on a specific project or fill in for employees who may be on leave.
  • Commission: people in this category may be paid on a ‘commission only’ basis which means they only receive money when they sell or achieve a specific target.

Start at the beginning

When an incorporated association is considering employing a person, it is essential to take into account some fundamental concerns, including:

  • what the association wants the employee to do;
  • the selection process that will be followed;
  • the employment conditions (full/part time, short/long term contract etc); and
  • the legal obligations of the association as the employer.

In considering these matters, incorporated associations should take into account their own objectives and needs, legal and regulatory requirements, potential employee needs and resource availability.

Job descriptions

Job description profiles are useful tools in ensuring that any new position fits with the association’s objectives, vision and strategic plan.

The document should include details such as:

  • the position title;
  • the essential tasks or duties of the position;
  • the hours that the employee will be required to work;
  • the remuneration the employee will receive in return for work performed;
  • the reporting structure (who the employee reports to and who, if anyone, reports to the employee); and
  • other conditions of employment.

A job description can be sent to prospective employees so that they know what the job requires, and allows them to decide if they think they are suitable for the position. 

Selection criteria

The association should set out in writing the matters that will be taken into account in selecting applicants for employment. These are called selection criteria. The use of selection criteria ensures that the selection process is transparent, fair, consistent and accountable.

The selection criteria should include matters such as the qualities, skills, knowledge and experience that the incorporated association requires of a successful applicant. For example, ‘well developed written communication skills’ or ‘ability to develop Excel spreadsheets’. It is helpful to limit the number of selection criteria to, six to ten as having too many often makes the selection task more difficult.

It is fair and normal practice to let applicants know what criteria will be used to assess applications, and any special weight that will be given to each criterion. The selection criteria are usually forwarded to potential applicants along with the job description.

When preparing selection criteria (and later, selecting people for employment through the interview) associations need to be mindful of anti-discrimination legislation (See Discrimination and Harassment).

Advertising the position

An association may need to advertise for applicants for a position (although this is not a requirement of the law). The Association should use the best means available (newspaper, recruitment agent, websites) to attract suitable applicants.

The advertisement should provide details about the job and contact details for obtaining further information on the job description and selection criteria.   When preparing advertisements, consideration should be given to requirements under anti-discrimination legislation, and any information provided should not be misleading or deceptive.

The employment interview

The employment interview provides the employer with an opportunity to meet face-to-face with an applicant, learn more about the person and see if he or she is suitable for the association, persons or committee interviewing the applicant (the interview panel) should prepare a basic set of interview questions relevant to the particular job description and the selection criteria. For example, questions about a person's previous employment experience, qualifications and reasons for applying for the job will generally be relevant.

As noted above, all aspects of the employment selection process are subject to anti-discrimination legislation and the interview panel should keep this in mind when developing questions. For example, questions about a person's religion, marital status or sexual orientation are not likely to be relevant and may give rise to discrimination issues.

The employment contract

Generally, a contract of employment forms the foundation of the relationship between an employer and an employee. The employment contract contains the terms and conditions of employment, including matters such as pay, leave and hours of work. A contract of employment may be in writing or verbal. However, it is preferable to have a written contract, as this generally minimises any confusion, uncertainty or doubt about the terms and conditions of employment and in particular, key terms and conditions like remuneration, duties and notice of termination of employment.

For the majority of incorporated associations, an employment contract could be:

  • a contract that supplements entitlements in:
    • an existing industrial award,
    • a collective agreement made between an employer and either employees or a union/s; or
  • an individual agreement made between an employer and one employee;
  • a ‘common law’ contract of employment, particularly where the association is not covered by any award or agreement and only legislated minimum entitlements apply.

Industrial relations systems

Industrial relations and employment in Australia is governed at two separate levels – the State level and the Commonwealth level. Each level has its own system of regulation. The terms and conditions of an employee's contract may be subject to a State or Commonwealth industrial award or agreement. In addition, there are State and Commonwealth workplace laws, such as minimum conditions, which may apply to that employment.

As a result of the previous Commonwealth ‘Work Choices’ legislation the Workplace Relations Amendment (Work Choices) Act (2005), incorporated associations fall under the Commonwealth system by virtue of them being ‘constitutional corporations’. To be a constitutional corporation, a body must firstly be incorporated, and secondly, have ‘significant’ or ‘substantial’ trading or financial activities. This can include charitable organisations, clubs, educational institutions and health providers.

Clearly, all incorporated associations meet the incorporation test, but many will need clarification on whether they are engaged in sufficient financial or trading activities to be considered constitutional corporations. Associations that are not constitutional corporations will generally fall under the Western Australian labour relations system.

To clarify whether your association falls under the Commonwealth or the State system, or if you are unsure what industrial award and/or agreement may apply to your incorporated association, you can contact the Labour Relations Division of the Department of Mines, Industry Regulation and Safety for advice.

Wageline is a service provided by Labour Relations that can provide assistance in determining which State or Commonwealth award, agreement and legislation may apply.

Wageline can be contacted on telephone 1300 655 266. You can also visit the Labour Relations website for more information.

Western Australian industrial relations system

The Western Australian industrial relations system is generally governed by the Industrial Relations Act 1979. It is also underpinned by minimum conditions of employment provided by the Minimum Conditions of Employment Act 1993.

This latter Act contains a minimum set of conditions that are taken to be implied into every contract of employment, award or industrial agreement entered into in Western Australia.  These minimum conditions cover areas such as:

  • minimum rates of pay;
  • annual leave;
  • sick leave;
  • public holidays;
  • bereavement leave;
  • parental leave; and
  • consultation in the event of significant change (including redundancy).

In addition, the Long Service Leave Act 1958 sets out minimum entitlements to long service leave for all employees in Western Australia (generally, 8 and 2/3 weeks’ leave after 10 years’ continuous service). The Long Service Leave Act 1958 generally applies to all employees in Western Australia, unless a federal award or agreement deals with, or excludes, long service leave entitlements.

The relevant State Government authority is the Labour Relations Division of the Department of Mines, Industry Regulation and Safety, which can provide a wealth of information on all aspects of the Western Australian industrial relations system (including those that apply to constitutional corporations) and how it interfaces with the Commonwealth’s laws.

Contact Wageline on 1300 655 266 or visit the website.

Commonwealth industrial relations system

In 2009, the Commonwealth Government introduced a new national workplace relations system under the Fair Work Act 2009. Some key elements of the system under the Fair Work Act include:

  • A legislated set a 10 minimum National Employment Standards
  • The creation of modern awards designed to establish one set of minimum conditions and wage entitlements for employers and employees across Australia who work in particular industries and occupations.
  • Streamlined protections dealing with workplace rights (including protection against discrimination), industrial activities and unfair dismissal.

The workplace relations system is regulated by two agencies, Fair Work Australia and the Fair Work Ombudsman.

To find out more about Commonwealth awards and agreements, you can contact the:

Fair Work Commission
Telephone: 1300 799 675
Perth Office contact details
Telephone: 9464 5172
Address: Floor 16, 111 St Georges Tce, PERTH WA 6000
Website: www.fwc.gov.au
Email: perth@fwc.gov.au

Fair Work Ombudsman
Infoline: 13 13 94
Address: GPO Box 9887, In your capital city
Website: www.fairwork.gov.au

Establishing the terms and conditions of employment

Industrial awards

An industrial award is a legally binding document that outlines the wages and conditions of employment for groups of employees in an industry or occupation, for example, the Western Australian Hairdressers Award 1989.  Generally, employers cannot provide conditions of employment that would be less favourable than award conditions. They may provide conditions that are more favourable that the award conditions or enter into arrangements with employees in relation to matters that are not dealt with by the award.

Western Australian awards are made by the Western Australian Industrial Relations Commission. Traditionally, Commonwealth awards were made by the Australian Industrial Relations Commission.

State awards covering employers that are not constitutional corporations continue to apply in the State industrial relations system. Western Australian awards can only apply to employers that are in the State industrial relations system (that is, employers that are not constitutional corporations).

As indicated above, Labour Relations will be able to assist incorporated associations that are not constitutional corporations to determine whether they are required to apply a State award in their particular circumstances.

Incorporated associations that are constitutional corporations can seek advice about award coverage from the Fair Work Infoline on 13 13 94.

An employment contract based on an award might simply be a letter which acknowledges that the position is subject to the provisions of a particular award.

Employer-employee agreements

If your association is not a constitutional corporation, it may be eligible to make use of a form of individual agreement known as an ‘Employer-Employee Agreement’ (EEA).

An EEA is a voluntary written agreement between an employer and employee, which generally replaces the provisions of an award and forms the basis of the contract between the two parties. (Note that an EEA cannot be made while an industrial agreement, i.e. a collective agreement, applies to an employee's employment).

An EEA cannot be offered as a condition of employment. In offering EEAs, the employer must give a new employee the choice of an EEA or the applicable award, or, if there is no applicable award, a ‘common law’ contract of employment containing the same terms as an EEA.  The maximum term of an EEA is three years.

EEAs must be registered by the Registrar of the Western Australian Industrial Relations Commission within 21 days of signing, and must pass a no-disadvantage test to ensure that employees are not worse off than they would be under a relevant award. 

There are also a number of other substantive and procedural requirements that must be met before an EEA can be registered.

For more information about EEAs is available from the Western Australian Industrial Relations Commission.

Common law contract of employment

Common law contracts are individual agreements between an employer and an employee. Unlike statutory agreements, it is not possible to negotiate out of any applicable award or collective agreement provisions or conditions in a common law contract. Whether they are included in the contract or not, the terms of the award or collective agreement still apply.

Common law contracts may therefore be most useful to incorporated associations where there is no award that applies to its employees. However, any contract would still need to comply with the minimum conditions imposed by the applicable State and Commonwealth legislation.

Labour Relations can provide assistance with developing a common law contract.

Should the contract be in writing?

As noted earlier, it is not essential that a contract of employment be in writing, but it is certainly desirable.  It is good practice to confirm any offer of employment in writing, and for the employee to accept the offer by returning a signed copy of the letter, accepting its conditions, before starting work.

A letter of employment could cover:

  • details of the duties required by the position;
  • whether the position is full-time or part-time, casual or permanent;
  • the award or agreement (if any) applying to the position; and
  • any special or additional conditions that apply in the association’s workplace.

Termination of employment

A contract of employment may be lawfully terminated in a number of ways. If your incorporated association needs to terminate an employee's employment, it is important to find out how the employment can be terminated and what procedures the association must follow in effecting that termination. It is advisable to obtain legal advice before terminating an employee's employment.

Some of the ways in which employment may come to an end are set out below.

  • Termination by operation of law: for example if an employee dies.
  • Completion of the contract: an employment contract for a fixed-term, or for the completion of a certain task/project, ends automatically at the end of the period, or on completion of the task/project.
  • Termination by notice: Either party may terminate a contract of employment by giving the proper period of notice of termination. The period of notice may be set out in the employee's contract of employment or an applicable award or agreement. In the absence of a right to terminate by giving a specified period of notice, an employee is entitled to ’reasonable notice‘.  This can often be a relatively long period of time, and will vary depending on the circumstances, including the employee’s age, seniority and length of service.
  • Termination by breach of contract: A party may terminate a contract of employment in some circumstances if the other party breaches the contract of employment. Not every breach of contract will justify the termination of that contract. Whether a particular breach justifies termination will depend on the nature of the breach and the particular circumstances of the case.

Redundancy

If an incorporated association in the Commonwealth industrial relations system has genuine operational reasons for terminating the employment of an employee (i.e. reasons of an economic, technological, structural or similar nature relating to the employer’s business), an employee is not able to claim for unfair dismissal.

It is advisable for employers to meet other requirements concerning notice and fairness, including procedural requirements to consult with employees and, in some circumstances, their representative.

State and Commonwealth awards and agreements will often deal with matters concerning redundancy, including issues such as consultation with the employee, notice to and consultation with unions, possible redeployment opportunities (providing the employee with another position), redundancy payments and benefits. There are provisions contained in the Western Australian Minimum Conditions of Employment Act, which generally require employers to consult with an employee as soon as reasonably practicable after a decision has been made to terminate the employee's employment due to redundancy. 

Associations should be clear that a position is no longer required before terminating employment by reason of redundancy. If an employee's employment is terminated on grounds of redundancy in circumstances where this is not a genuine reason for the termination, the association may be exposed to a claim of unfair dismissal.

Example:      

An association tells its receptionist that he has been made redundant because it no longer needs a receptionist. A week after leaving, the ex-employee notices that the Association is advertising for a 'customer service officer', whose job description is virtually identical to his receptionist's job description. Depending on the circumstances, the termination of the receptionist's employment may give rise to a claim of unfair dismissal.

Summary (instant) dismissal

Some contracts of employment make allowance for instant termination of employment (termination without notice) where an employee has been found to have engaged in serious misconduct. To justify summary dismissal, an employee's conduct generally has to be serious enough to strike at the heart of the employment relationship, such as conduct that destroys the employer-employee relationship of mutual trust and confidence.

Examples of serious misconduct that may justify summary dismissal include:

  • theft;
  • use of illicit drugs in the workplace;
  • criminal conduct, for example, assault; and
  • fraudulent conduct.

It is important that any allegation of serious misconduct is investigated thoroughly and fairly, and that any allegations are substantiated by reference to clear evidence before an association terminates an employee's employment summarily for serious misconduct.

Employees whose employment is terminated summarily will usually still be entitled to payment in relation to their outstanding annual and long service leave entitlements.

Unlawful termination

Termination of a contract of employment is unlawful if it is terminated for a prohibited reason, or if proper notice is not given. Regardless of whether they fall under the Commonwealth or State jurisdictions, associations must not breach these provisions.

Prohibited reasons include:

  • union membership, reasonable participation in union activities, or non-membership;
  • prohibited grounds of discrimination;
  • temporary absence from work because of illness or injury;
  • absence from work during maternity or parental leave; and
  • filing a complaint, or participating in proceedings against an employer.

Unfair dismissal

There are unfair dismissal laws in both the State and Commonwealth industrial relations systems. In Western Australia, the term 'unfair dismissal' refers to a termination of employment in circumstances that are ‘harsh, oppressive or unfair’. Under the Commonwealth law, an unfair dismissal occurs when an employee’s termination is ‘harsh, unjust or unreasonable’.

Under both systems, the focus is on both the substantive 'fairness' of the decision to terminate the employment, and the process by which the decision to terminate employment was reached and communicated to the employee (procedural fairness).

Key elements of procedural fairness include:

  • notifying the employee of reasons for termination of employment;
  • giving the employee an opportunity to respond before any final decision is made;
  • if employment is to be terminated for reasons, such as repeated misconduct or poor performance, advising the employee of the issues and giving the employee an opportunity to improve prior to termination (eg. by way of warnings, counselling).

Employees are generally entitled to be told if their work performance is not satisfactory, given a chance to implement change and be warned if their performance is still unsatisfactory.

When discussing performance issues with an employee, it is important that each party is clear on:

  • the status of the discussions;
  • the mutual expectations of each party; and
  • agreed outcomes and consequences of the discussion.

Written records of discussions that are clear and simple and signed by both parties act as ongoing documentation of the process for both the employer and employee. It is essential for employers to keep well-documented and up-to-date records that may later be used to support decisions about an employee's ongoing employment.

Certain employees are excluded from access to unfair dismissal legislation.

For information regarding exclusions under the national workplace relations system associations should contact the Fair Work Commission, or call on 1300 799 675.

Under the Western Australian system, a non-award employee whose contract of employment provides for a salary exceeding $153,900 per annum is excluded from bringing an application of unfair dismissal.

This figure is subject to change annually, so check the website for the current prescribed amount.

Exit interviews

An exiting employee has valuable knowledge on the role in which they have been employed. Exit interviews invite the employee to provide information and feedback about:

  • their role within the organisation;
  • the resources required to adequately fulfil the role;
  • issues the organisation should be aware of as an employer; and

arrangements that have been made for existing workloads and changeover or transition periods.

Other employer obligations

Superannuation

The Commonwealth’s superannuation guarantee scheme generally requires all employers to make superannuation contributions on behalf of their employees.  There are limited exemptions for certain employees.

The required minimum level of employer contribution is 9.5% of an employee's notional earnings base.

Under both Commonwealth and State industrial relations systems, employees may (depending on the terms of an applicable award) have the right to nominate their preferred superannuation fund and if so, employers must notify employees of their right to choose. If an employee does not provide written details of their preferred fund, the employer can use a fund of its choice until such time that the employee requests a change.

Workers' compensation

Regardless of which industrial relations system applies to their operation, all incorporated associations that employ staff should arrange appropriate workers’ compensation insurance.

For more information on worker’s compensation insurance, refer to Insurance and Risk Management and/or Occupational Safety and Health and Workers’ Compensation. An employee’s legal entitlement to compensation for injury in a workplace cannot be nullified through any employment contract or individual agreement.

Records

Under both Commonwealth and State industrial relations systems, employers are required to keep time and wage records for each employee. The records must accurately document the employee’s wages and entitlements. Penalties apply if these records are not kept.

The specifics of employee record keeping will vary depending on the relevant industrial system, award, agreement, industry standard, or the association’s policy. However, as a general guide, there should be a separate record for each employee detailing basic personal information that includes, where applicable:

  • the name of the relevant award or agreement regulating the employee's employment;
  • the classification of the employee under the award or agreement;
  • whether the employee works full-time or part-time, or is employed on a casual basis;
  • the date the employee began work;
  • hours worked, including breaks;
  • leave entitlements taken and due;
  • remuneration; and
  • overtime, flexitime or time-in-lieu.

Employees (and, in some cases, their representatives) are generally entitled to access and inspect their records.

Employment of children

In Western Australia, children under 15 years of age (including the year in which the child turns 15) cannot generally be employed during school hours.

Children under 12 years of age cannot generally engage in street trading. Children between the ages of 12 and 15 cannot engage in street trading during school hours or before 6am or after 9.30pm. Street trading includes any form of selling or offering an item or service in a public place.

Where the welfare of a child is at risk, the Director General of Education can impose conditions or prohibit employment.

Discrimination and harassment

There are State and Commonwealth laws prohibiting discrimination on various grounds in certain areas of public life.  In many circumstances, as they go about their day-to-day business, incorporated associations will be required to comply with relevant anti-discrimination legislation and the related harassment laws.  This chapter provides an overview of anti-discrimination legislation and its implications for incorporated associations.

Key Points

  • There is extensive Commonwealth and Western Australian legislation that prohibits unlawful discrimination and harassment on various grounds in certain areas of public life.  Incorporated associations will generally be subject to anti-discrimination legislation, and need to be particularly mindful of discrimination in the areas of employment, the provision of goods, services and facilities, and membership of the incorporated association.
  • Incorporated associations need to have a policy (and grievance procedure) in place that deals with discrimination, harassment and victimisation.  Training for employees and members about discrimination and harassment may also be necessary.
  • Complaints of unlawful discrimination or harassment can be made to the Equal Opportunity Commission (in relation to complaints of non-compliance with Western Australian legislation) or the Human Rights and Equal Opportunity Commission (in relation to complaints of non-compliance with Commonwealth legislation).

What is discrimination?

Discrimination is defined in terms of direct or indirect discrimination. 

Direct discrimination is generally established when a person is treated less favourably than another person in the same or similar circumstances.  For it to be discrimination, the less favourable treatment must be on grounds prohibited by legislation. 

For example, unlawful sex discrimination may arise if a person is refused a job interview because she is a woman.

Indirect discrimination is generally established when a condition or requirement is imposed on a person that, on its face, appears neutral, but in practice adversely impacts on a particular person with an attribute covered by anti‑discrimination legislation (e.g. sex, race, marital status, etc). The condition or requirement will be unlawful if it is not reasonable and there is no applicable exception or other defence.  There may be no intention to discriminate, but the conduct or decision leads to a discriminatory effect. 

For example, imposing a height requirement for job applicants may be indirectly discriminatory against women and people of certain races (depending on whether the requirement is reasonable).

Grounds of discrimination

The grounds on which discrimination is unlawful are set out in Commonwealth and State legislation.

It is unlawful to discriminate against a person on any one of these stated grounds, or on a characteristic that generally relates to a person on these grounds.  For example, the capacity to bear children is a characteristic attributed to women.

In relation to some grounds, it is unlawful to discriminate against a person on the ground that a relative or associate of that person has that attribute (e.g. race, impairment).

Commonwealth legislation

The main laws that cover discrimination at the Commonwealth level are:

  • the Racial Discrimination Act 1975, which makes it unlawful to discriminate against a person on the ground of race, colour, descent, national or ethnic origin. Racial harassment is also unlawful under this Act;
  • the Disability Discrimination Act 1992, which makes it unlawful to discriminate against a person on the ground of disability.  Disability harassment is also unlawful;
  • the Sex Discrimination Act 1984, which makes it unlawful to discriminate against a person on the ground of sex, marital status, pregnancy, potential pregnancy, breastfeeding or family responsibilities (in some circumstances).  Sexual harassment is also unlawful;
  • the Age Discrimination Act 2004, which makes it unlawful to discriminate against a person on the ground of age; and
  • the Human Rights and Equal Opportunity Commission Act 1986.  Although this Act does not make discrimination unlawful, it nevertheless sets out a range of grounds on which complaints of discrimination in employment can be made to the Human Rights and Equal Opportunity Commission. 

These grounds are:

  • age
  • medical record
  • criminal record
  • impairment
  • marital status
  • mental, intellectual or psychiatric disability
  • nationality
  • physical disability
  • sexual orientation
  • trade union activity

Please also note that it is also unlawful under the Fair Work Act 2009 to prejudice an employee in his or her employment on the ground that he or she is or is not a member of a trade union.  Under the Crimes Act 1914 (Commonwealth), it is unnecessary for a person to disclose a spent conviction.

Areas where Commonwealth legislation applies

Discriminatory behaviour will only constitute unlawful discrimination if it takes place within one of the areas of public life that are prescribed by the legislation.

Generally, under the Commonwealth’s laws, discrimination is unlawful in the areas of:

  • employment;
  • provision of accommodation;
  • education;
  • provision of goods, services and facilities;
  • access to places and vehicles;
  • disposal of land;
  • clubs and sport;
  • administration of Commonwealth laws and programmes; and
  • advertisements.

Discrimination in relation to superannuation and insurance is unlawful on some grounds.

Western Australian legislation

The Equal Opportunity Act 1984 (EOA) is the relevant piece of State anti-discrimination legislation.

The EOA makes it unlawful to discriminate against a person on a number of grounds, including:

  • race
  • sex
  • age
  • pregnancy
  • impairment
  • marital status
  • gender history
  • sexual orientation
  • religious or political conviction
  • family responsibility or family status

Sexual harassment and racial harassment are also unlawful.

Under the Industrial Relations Act 1979, it is unlawful to discriminate against a person on the ground of trade union membership or non-membership. The Spent Convictions Act 1988 makes it unlawful to discriminate against a person with a spent conviction.

Areas where Western Australian legislation applies

As with Commonwealth legislation, discriminatory behaviour will only constitute unlawful discrimination if it takes place within one of the areas of public life that are prescribed by the legislation.

Discrimination is unlawful in the following areas:

  1. employment;
  2. provision of accommodation;
  3. education;
  4. provision of goods, services and facilities;
  5. access to places and vehicles;
  6. Clubs (See below for the meaning of ‘clubs’ under the EOA. Incorporated associations are not necessarily clubs.); and
  7. sport.

Discrimination in relation to membership of incorporated associations, application forms, superannuation and insurance, and disposal of land is also unlawful on some grounds.

Issues for incorporated associations

The issues that are most likely to be relevant to incorporated associations are in the areas of employment, and the provision of goods, services and facilities.  In addition, an incorporated association may not discriminate on the ground of impairment, age or race in relation to membership of the incorporated association.

Employment

Incorporated associations that are employers are prohibited under Commonwealth and Western Australian laws from discriminating against employees (both current and prospective, and whether full-time, part-time or casual) in the area of employment.  It is unlawful to discriminate against a person when deciding who should be offered employment, the terms on which employment is offered, the terms and conditions of employment, and allocation or access to benefits (e.g. promotion and training).

It is also unlawful for a principal to discriminate against a contract worker in relation to the terms and conditions of contract work, not allowing the contract worker to work or continue work, access to benefits, or any other detriment.

Discrimination may not be unlawful in certain circumstances because of certain exceptions set out in the legislation.  For example, where the duties performed need to be done by a person of the relevant sex to preserve privacy, discrimination on the ground of sex is lawful.

It is also not unlawful to discriminate against a person on the ground of disability or impairment if that person is not able to carry out the inherent requirements of their job, or is only able to carry out those requirements with the assistance of services or facilities which, if provided, would impose an unjustifiable hardship on the employer.

Example of lawful discrimination

An employee is told that she cannot be promoted because she has dyed her hair pink.  This might be considered unfair, but it is not illegal to discriminate against someone on the basis of hair colour – so the conduct is not unlawful discrimination.

However, if the employee is told that she cannot be promoted because she is too old, this is likely to be unlawful discrimination on the ground of age.

Goods, services and facilities

It is generally unlawful under both Commonwealth and Western Australian legislation to discriminate against a person on a prohibited ground in the provision of goods or services, whether for payment or not.  Goods would include things such as clothing, books, food and equipment.  The term 'services' includes services relating to the provision of finance, entertainment or recreation, transport or travel, and services of the kind provided by members of any trade or profession.

Exceptions may also apply in this area.  For example, it is generally lawful:

  • to supply bona fide concessions or benefits to persons on the basis of age (e.g. pensioner travel concessions); or
  • to give persons of a particular race, sex, age (or other attribute covered by the legislation) access to facilities, services or opportunities to meet their special needs in relation to employment, education, training or welfare.

Membership

In relation to membership of an association, there are only limited grounds for discrimination that are applicable. Discrimination on the ground of impairment or age (under Western Australian legislation) and on the ground of impairment (under Commonwealth legislation) is unlawful in relation to:

  • a person's application for membership;
  • the terms and conditions on which an incorporated association is prepared to admit the person to membership;
  • the general terms and conditions of membership; and
  • access to benefits and facilities provided by the incorporated association.
  • There are also specific exceptions where discrimination is not unlawful.  These include:
  • where the principal object of the associated incorporation is the provision of benefits to persons with a particular impairment or of a particular age;
  • where a benefit has to be provided to a person with an impairment in a special manner and it would be an unjustifiable hardship on the association to do so;
  • where a bona fide benefit or concession is based on age;
  • where membership categories are based on age.

Clubs

Although most clubs in Western Australia are incorporated associations, there are certain anti-discrimination provisions that refer specifically to clubs, but not necessarily to incorporated associations. The specific provisions relating to clubs, however, may apply to those incorporated associations that fall within the definition of a 'club'.

Under the EOA, a club is generally defined to include an incorporated association of not less than 30 persons associated together for a purpose including social, cultural, sporting or political purposes, and

  • that provides and maintains its facilities from the funds of the association; and
  • sells or supplies liquor for consumption on its premises.
  • In relation to membership of a club, the anti-discrimination provisions are more extensive than those that apply to an association that is not also a club. It is generally unlawful for a club, the management committee of a club or a member of the management committee of a club, to discriminate against a person on any prohibited ground in matters relating to:
  • a person's application for membership;
  • the terms and conditions on which the club is prepared to admit the person to membership;
  • the general terms and conditions of membership; and
  • access to benefits and facilities provided by the club.

There are also specific exceptions/exemptions where discrimination will not be unlawful in this area. 

For example, refusing membership to a club on the ground of a person's sex is generally not unlawful if membership of the club is available to persons of a particular sex only.  Please note that the Commissioner for Equal Opportunity has publicly flagged this particular exemption for review and a possible legislative change.

Note also that the specific exceptions listed above as applying to incorporated associations apply to clubs as well.

Temporary exemptions

There are circumstances in which an incorporated association may apply for a temporary exemption from the operation of part/s of Commonwealth anti-discrimination legislation and the Western Australian EOA.  A temporary exemption may be granted where circumstances exist which might constitute unlawful discrimination, but which can be shown to fit within the objects and scheme of the legislation.  For example, a temporary exemption might allow an organisation to offer a research award to women to increase the number of women in research positions within that organisation.

The effect of a temporary exemption is that discrimination covered by the exemption is not unlawful under the legislation while the exemption is in force.

The circumstances in which exemptions will be granted tend to be limited because of the permanent exceptions contained in the legislation, referred to above.  Consequently, exemptions at both Commonwealth and Western Australian level are not frequently granted.

To obtain an exemption, an incorporated association must apply in writing to the relevant body; that is,

Harassment

Harassment refers to a wide spectrum of offensive behaviour, not all of which may have been captured by appropriate legislation. In Australia, unlawful harassment is dealt with under the anti-discrimination laws, rather than through specific harassment legislation, like in the United Kingdom.

Harassment includes any unwelcome behaviour that offends, humiliates or intimidates a person.

Generally, unlawful harassment occurs when someone is subjected to such behaviour for a reason that is prohibited under anti-discrimination legislation. Put another way, unlawful harassment is a form of discrimination. For example, intimidating a person because he or she belongs to a particular ethnic group is unlawful because racial discrimination is outlawed by both Commonwealth and State legislation.

Harassment can involve physical conduct, verbal conduct or visual conduct (e.g. in the form of posters, email, or SMS messages).

Sexual harassment

In Australia, sexual harassment is a legally recognised form of sex discrimination.  It is the most common form of harassment.  Generally, sexual harassment is any form of sexually related behaviour that is:

  • unwelcome; and that
  • offends, humiliates or intimidates a person;

in circumstances where a reasonable person would have anticipated that the person harassed would be offended, humiliated or intimidated.

Sexual harassment can result from a one-off incident. It does not have to be repeated or continuous to be against the law. Under the EOA, sexual harassment is unlawful in the areas of employment, education, and accommodation.  However, under criminal law or Commonwealth anti-discrimination legislation, sexual harassment in other areas of public life may be unlawful sex discrimination.

The Commonwealth Sex Discrimination Act 1984 makes sexual harassment unlawful in a wide range of areas that could apply to incorporated associations.

For example, in the areas of clubs and sport and in the provision of goods, services and facilities. 

The Australian Human Rights Commission has published Sexual Harassment: A Code of Practice to assist employers to understand their responsibilities under the Commonwealth Sex Discrimination Act 1984.

Racial harassment

Racial harassment generally includes racially‑based threats, taunts, abuse or insults that disadvantage another person in their workplace or other area covered by anti‑discrimination laws.  Racial harassment could include, for example, racist jokes, racist graffiti and name-calling.

The EOA only deals with racial harassment in the areas of work, education and accommodation.  However in some circumstances, racial harassment could be unlawful racial discrimination, or unlawful under criminal law or Commonwealth anti‑discrimination legislation.

Under the Commonwealth Racial Discrimination Act 1975, racial harassment extends to other areas that could apply to incorporated associations (for example, in the provision of goods, services or facilities).  Under this Commonwealth Act, it is unlawful to perform an act (other than in private) if the act is reasonably likely in all the circumstances to offend, insult, humiliate or intimidate another person or group of people because of race.

In terms of the workplace, sending racially sensitive or offensive emails to colleagues, even if they are meant to be funny, may be considered unlawful racial harassment.

In certain circumstances, aspects of racial harassment can constitute a criminal offence.

Racial vilification

The Western Australian Criminal Code makes aspects of racial harassment, and incitement to racial hatred criminal offences punishable by substantial jail terms.

Disability harassment

Under the Commonwealth Disability Discrimination Act 1992, disability harassment is unlawful in employment, education and provision of goods and services.  In some circumstances, disability harassment may be unlawful disability discrimination.

Victimisation

It is unlawful to subject, or threaten to subject, someone to a detriment because they assert their rights under anti-discrimination legislation.  This is known as victimisation.

Liability

An employer is generally personally liable for acts of discrimination and/or harassment committed by employees or agents in connection with their employment or duties, unless the employer can establish that it took all reasonable steps to prevent the discrimination or harassment. 

A lack of knowledge of discrimination or harassment taking place is not an automatic defence.

An individual may also be personally liable for acts of discrimination or harassment, depending on the circumstances.

Dealing with discrimination or harassment

Most instances of discrimination or harassment constitute unlawful behaviour, rather than a criminal offence. As such, they are generally dealt with by lower authorities than the courts. It is the person experiencing the discrimination or harassment who normally has to initiate the action to seek some form of resolution.

Policy, grievance procedure and training

Incorporated associations can assist with this process by undertaking some proactive planning. For example, it is important for associations to have a policy (and grievance procedure) in place that deals with discrimination, harassment and victimisation. Training for employees and members about discrimination and harassment may also be necessary.

Complaints to external bodies

Complaints of discrimination or harassment under the EOA can be made to the Equal Opportunity Commission, which is administered by the Commissioner for Equal Opportunity.  The Commissioner has the power to investigate and attempt to conciliate complaints of unlawful discrimination lodged under the EOA.  If conciliation is not successful, the Commissioner may refer the matter to the SAT.

The SAT is independent of the Commission, and is a statutory body that makes and reviews a range of administrative decisions.  The SAT holds formal inquiries into complaints, where witnesses may be called to give evidence.  A decision and orders are made which are enforceable.

Complaints of discrimination or harassment under Commonwealth anti-discrimination legislation can be made to the Human Rights and Equal Opportunity Commission.  The President of the Commission is responsible for inquiring into and attempting to conciliate the complaint.  If the complaint is not resolved at this level, the complainant may apply to the Federal Court of Australia or the Federal Magistrates' Court of Australia to have a hearing conducted into their complaint.

In both jurisdictions, complaints should generally be made within 12 months of the alleged act/s of discrimination or harassment. 

Commissioner for Equal Opportunity

Postal Address:
PO Box 7370
Cloisters Square Perth WA 6850

Telephone: (08) 9216 3900
Country Callers: 1800 198 149
TTY: 9216 3936
Website: www.eoc.wa.gov.au
Email: eoc@eoc.wa.gov.au

Australian Human Rights Commission

Postal Address:
GPO Box 5218
Sydney NSW 2001

Telephone: (02) 9284 9600
TTY: 1800 620 241
Complaints Infoline: 1300 656 419
Website: www.humanrights.gov.au
Email: complaintsinfo@humanrights.gov.au

Insurance and risk management

Insurance assists an incorporated association to manage its risks by providing cover against a range of unexpected events that may otherwise leave the association in difficult circumstances.  An incorporated association should give careful consideration to its insurance needs and obtain professional assistance to ensure that it has appropriate insurance that suits its size, activities and resources.  This chapter provides an overview of the kinds of insurance products that an incorporated association may wish to consider, and some tips on obtaining insurance.

Key Points

  • There are various types of insurance cover that an incorporated association may require.
  • Some insurance is compulsory for incorporated associations (eg workers' compensation for employees).
  • A financial institution providing financial assistance to an incorporated association may insist on the association maintaining certain minimum levels of insurance cover.
  • An incorporated association should have a proper risk management program.
  • If in doubt, get professional advice from an insurance broker or lawyer.

Reasons for obtaining insurance

There are various reasons why an incorporated association may wish to obtain insurance.  For instance:

  • becoming incorporated does not mean that an association is protected from being exposed to risk;
  • there are certain compulsory insurance requirements imposed by law that may apply to an incorporated association.  In addition, a financial institution providing financial assistance to an incorporated association may insist on minimum insurance coverage;
  • an incorporated association may acquire property or other assets that require or justify insurance protection;
  • an association may organise or participate in activities that require or justify suitable insurance (e.g. sporting activities) or
  • an incorporated association's members, executives, staff and volunteers may need to be insured against certain risks or personal liability that may arise as a result of their role in the association.

Types of insurance

It is theoretically possible to obtain insurance for almost any event or occurrence if there is an insurer willing to provide cover and the incorporated association is prepared to pay the premium.  It can become confusing when considering all the different types of insurance products available and the assistance of a qualified adviser is advisable. 

The following sets out some of the common types of insurance that may be relevant to incorporated associations.

  • Professional indemnity - to cover claims in respect of a breach of duty in the course of carrying out the organisation's usual activity or functions.
  • Portable/ valuable items - to cover loss of specified items.
  • Goods in transit - to cover loss of or damage to goods during transit.
  • Theft - to cover theft of contents, cash and stock.
  • Fire and defined events - to cover loss or damage to property at premises caused by a defined insured event; e.g. fire, explosion, earthquake.
  • Glass and signs - to cover damage to glass or signs, e.g. fractures and breakages.
  • Events insurance - to cover an event, such as a fête, against loss (e.g. cancellation due to bad weather).
  • Workers' compensation - to cover injury to employees for accidents associated with work.
  • Public liability insurance - to cover claims brought by third parties for general legal liability; e.g. negligence
  • Personal and property insurance - to cover injury or damage caused to people or property
  • Directors’ and officers’ liability- to cover directors and officers against legal liability which may arise out of their role.
  • Volunteer insurance - to cover volunteers for personal injury and public liability while carrying out work.
  • Building insurance - to cover the owner of the physical premises against events such as fire, storm and vandalism.
  • Legal expenses - to cover the cost of defending legal rights in relation to disputes.
  • Fidelity guarantee - to cover against misappropriation of funds by employees or committee members.
  • Commercial vehicles - to cover commercial vehicles for theft, fire, accident.

Compulsory insurance

Some insurance cover is compulsory under applicable laws and an incorporated association should consult a qualified adviser (such as an insurance broker or lawyer) to determine its compulsory insurance obligations.

For example, it is compulsory for an incorporated association that employs staff to have workers' compensation insurance.

In addition, in some cases, a financial institution providing financial assistance to an incorporated association will insist that the association has certain minimum levels of insurance cover, such as public liability cover and professional indemnity cover.

Public liability insurance

Public liability insurance generally covers claims brought by third parties against an incorporated association in respect of personal injury or property damage that may arise out of the activities of the association.  This is particularly important for associations that interact with the public (eg at premises open to the public or at public events, such as sporting activities).

Deciding on insurance

Insurance may become an increasingly large component of an incorporated association's expenses.  Although it may be tempting for an incorporated association to decide that certain non-compulsory insurance is unnecessary, therefore reducing insurance expenditure, some non-compulsory insurance may be essential to the future viability of the association. 

An incorporated association should consider the cost of non-compulsory insurance against the risks covered by that insurance in the context of the activities carried out by the association.

An incorporated association may wish to engage a qualified insurance broker to assist it to put in place an insurance programme that suits its requirements.  Whether using a broker, obtaining insurance directly or obtaining insurance by any other means, it is important for an incorporated association to discharge its duty of disclosure to the insurer prior to obtaining insurance.  The insured (i.e. the incorporated association) is under a legal duty to disclose to the insurer any matter known to it – or that a reasonable person in the circumstances of the insured could be expected to know – relevant to the decision of the insurer whether to accept the risk and if so on what terms. (This is the same duty of disclosure that is required by any person arranging his or her home or motor vehicle insurance.)

A failure by an incorporated association to discharge its duty of disclosure to an insurer could enable the insurer to reduce the amount paid in respect of a claim or even decline to pay the claim altogether.

As a word of caution, an incorporated association should note that an insurance policy might not entirely cover the risk that is being insured for. Often, a policy will be subject to exclusions (eg for fraud), be limited to a maximum aggregate claim amount or a maximum amount per claim, and will often require excess payments to be made on claims.

An incorporated association should conduct, on a regular basis, a thorough review of its activities and risks in order to assess whether its existing insurance program provides appropriate cover.

Exclusions

Exclusions in insurance policies are those events, occurrences or types of damage or loss not covered by a policy.  Exclusions can vary from one insurance policy to another. An incorporated association should pay special attention to any exclusions when considering the type and extent of cover. 

Some examples of common exclusions are:

  • workers' compensation and professional indemnity cover may not extend to volunteers;
  • the loss of cash kept on premises may not be covered;
  • items valued over a certain amount may not be covered; and
  • the use of private cars for work purposes may not be covered under the owner's private car insurance.

Risk management

‘Risk management’ is a term used to describe a formal and structured process of identifying and managing risk.  Generally speaking, it involves assessing, and then actively managing, an organisation’s potential exposure to loss, damage or litigation.

Buying insurance is one part, but not the only part, of a risk management programme.  By paying the premium, the insured transfers some of its risk to a third party insurer.  In many cases, effective practical strategies for reducing risk, such as safety protocols and security devices, can work together with insurance to reduce risk exposure.  Indeed, some risk management strategies may result in reduced insurance costs by reducing the likelihood of claims.

Basic risk management steps

There are a number of basic steps involved in the process of managing an incorporated association's risks.  It is essentially a process of identifying each risk, evaluating each risk, deciding what actions need to be taken to address or reduce each risk and constantly monitoring and reviewing the process.

  1. Identify each risk.  This requires a thorough analysis of the association's operations, activities and business.  The aim is to identify what goes on in the association, what risks it is exposed to, what kinds of events occur that may present risks, and so on.
  2. Assess risks and consequences.  Assessment requires balancing the likelihood of a risk occurring against the potential consequences.  The association needs to decide which risks it will act upon and which risks it will ignore.  For example, an association may choose to avoid a risk by not continuing with a particular activity, or determine that the risk is so unlikely to occur that it does not require any action.
  3. Treat risks.  The association then needs to decide how it will deal with and manage each relevant risk.  This involves considering any existing risk control measures (eg insurance, security alarm), deciding whether the existing measures are adequate, considering any additional measures that may be required and so on.  This is also an exercise in balancing cost with consequences.
  4. Monitor and review the process on a regular basis.  It is important to regularly review if there has been any change in the association's risk position and, if necessary, repeat and review the process set out above.

Potential areas of risk

It is almost impossible to produce an exhaustive list of all potential risks that may apply to an incorporated association, as there are so many variables. 

However, common examples of categories of risk include:

  • individual and public health and safety;
  • security considerations (eg premises, records, computers);
  • financial and administrative risks;
  • reporting and legal requirements;
  • professional liability;
  • general liability;
  • potential for error or accident;
  • potential for damage; and
  • potential for litigation.

Some hints when considering insurance and risks

  • Obtain professional advice and assistance from a qualified insurance broker.
  • Investigate group insurance schemes (e.g. National Professional Indemnity Scheme for Community Legal Centres).  Group coverage policies may reduce premium costs.
  • Check if group insurance coverage is part of a funding source that already covers the association.
  • Regularly check insurance cover and policies to ensure that you are not under‑insured or over-insured.
  • Consolidate policies where possible – packaged insurance may be more cost effective than individual cover.
  • Undertake regular risk management to identify, assess and manage risks.
  • Ensure that all office bearers, committee members, management and staff are aware of their legal responsibilities.
  • Ensure that all officers, management and staff receive ongoing training on professional standards of conduct and occupational safety and health.
  • Ensure that relevant policies and procedures concerning risks (e.g. professional standards and health and safety) are developed, implemented and maintained.
  • Enhance security and fire safety mechanisms (e.g. locks, fire extinguishers, fire safes, sprinklers).

Occupational safety and health and workers’ compensation

Occupational safety and health is a key area of ethical and legal responsibility for incorporated associations. Incorporated associations generally owe an obligation under both common law (duty of care) and the Western Australian occupational safety and health law to any volunteers, employees, contractors and visitors to their workplaces, under both common law (duty of care) and the Western Australian occupational safety and health law, to provide and maintain a safe and healthy working environment. Safety and health includes addressing potential safety and health risks from the physical working environment, as well as potential psychological and emotional harm from, for example, exposure to workplace bullying or workplace violence.

Associations are also required to comply with relevant local government planning, and safety and health by-laws, and any State or Commonwealth legislation or regulations that may apply in relation to specific industries or activities such as childcare, residential care and aged care. This chapter provides a general summary of the duties of care under Western Australian legislation, the role of WorkSafe, and matters relating to workers' compensation that may be relevant for incorporated associations.

Key Points

  • Incorporated associations are required to provide a safe and healthy working environment for employees, contractors, volunteers and visitors.
  • There are a range of specific obligations for all parties under the Occupational Safety and Health Act 1984 and Regulations (the OSH Laws).
  • WorkSafe is the division of the Department of Mines, Industry Regulation and Safety that administers the OSH Laws.
  • Inspectors appointed by WorkSafe have broad powers, including entering and inspecting workplaces.
  • The WorkSafe Western Australia Commissioner must be notified of all work related injuries involving fatal and some serious injuries, and certain diseases.
  • Incorporated associations that engage workers must have workers' compensation insurance.
  • Workers’ compensation is regulated by legislation and administered by WorkCover, a State Government statutory authority.
  • Volunteers are not covered by workers' compensation insurance.
  • If a worker is injured while at work, the employer and worker are required to complete and submit prescribed documentation.

Occupational safety and health

The applicable Western Australian legislation is the Occupational Safety and Health Act 1984 and its associated Regulations (collectively referred to as the OSH Laws).

The objects of the Occupational Safety and Health Act 1984 include to:

  • promote and secure the safety and health of persons at work;
  • protect persons at work against hazards;
  • assist in securing safe and hygienic work environments;
  • reduce, eliminate and control hazards to which people are exposed at work; and  
  • foster co-operation and consultation between employers and employees in the formulation and implementation of safety and health standards.

An incorporated association is required to comply with OSH Laws by providing a safe and healthy work environment. It is important for incorporated associations to take note of the rights and duties in the OSH Laws, and to comply with the relevant provisions concerning safety requirements.

Duties of employers

In addition to a general duty to provide and maintain a safe and healthy work environment, under the OSH Laws, employers also have specific obligations.  In summary, those obligations include, so far as is practicable, to:

  • provide and maintain workplaces, plant and systems of work so that employees are not exposed to hazards;
  • provide such necessary information, instruction and training to, and supervision of, employees so that employees can perform their work safely;
  • consult and cooperate with safety and health representatives and other employees on occupational safety and health matters;
  • provide employees with adequate personal protective clothing and safety equipment, where it is not practicable to avoid the presence of hazards at the workplace;
  • ensure the safe use, cleaning, maintenance, transportation and disposal of plant in the workplace;
  • ensure that the use, handling, processing, storage, transportation and disposal of substances in the workplace is carried out, such that employees are not exposed to hazards; and
  • immediately notify the WorkSafe Western Australia Commissioner if an employee at a workplace suffers an injury that results in death, or an injury of a kind prescribed in the Regulations (e.g. fractured skull, spine or bones, some amputations and any injury that, in the opinion of a medical practitioner, is likely to prevent the employee from being able to work within ten days of when the injury occurred).  Access the Worksafe website to obtain information about the process involved.

Incorporated associations that engage contractors owe these obligations to contractors.

Under the OSH Laws, associations may also have obligations to people who are not employees or contractors at the workplace (e.g. volunteers, visitors), including ensuring that these people are not exposed to hazards.

Further obligations under the OSH Laws may apply depending on the nature of the incorporated association's activities.

Rights and duties of employees and contractors

Employees and self-employed people (contractors) have a responsibility under the OSH Laws to take reasonable care to ensure his/her own safety and health at work, and to avoid adversely affecting the safety and health of others.

Employees also have specific obligations under the OSH Laws.  In summary, these obligations include to:

  • cooperate with their employer to ensure that the workplace is safe and healthy (eg by complying with the safety procedures and guidelines);
  • comply with safety and health instructions provided by their employer;
  • use the personal protective equipment provided in the manner instructed by the employer; and
  • report hazards and injuries to their employer.

Employees also have some important rights under the OSH Laws. In particular, they have:

  • the ability to request that their employer have an election to establish safety and health representatives at the workplace. (Refer to the guidance note, Formal Consultative Processes at the Workplace, available at the Worksafe website for more details);
  • the ability to request that their employer establish a safety and health committee at the workplace. (Refer to the above mentioned guidance note for more details);
  • the right to receive adequate information, instruction, training and supervision so as to be able to work safely, under their employer’s general duty of care;
  • the right to be consulted about safety and health at the workplace, under their employer’s general duty of care; and
  • the right to refuse to undertake work if they have reasonable grounds to believe that working would expose them, or any other person, to a risk of imminent and serious injury or harm to health, and receive the normal pay and benefits they would be entitled to if working. However, their employer may give them alternative work and it is an offence to leave the workplace without the employer’s authorisation.

WorkSafe

WorkSafe is the division of the Department of Mines, Industry Regulation and Safety that administers the OSH Laws. It can provide further information on occupational safety and health matters, including educational materials.

WorkSafe has both an educative and compliance role. As part of its educative role, WorkSafe has various initiatives to promote understanding of occupational safety and health. For example you can find information about small business safety which may be relevant to associations on the Worksafe website.

As part of the compliance activities, WorkSafe investigates and prosecutes breaches under the OSH Laws and conducts compliance campaigns. Inspectors, who are appointed officers of WorkSafe, have broad powers to visit and inspect workplaces. It is an offence to interfere in the performance of an inspector's functions.

Generally, where an inspector is of the opinion that there has been, or may be, a breach of the OSH Laws, or there is activity which may occur, or is occurring, at a workplace which involves, or may involve, the risk of injury or harm to health, he or she may do a number of things.  An inspector's powers include issuing verbal directions, improvement and prohibition notices, and initiating a prosecution under the OSH Laws. Any notices issued by a WorkSafe inspector, including copies, must be displayed in a prominent place at, or near, workplaces affected by each notice.

Reporting accidents

In the first instance, all accidents and incidents (near misses) should be reported to the association (the employer) as soon as possible, via the relevant supervisor or manager. As a matter of best practice, a written report should be made, setting out all the relevant details of the accident.

The WorkSafe Western Australia Commissioner must be notified of all work related injuries that result in a death or fracture of the skull, spine, pelvis, any bone in the arm (other than in the wrists or hand) or the leg (other than a bone in the ankle or foot), some types of amputations, the loss of sight in an eye or an injury that, in the opinion of a medical practitioner, is likely to prevent the employee from being able to work within ten days of when the injury occurred. Certain infectious and occupational diseases must also be notified, including viral hepatitis. The OSH Laws deal with the notification requirements for work related injuries. Information about the processes involved is available from the WorkSafe website.

Workers' compensation

Not for profit organisations work hard to serve the community and provide help to those in need. But what happens when the people delivering those services are injured in a workplace accident?

In Western Australia, all workers must be covered by a valid workers’ compensation insurance policy. The definition of a ‘worker’ is broad and extends to any ‘contract of service’ or ‘contract for service’ between a worker and employer.

If an association is unsure whether its staff are classified as ‘workers’ or ‘volunteers,’ it should contact its insurer or insurance broker to confirm the organisation has the right coverage.

Any individual, whether paid or volunteer, who fulfils a governing role for a incorporated association can be held personally liable for the costs of an uninsured workers’ compensation claim and could face prosecution for non-compliance with the duty to insure. These costs can total hundreds of thousands of dollars, so it is simply not worth the risk.

WorkCover WA is the government agency responsible for overseeing and regulating the workers’ compensation and injury management scheme in WA. For more information contact WorkCover WA’s Advice and Assistance line on telephone 1300 570 937 or visit workcover.wa.gov.au/employers

Volunteers

People volunteer for a variety of reasons, ranging from people wishing to develop skills and gain work experience, to those who want to meet people and socialise. This chapter briefly outlines some of the key issues relating to engaging volunteers in the activities of incorporated associations. 

Key points

  • Volunteers (either as members or non-members) can do and participate in a wide variety of roles within an incorporated association.
  • Incorporated associations should be aware of their rights and responsibilities when engaging volunteers.
  • Generally an incorporated association will be liable for anything a volunteer does in good faith when working for the association. 

Statistics released by the Australian Bureau of Statistics, revealed that in 2014 5.8million people (31%) in  Australia had undertaken voluntary work for organisations, including incorporated associations, in the previous 12 months. Many associations would not be able to function without the assistance of their volunteers.

Volunteering Western Australia

Volunteering Western Australia is the group that acts as the peak body for volunteering in this State. It supports and promotes the role of volunteers in organisations, and through its website and publications, provides both volunteers and organisations with a range of useful information on volunteering in general, volunteering opportunities, and the rights and responsibilities of both parties.

The content of this chapter draws heavily from the Volunteering Western Australia website.

Volunteer agencies will also find the Code of Practice a useful document. This can be downloaded from Volunteering Western Australia. 

Volunteering Western Australia:
City West Lotteries House
2 Delhi Street
West Perth WA 6005
Telephone:    (08) 9482 4333
Website: www.volunteeringwa.org.au

Principles of volunteering

Volunteering Western Australia describes a number of principles of volunteering, including:

  • volunteer work is unpaid;
  • volunteering is always a matter of choice;
  • volunteering is an activity performed in the not-for-profit sector only;
  • volunteers do not replace paid workers or constitute a threat to job security of paid workers; and
  • volunteering is a legitimate way in which citizens can participate in the activities of their community.

Role of volunteers

Volunteers (either as members or non-members of the incorporated association) can and do participate in a wide variety of roles within incorporated associations.

Examples include voluntary:

  • bookkeeping;
  • administrative support;
  • professional services (e.g. free legal or accounting advice);
  • participation on sub-committees;
  • participation in, or co-ordination of, activities and events run by the association;
  • maintenance services;
  • organisational advice;
  • direct service delivery;
  • fundraising; and
  • lobbying.

Rights and responsibilities of volunteers

Volunteering Western Australia has developed a list of volunteer rights and responsibilities which include:

Volunteers have a right to:

  • choose the types of activity in which they wish to be involved;
  • be adequately covered by insurance;
  • receive orientation, training and ongoing support;
  • receive reimbursement of authorised out-of-pocket expenses; and
  • say ‘no’ when they cannot commit to a task.

Volunteers have a responsibility to:

  • work in accordance with health and safety laws;
  • work in accordance with instructions and rules (of the association);
  • notify the association if they are unable to attend work;
  • be willing to undertake training and supervision;
  • maintain confidentiality and be non-judgemental; and
  • say 'no' when they cannot commit to a task.

Rights and responsibilities of incorporated associations

Volunteering Western Australia also sets out a list of rights of agencies (in this case, incorporated associations) engaging volunteers, which include the right to:

  • assess the volunteer's capabilities and allocate suitable tasks for them;
  • plan and facilitate volunteer training;
  • reassign volunteers to appropriate work;
  • supervise volunteers and give feedback; and
  • decline to use volunteers in certain capacities.
  • Similarly, a list of responsibilities of agencies/associations engaging volunteers includes the responsibility to:
  • empower volunteers to meet their own, as well as the association's, needs;
  • offer volunteers work opportunities that are appropriate to their skills, experience and aspirations;
  • provide volunteers with clear duty statements;
  • provide volunteers with orientation training;
  • offer volunteers training and support to meet their goals;
  • implement procedures to ensure volunteer safety and well-being;
  • offer reimbursement for out-of-pocket expenses; and
  • recognise the value of contributions made by volunteers.

Recruiting volunteers

Many incorporated associations are run entirely by volunteers. Although volunteers are not paid and are not normally classified as employees for the purpose of employment and taxation laws, incorporated associations generally owe their volunteers a duty of care in relation to the work they undertake for the association. There are additional legal obligations imposed under the Occupational Safety and Health Act 1984 (Occupational Safety and Health and Workers’ Compensation).

It is important for incorporated associations that intend engaging volunteers to:

  • determine the association's volunteering needs;
  • determine how volunteers will fit within the association’s structure;
  • determine appropriate selection criteria and procedures in relation to the engagement and management of volunteers; and
  • provide a safe work environment, including the provision of appropriate support, training and supervision.
  • Some questions for incorporated associations to consider when deciding to engage volunteers:
  • What different roles will volunteers play in the association? How will the roles be documented?
  • What risk management and/or insurance issues need to be considered?
  • What expectations does the association have of volunteers?
  • How will volunteers be recruited and selected?
  • How will the volunteer arrangement between the association and its volunteers be documented, if at all?
  • How will volunteers be orientated and inducted into the association?
  • What will this induction include?
  • What policies and obligations do volunteers need to be aware of? (For example: anti-discrimination policies, conflict of interest policies, and occupational health and safety policies).
  • What resources will volunteers require?
  • How will tasks be assigned to volunteers? Who will supervise and direct their work?
  • What grievance procedures apply to volunteers?
  • What volunteer expenses will be reimbursed? How?
  • How (and when) will the association review its responsibilities in relation to volunteers?

Volunteer liability and insurance

In certain circumstances, the Volunteers and Food and other Donors (Protection from Liability) Act 2002 relieves volunteers of incorporated associations from civil liability for acts done in the course of their volunteer work, and transfers that liability to the incorporated association. Generally speaking, the incorporated association will be liable for anything a volunteer does in good faith when doing work organised by the association.

An association will generally not be liable for acts of volunteers where the volunteer:

  • acts outside the scope of the work organised by the association;
  • acts contrary to instructions given by the association; or
  • is unable to do their work in a proper manner because his or her actions were significantly impaired by alcohol or non-therapeutic drugs.

The potential liability of an incorporated association under this legislation highlights how important it is for associations to have, and implement, policies in relation to volunteer work and to provide volunteers with adequate training and supervision.

Sporting and recreational clubs

As a group, sporting and recreational clubs represent the largest number of associations incorporated in Western Australia.  They vary in size and complexity, and offer a diverse range of competitive, recreational, professional and amateur activities.  This chapter provides an overview of some of the issues that concern sport and recreational associations.

Key Points

  • Incorporated associations are required to have a set of rules that comply with the Associations Incorporation Act 2015.  These rules are often referred to as the Constitution.  Additional rules can be included in a set of by-laws.
  • It is compulsory for incorporated associations to keep an up-to-date register of all its members, including children.  The register must be made available to association members for inspection upon request.
  • A priority for sport and recreational associations is to ensure that safety rules and procedures are implemented and to be protected against liability.  It is very important to ensure that all members and participants are fully informed of the safety rules and requirements.
  • Parents must give their consent, preferably in writing, for children to participate in sports and recreational activities.
  • Sport and recreational associations must ensure that they have adequate insurance.

Eligibility for incorporation

Sport and recreational groups that intend to operate as not-for-profit associations are generally eligible for incorporation under the Associations Incorporation Act 2015.  This does not mean that sports clubs cannot sell club merchandise, charge admission fees for sporting fixtures, or make a profit from their activities.  No proceeds may be distributed to the members or former members of the club.

Rules of association and by-laws

All groups applying to become an incorporated association are required to adopt and submit a set of rules of association (also known as the ‘constitution’) to Consumer Protection. 

The rules of association regulate the overall management of the incorporated association.  These rules provide for matters such as management committee elections, meetings and financial records, amongst others.  The minimum matters that need to be dealt with in the rules are prescribed by the Act.

Significantly, an association’s rules may only be amended by means of a special resolution of the members. 

However, an associations will often have additional needs and requirements that are specific to its organisation and day-to-day management that might also be included in its rules.  To keep the rules of association simple and manageable, sporting associations in particular, often find it easier and more efficient to set up these additional rules as by-laws.  

By-laws are secondary rules that expand on the rules of association and cover non-administrative matters that do not need to be included in the rules of association.

Typically, by-laws might deal with matters, such as the following:

  • club colours
  • uniforms and dress codes
  • competition rules
  • sporting fixtures
  • player eligibility
  • selection of players
  • coaching regulations
  • awards
  • supply of liquor
  • a code of conduct
  • tribunals

In order for by-laws to be lawfully effective the rules of association should include a simple clause, referring to the addition and amendment of by-laws.
  
For example:

The management committee shall have the power to make, alter and rescind any by-laws that it considers necessary for the effective administration of the association, provided that no by-law may be inconsistent with the rules of association.

Authorising the committee to make and change by-laws means they can be kept relevant and current without the need for approval by members at a general meeting.  It is important that members are kept informed of any amendments – no less frequently than at each Annual General Meeting.  There is also no legal reason why changes to by-laws should not be under the control of the members, if that is desired.  The by-law clause in the rules would need to reflect that.

Note: apart from the clause that authorises them, the by-laws themselves are not intended to form a part of the rules of association that are subject to the Act.  By-laws are separate from the rules and can be easily amended within the association. 

Do not attach by-laws to rules that are submitted to Consumer Protection.  If they are, it is possible they will become legally part of the rules.  They can only be amended by a special resolution of members and then lodged with Consumer Protection before they become effective. This undermines one of the primary reasons for establishing by-laws.

The Department of Local Government, Sport and Cultural Industries - Sport and Recreation has a useful  website that provides an example of a constitution (rules) specifically designed for sporting groups.

Department of Local Government, Sport and Cultural Industries - Sport and Recreation:

Postal address: PO Box 329, Leederville WA 6903
Telephone: (08) 9492 9700
Email: www.dsr.wa.gov.au/contact
Website: www.dsr.wa.gov.au

Membership and members’ register

It is compulsory for an incorporated association to keep an up-to-date register of all its members, including children where they are members.  The members’ register must list each member's name and postal or residential or email address.

The register must be made available to members for inspection upon request.  The member may also make a copy of all or part of the register.  The register is not required to be available to non members, unless the non-member has legal authority such as a warrant.

Other than member names and addresses, no other information is required for the register.  Associations cannot insist on members providing other personal information for the purpose of the register.  

If an association has a genuine need for keeping additional information about members, it is recommended a separate list of the information is kept.  This additional list is treated with the utmost confidentiality and is not made available to any member or other person for inspection.

More detail on the members register may be found in Record Keeping.

Children as members

Parents are often genuinely concerned about the names and addresses of children being included on the members register.  One way to relieve these concerns is to have the parents (or at least one parent) join as the member(s) while the children are signed up as players or participants.  Only the names and addresses of the parents would be kept on the members register.  A separate ‘players’ register’ would need to be maintained so the club could effectively run its sporting activity.  This register would not be accessible to the general membership.

This strategy may require the rules of association to be amended to provide for a ‘players’ category and for maintenance of the players list or register.

A different concern regarding children as members is that some clubs may not have any adult members who can legally form a management committee. 

For example, Consumer Protection has encountered several sporting clubs where under their rules only children are signed up as members.  Although the parents actually run the club as a committee, they are not members of the club and therefore not entitled to form a management committee. 

All sporting and recreational clubs are advised to review their rules of association to ensure those rules appropriately distinguish between under-age players or members and adults who can realistically and lawfully form management committees.

Child Protection

An association is responsible for providing a safe environment for members and associates such as players.  Protecting young members and associates (children under the age of 18 years) against any form of abuse, harassment, maltreatment and intimidation is a priority.  Child abuse is a criminal offence and must be taken seriously. 

It is important for associations that have young members and associates and/or provide activities for children, to have a clear policy statement on child protection and procedures for reporting child abuse. 
 
A child protection policy conveys the message to all members that they have a legal duty to ensure the safety of children and that child abuse is unlawful.  Child abuse is a serious offence and inevitably leads to the expulsion of a member from the association.

Safety in sport

Many sports and recreational activities have inherent risks and dangers.  It is inevitable that injuries amongst participants will occur.  Negligence in sport accounts for a large number of legal cases.  Sports participants, officials, members and the association itself can be held legally liable (responsible) for negligent conduct that causes harm to another person.  In some cases a person may also be liable for the negligent act of another person, even though the first person did not know about the negligent act.

To establish liability in negligence for sports related injuries, the general principles of the law of negligence apply.  

Legally, a person's (the defendant’s) conduct is only negligent if it is found the person owed the injured person (the plaintiff) a duty of care, the defendant breached that duty of care, the damage (injury) was caused by that breach and that it was reasonably foreseeable to the ordinary person that the damage was a potential result of the breach. 

Each of these four elements must be present for liability to be established. 

Participants

It is established law that participants such as players, have a duty of care to other participants.  The standard of care is measured in terms of the 'reasonable person' test.  Participants are expected to behave in a reasonable and careful manner with the knowledge and skills of a participant in that situation.  If the person's behaviour falls below the standard required, the person may be said to be negligent.  This objective standard of care may be modified due to the inherent risks of a sport that participants are aware of and accept.  The standard is modified to suit the sport.  For instance, lawn bowls and tennis carry few risks compared with sports such as rugby, hockey and soccer.

A number of factors may be taken into account when determining whether a person acted as a reasonable participant.  These include the age of the participant, the nature of the sport, the level at which the sport is played, the sporting rules, the circumstances in which the sport is played, the likelihood of an injury occurring and the likely seriousness of potential injuries.

Participants are generally taken to have voluntarily accepted and consented to the risks inherent in a particular sport.  This includes the risk of injury that might arise from minor or expected breaches of the rules of that sport.

However, they do not consent to unacceptable and non-inherent risks and unnecessary dangerous play.

Participants are expected to play within the rules of the sport and any safety requirements.

Where participants infringe safety rules and regulations to a significant degree, their behaviour may amount to negligence.  Whether an act is negligent or not is determined by the facts.

In contact sports, participants consent to physical contact by voluntarily playing the sport.  If a player is injured as a result of physical contact that occurs within the rules of the game or as a result of minor or expected breaches of the rules, then the conduct is not negligent.

However, if the physical contact is dangerous, reckless or outside the type of physical contact associated with the sport, the conduct may amount to negligence. For example, punching is an inherent part of boxing but is unlawful in a game of soccer.  Unlawful physical contact in a sport can also give rise to a conviction for criminal assault and battery.  Again, whether an act is negligent will be determined on the facts of each case.

Coaches and referees

Coaches and referees owe a duty of care to participants in sports activities.  The reasonable person standard of care applies to both coaches and referees.  They are expected to do what a reasonably competent coach or referee would do in that position.  Some of the coach's duties may extend to the activities they teach and to the safety of participants.  They are expected to provide reasonable supervision and ensure that participants are properly instructed in the rules of the activity and safety requirements.  Likewise, some of the referee's duties may extend to ensuring that games are played within the rules and enforcing safety regulations.

Spectators

Spectators and bystanders are also exposed to risks at sporting events.  A sports association, officials and participants have a duty to take reasonable care not to injure or cause injury to spectators or bystanders.

Spectators and bystanders could be injured in a variety of ways such as by stray golf balls and cricket balls, racing cars leaving the track and crashing into the spectator area, errant horses, faulty equipment, grandstands collapsing and unruly behaviour.

A sporting association may be held liable for injuries to spectators if they have failed to take reasonable steps to ensure the safety of spectators or bystanders.  For a spectator or bystander to succeed in a negligence claim against the association, the four elements mentioned above must be proved.  The injured person will need to prove that the risk was reasonably foreseeable and that reasonable steps were not taken to protect spectators or bystanders.  In most cases involving sports events, the risks are reasonably foreseeable and the association and organisers must ensure that they take the necessary steps to protect spectators and bystanders.  The law also takes a pragmatic view in some matters.  For example, a spectator who is standing on the sideline at a football match and is hit by the football is unlikely to succeed in a negligence claim.  They are taken to have accepted the risk inherent in standing on the sideline.

It is also important for these sorts of associations to have public liability insurance.

Effect of the Civil Liability Act 2002

In Western Australia, the Civil Liability Act 2002 (CLA) limits liability for injury resulting from a recreational activity.  A recreational activity includes any sport, whether organised or not, as well as activities that are pursued for enjoyment, relaxation and leisure.  Therefore, the CLA will apply to many of the activities of sporting and recreational associations.

The CLA provides that a person accused of causing harm (the defendant) will not be held liable for harm caused to another person if the injured person was involved in a dangerous recreational activity and the harm is a result of an obvious risk of that activity.

A dangerous recreational activity is one that involves a significant risk of harm such as rugby and abseiling.  An obvious risk includes risks that are commonly associated with an activity, even if the risk is not very observable. 

If a risk is obvious, there is no duty to warn a person of the obvious risk.  However, a person will not avoid liability if the injured person had specifically asked for advice about the risk or the person conducting the activity is required by law to warn the person of the risk.

A person is also not liable for harm that occurs as a result of an inherent risk, such as from something that cannot be avoided by the exercise of reasonable care and skill.  For example, tackling is part of the game of rugby that can cause injury, however, the tackle must still be within the rules to avoid any liability. 

Boxers can also expect to get hurt from punches to the body, as punching is inherent to the activity.

The CLA also provides that a person (the defendant) does not owe a duty of care to a person who engages in a recreational activity if the person was warned of the risks

If a child is injured, the person who is accused of causing the harm may rely on a risk warning that was made to a parent or another person, if that parent or person is not deemed to be incompetent and the child was accompanied by the parent or other person (eg a guardian).  A risk warning reasonably warns the person about the risks involved in the activity.  A risk warning can be a general warning in oral or written form.

A person may not avoid liability by relying on a risk warning if the injured person was required to engage in the activity by the defendant (eg a compulsory school activity).

Waivers and participation agreements

It is not uncommon for sporting associations to require members to sign a waiver that indemnifies the association and its officials from any liability.  Waivers have limited value and in the case of children, parents may not sign away children's rights to safety and protection against negligent acts.  Parental consent is essential for allowing children to engage in organised sports and recreational activities.  

Parental consent forms can be extended to serve as a 'participant agreement.'  It requires parents to give permission for participation and clearly states that they and their children are aware of the dangers or risks of the activity, that they will abide by the rules of the activity and that they understand the safety requirements.  A participant agreement can also set out parents' responsibilities in terms of medical costs and insurance.

Insurance

The Insurance and Risk Management section of this guide deals with insurance matters.  Sporting groups can obtain insurance specifically designed to cover sports injuries, liabilities and events.

 The following are examples of some insurance policies for sports groups:

  • Accident and injury insurance covers players and officials (eg a coach) for injuries that occur during officially sanctioned activities;
  • Public liability insurance provides insurance cover for the association for their legal liability to participants, members, spectators and the general public during events;
  • Professional indemnity provides cover for administrators, coaches and referees while performing official duties;
  • Directors and officials insurance provides cover for directors, officers of the association and management committee members who may be sued for negligence in the performance of their official duties.  People who are involved in the management of an association are responsible for implementing legislation and policy and may be exposed to legal actions arising out of matters relating to employment, safety and health, discrimination and the financial affairs of the association.  There is no cover for intentional acts of dishonesty;
  • Contingency insurance provides cover for prize money, the cancellation of events, adverse weather conditions and the non-appearance of people;
  • Special events insurance is obtainable for a particular event such as a tournament or festival;
  • Property insurance provides cover for items such as office and sports equipment and facilities; and
  • Voluntary workers insurance provides cover for volunteers working for the association.  For example, fundraising, organising activities and assisting at events.

Sporting groups are advised to consult a specialist sports insurance broker to obtain the most suitable sports cover for the group.

Although sports groups may have a basic insurance policy, participants, members and officials should be informed of the nature and extent of the insurance cover.  Participants in particular should be advised to have their own private health insurance.

Sample Form - Participation Agreement

PARTICIPATION AGREEMENT

A MODEL SPORT AND RECREATIONAL PARTICIPATION AGREEMENT

      I/We ___________________________________ [Insert full name of parent/s or legal guardian in block letters] hereby:

  1. give consent that __________________________________________ [Insert name of child] may participate in the following activities: 
    _______________________________________________________________________________________________________
  2. confirm that the child named above does not have any medical condition that  excludes him/her from taking part in the above activity/ies.
  3. acknowledge that I/we have read and understood the rules of the activity/ies and that I/we are bound by these rules.
  4. acknowledge that I/we have a responsibility and obligation to ensure that my/our child/children understands and abides by the rules of the activity.
  5. I/we understand there are risks associated with my child's participation in the activities listed above that can result in injury.
  6. acknowledge that I/we have read and will abide by the Association's sport and recreational by-laws.
  7. acknowledge that I/we have read and will abide by the Association's Code of Conduct and Child Protection Policy.
  8. consent to the child named above receiving medical treatment and that I/we agree to reimburse the Association for all medical costs.
  9. agree that I/we have read and understood this Participation Agreement.

 

      Signature:                             Witness:                                             Date:

Copyright

Gathering, reproducing and distributing information is often an integral part of an association's business and activities.  Associations pursuing not-for-profit purposes are not exempt from copyright obligations.  Therefore, it is important for incorporated associations to be aware of copyright protection in order to protect their own material and to avoid infringing the copyright of others.  This chapter deals with some basic aspects of copyright.

 Key Points

  • Copyright refers to the protection of property rights of a creator of a work.  Copyright protection is provided under the Copyright Act 1968.  Material that is produced and published by incorporated associations may also be protected by copyright.
  • Copyright gives the copyright owner exclusive rights to control the copying and distribution of copyrighted work.
  • Copyright is infringed when the exclusive rights of the owner are violated and a copyrighted work is copied, reproduced and used without the owner's permission. 
  • Consumer Protection allows reproduction of this manual.

The information and material used by an incorporated association may be gathered from many different sources, including the Internet, and the association may itself produce its own original material. This might be in the form of documents, records, pamphlets, posters, photographs, drawings, videos, newsletters, books and magazines, to mention just a few.  The information both used and produced by an association is likely to be protected by copyright, which means that the material may not be freely copied, used or distributed.

What is copyright?

Copyright is a type of legal protection for people who express ideas or information in certain forms, such as through writing, music and visual images. Copyright protection is provided under the Commonwealth Copyright Act 1968, which confers certain property rights on the creator of such a work. There are two basic categories of subject matter that are protected:

  • artistic, literary (including computer programmes), musical and dramatic works; and
  • broadcasts, films and sound recordings.

To be protected, a work must be both original and in some tangible or material form (for example, written down or saved to a computer disk). It can’t just be an idea. Original means that the work comes from the author and that it is more than a mere copy of other material. Original does not mean it has to be a completely new invention or creation.

Even a compilation of pre-existing work may have copyright protection, if the author has combined the material in some new way (for example, a new collection of classic poetry).

When a piece of work is created, the person or organisation that owns copyright on the work can decide how the work will be reproduced and/or communicated. Copyright confers various rights allowing the copyright owner to assign, licence or even prohibit the use of their work by another party. Assigning rights gives the copyright to a new owner. Licensing allows a third party to use the material. Both can be undertaken with certain conditions or exemptions agreed to.

In Australia, copyright is automatic once an original work is written down or recorded. It does not have to be applied for, it is free, and in most cases, applies for 50 years after the creator's death.

A copyright notice such as:

© Department of Mines, Industry Regulation and Safety, 2017

It is not necessary, although it can be useful to highlight the copyright of the owner to other people.

Areas protected by copyright include:

  • written material
  • musical and artistic works
  • computer programs
  • compilations
  • film
  • recordings
  • broadcasts
  • publications
  • performances

Areas not protected by copyright include:

  • ideas
  • concepts
  • styles
  • techniques
  • information

Please note that copyright protects the way or form in which an idea or information is expressed, not the idea or information itself.

Who has copyright?

The basic rule is that the author of the work is the first owner of copyright.  For example, the author and first copyright owner is the person who wrote the material for the pamphlet or article, the person who took the photograph, or the person who made the video.  However, there are instances when the author and owner of the copyright is not the same person.  In these cases, the author is the person who creates the work and the copyright owner is the person who owns the rights in the work.  For example, an employee who writes a series of information sheets is the author and the employer is the copyright owner.

Work created by freelancers under a commissioned agreement generally places copyright with the person creating the work (the freelancer). The organisation receiving the work has a licence to use it, unless, by agreement, copyright ownership is assigned to that organisation (i.e. commissioning agency).  The agreement must be in writing and signed by all parties.  The author of a photograph is the person who took the photograph.  However, if the photograph was commissioned for a private or domestic purpose, the client is the copyright owner, unless agreed otherwise.

When an employee of an association completes work in the course of his or her employment, the association generally has the copyright.  For example, if an employee writes a newsletter for the association, or an employee designs and produces a poster, the association owns the copyright.  

Volunteers, however, usually keep copyright of any material that they create, and the association or organisation will normally have a licence or permission to use the relevant material.  If an association is unsure or concerned about this, they should seek specific legal advice.

It is often worthwhile to deal with copyright issues at the time materials are being produced. Associations that receive funding to produce a work (for example, a research report) should check what the funding agreement says about copyright.  It is possible for an association to produce some wonderful publications and resources, only to find out that the funding arrangement transfers copyright ownership to the funding body.

Infringing copyright

Copyright gives the copyright owner exclusive right to control the copying and distribution of copyrighted work.  Copyright is infringed when the exclusive rights of the owner are violated, such as when a copyrighted work is copied, reproduced and used without the owner's permission.  This includes downloading, copying and printing material from the Internet. To avoid infringement, it is necessary to obtain permission to copy and use the material from the appropriate person or organization, that is, the copyright owner.

There are some exceptions to copyright infringement.  In the education area, allowances are made to use copyright materials for research and study without permission, although there are still limits on how this can occur.  Only a portion of the material may be used and it must be used for non-commercial purposes.  Therefore, an association may use educational material within those limits for delivering community education programmes, without permission and without infringing copyright.

Community associations often share information with each other, and allow other associations to reproduce material, as long as proper acknowledgement is given.  It is important to understand that the permission to use all or part of a work cannot be assumed, even if acknowledgement is made.  This is particularly the case if the material is going to be part of a bigger work to be sold for profit.  Permission granted for one purpose is not permission to use the material for other purposes.

Some materials will detail in the work itself how the work can and can't be reproduced, in which case permission can be implied as long as the conditions are followed.

An association has received $10,000 to set up a website to promote its projects and the community.  The website consists of information sheets, a newsletter 'Progress', photographs and other promotional information.  The Association includes the following notice on its website.

'All information and material including the newsletter, information sheets, photographs and graphics that appear on this website are protected by the Copyright Act 1968.  The Copyright belongs to the Association.  Apart from fair dealing for the purpose of research, private study, criticism and review as allowed by the Copyright Act, no material may be reproduced without the permission of the Management Council.'

Copyright on the Internet

The Internet has become a vital source of information.  However, material on the Internet is also protected by copyright.  Downloading, copying, saving and printing material from the Internet are covered by copyright.  Some websites will indicate implicit permission by showing 'print' or 'printer friendly version', but that does not necessarily allow unlimited copying, nor does it mean that the material can be distributed, especially for commercial gain.  The Australian Copyright Council, for example, allows one printed copy to be made of information sheets from its website for personal and non-commercial use only. Multiple copies are required to be purchased through the Council.

Please note that, throughout this guide, you are referred to various websites to obtain additional information, forms and policies. In most cases, this information will be protected by copyright and, therefore, may not be used to reproduce multiple copies.  At most, an association will be permitted to make one copy for its own use.  The website will usually state if more copies can be made and distributed.  If in doubt, contact the organisation concerned and ask for permission to use the material.

A further warning – a large amount of material placed on the internet is there without the permission of the copyright owner (for example, many scanned articles and photographs).  Re-using that material without permission of the original copyright owner will breach copyright.

Copyright is an increasingly complex area as technology changes.  Associations should seek legal advice when unclear on copyright rights or obligations.

The Australian Copyright Council provides information and training for the public. 

Australian Copyright Council
PO Box 1986, Strawberry Hills   NSW   2012
Telephone:    (02) 8815 9777
Facsimile:    (02) 8815 8799
Email: info@copyright.org.au  
Website: www.copyright.org.au

Trademarks

Trademarks are pictures, words or symbols that identify goods or services.  Examples could include logos, labels, marketing mascots, banners, catch lines or emblems.  For example, a well-known trademark is the McDonald’s sign. 

Unlike copyright, a trademark must be registered for it to be protected.  Trademarks are protected by the Commonwealth Trade Marks Act 1995.  If an incorporated association has a particular sign or mark that identifies it and that is known to, and recognised by, the public, it is worthwhile protecting its use by registering it as a trademark.  Copying a registered trademark can breach the trademark owner's rights and should be avoided.

IP Australia, a Commonwealth Government agency, can assist with further information about registering and protecting trademarks:

IP Australia
PO Box 200
Woden ACT 2606 

Telephone: 1300  65 10 10
Translating and interpreting service: 13 14 50
Facsimile: (02) 6283 7999
Email: assist@ipaustralia.gov.au  
Email is for general enquiries only. Please see IP Australia’s electronic business rules for details of what can be sent electronically.
Website: www.ipaustralia.gov.au

The End of the Road

This chapter sets out the procedure for ending the incorporation of an association.  It also discusses the alternative forms of incorporation and how associations could arrange to transfer their jurisdiction.

Key Points

  • An incorporated association may end its incorporation by applying for voluntary cancellation or by winding up either voluntarily or by order of the Supreme Court.
  • An association can apply for voluntary cancellation if it is solvent (has no outstanding debts or other legal liabilities) and resolves by special resolution to apply for cancellation.
  • If an incorporated association has surplus property when it is cancelled, it must prepare and submit a distribution plan to the Commissioner for approval. The distribution plan describes how the surplus property is to be distributed.  It is recommended that an association wishing to cease it's activities resolves its affairs as far as possible before applying for cancellation.
  • An association may also transfer to another form of incorporated structure. These include registering as a company, an Aboriginal or Torres Strait Islander corporation or a co-operative.  The main distinctions are the purpose of the organisation and whether or not profit is to be distributed to members and if so, to what extent.

For many associations, there comes a time when the members just want to call it quits and cease the activities of the association.  Sometimes they simply walk away, leaving the incorporated entity in place without any action to bring its life to an end.

A much better option is to take formal steps to dissolve the association’s incorporation.  Cancellation is the process by which the incorporation of an association as a separate legal entity is ended.  The process involves finalising any contracts, paying debts and distributing property.

However, cancellation may not be the most suitable course for the association at the time.  

In some circumstances it may be more appropriate for the members to consider a different form of incorporation.  For example, as a company or for Indigenous groups, an Aboriginal or Torres Strait Islander corporation.

Ways of ending an association's incorporation

The Act enables association’s to choose the process for the resolution of their affairs.  Whichever best suits their particular circumstances such as:

  • voluntary cancellation (with or without assets);
  • voluntary winding up, applying the relevant parts of the corporation law; or
  • winding up by order of the Supreme Court.

Voluntary cancellation

An incorporated association can only apply for voluntary cancellation if:

  • it is solvent – having sufficient assets to pay all of its debts and liabilities; and
  • it resolves by special resolution that it should be cancelled voluntarily.

Voluntary cancellation without assets

To begin the process, the management committee must examine the affairs of the association and pass a resolution confirming that there are no outstanding debts or property.

A general meeting of the association can then be called to pass the special resolution to apply for cancellation.  More information on the requirements for a special resolution is provided in Altering the Rules

Once these steps have been completed an application for cancellation can be submitted to Consumer Protection using AssociationsOnline along with copies of:

  • the resolution passed by the management committee; and
  • the special resolution passed by the members.

The cancellation of the association takes effect from the date determined by the Commissioner for Consumer Protection and will be confirmed in writing to the applicant.

Voluntary cancellation with assets

If the association has assets or surplus property there are additional steps that must be completed in order to be voluntarily cancelled.  Surplus property refers to any assets of the association that remain after the payment of any debts or liabilities. 

Again the management committee must pass a resolution before beginning the cancellation process.  The committee must examine the affairs of the association and declare by resolution that it is of the opinion the association can meet its debts and liabilities.  The committee should draft a plan detailing how the surplus property will be disposed of.  This plan must include the name(s) of the intended beneficiary or beneficiaries for the surplus property and an estimate of the value of the property that will be received by the recipient(s).

An incorporated association’s surplus property may only be distributed to organisations which fall into the following categories:

  • an incorporated association;
  • a company limited by guarantee registered under the Corporations Act 2001;
  • an organisation that holds a current licence under the Charitable Collections Act 1946 (see Fundraising for more information);
  • an organisation that is a member or former member of the association and whose rules prevent the distribution of property to its members; or
  • a non-distributing co-operative registered under the Co-operatives Act 2009.

The members must pass special resolutions:

  • confirming that they wish to apply to voluntarily cancel the association’s incorporation; and
  • approving the plan for the distribution of the surplus property.

An application for cancellation can be submitted to Consumer Protection using AssociationsOnline along with copies of:

  • the resolution passed by the management committee;
  • the special resolution passed by the members;
  • the distribution plan as passed by special resolution by the members; and
  • a statement by the committee that the resolutions have been passed in accordance with the Act.

This application must be submitted within 28 days of the date the special resolution was passed and should be accompanied by the prescribed fee.

The distribution plan must be approved by the Commissioner for Consumer Protection before it can be implemented by the association.  When approving the plan the Commissioner will advise the association the time period within which the property distribution must be completed. 

When the association has finished distributing its property it should notify the Commissioner.  The cancellation of the association will then take effect from the date determined by the Commissioner and will be confirmed in writing to the applicant.

Process to voluntarily cancel the incorporation of a solvent association without assets:

Process to voluntarily cancel the incorporation of a solvent association with assets:

 

Cancellation of an incorporated association by the Commissioner

In those instances where members simply walk away from an association without formally finalising its affairs, the Commissioner may direct that the incorporation of the association be cancelled.  The Act provides this discretion where the Commissioner has reasonable cause to believe that the incorporated association, among other things, has been inoperative for at least 12 months or has fewer than six members. 

Where the incorporation of an association has been cancelled, any property of the association vests in the State.  The Commissioner acting on behalf of the State, has an obligation to distribute this property in accordance with the Act.  This can be a time consuming process. 

Depending on the circumstances, former members of the defunct association may have little say in how such property is distributed, although extensive efforts are made to find and consult them.

The voluntary cancellation of an association is the best way to ensure that its assets and property are distributed according to the wishes of the members. 

Reporting defunct or disbanded associations and clubs

Consumer Protection is compiling a list of associations that may be defunct (inactive or dormant for 12 months or more).  If you are aware of an association that is now defunct please use the online form to report the association to Consumer Protection.

Winding up 

An incorporated association can be wound up voluntarily if it resolves by special resolution to wind up.  A solvent association may choose voluntary winding up rather than applying for cancellation if the association has difficulties identifying or locating assets, is a party to legal proceedings or has any outstanding contractual obligations or disputed debts. 
 
Where the financial affairs of an association are complex, winding up allows the association to appoint a liquidator to manage the process of finalising its financial affairs.  It also provides a level of protection for the committee and members in the event of any subsequent claim against the association.

An association may also be wound up by order of the Supreme Court if:

  • the association was not eligible for incorporation at the time of incorporation;
  • incorporation of the association was obtained by fraud or mistake;
  • the association has fewer than six members;
  • the association has suspended its operations or has been dormant for a year or more;
  • the association is unable to pay its debts;
  • the association has engaged in activities outside the scope of its purposes, as specified in its rules or has ceased to pursue those purposes;
  • the committee of the association has acted oppressively towards members;
  • the association has refused or failed to remedy a breach of the Act or regulations within a reasonable period after notice of the contravention has been given to the association by the Commissioner;
  • the association has itself or as trustee, traded or secured pecuniary profit for its members;
  • the association by special resolution, resolved that it be wound up by the Supreme Court; or
  • the Supreme Court is of the opinion that it is just and equitable that the association should be wound up.

An application to the Supreme Court to wind up an incorporated association can be brought by:

  • the association;
  • a member of the association;
  • the Commissioner;
  • the Minister; or
  • in certain circumstances, a creditor.

Provisions of the Corporations Law apply to the process.  An incorporated association should always consider seeking legal advice.

Types of incorporated structures

There may be circumstances in which members of an association want to carry on. For one reason or another, they cannot carry on as an incorporated association, or there may be advantages in moving to another jurisdiction. For example, an association wanting to expand its activities into other States may prefer to be incorporated as a company, regulated by Commonwealth authorities. 

The Act contains provisions that allow the Commissioner to facilitate a transfer to another jurisdiction.

There are a number of options for incorporation available, depending on the purpose, objectives, nature and structure of the group. The following are examples of incorporated structures:

  • an incorporated association;
  • a co-operative company;
  • an Aboriginal or Torres Strait Islander corporation; and
  • an incorporated company

Note: Incorporated associations and co-operatives are registered under State laws, while Aboriginal or Torres Strait Islander corporations and companies are registered under Commonwealth laws.

Incorporation under the Corporations Act 2001

An organisation wishing to operate for profit or conduct its activities anywhere in Australia can incorporate as an Australian company under the Corporations Act 2001.

Organisations can incorporate as either a public or private company. Private companies (proprietary companies) cannot have more than 50 members and are not able to attract investment from the general public. Public companies can raise capital by offering shares to the public and there is no restriction on the number of members (shareholders). For these reasons, public companies are subject to more stringent disclosure and reporting requirements under the Corporations Act 2001 than proprietary companies.

There are four types of companies:

  • Public no liability company. No liability companies can only be used for mining purposes.
     
  • Unlimited company with share capital. Unlimited companies with share capital can be public or proprietary. This type of company is often used for pooled investments because it is easier for members to withdraw their investment capital from this type of structure. The disadvantage is members are personally liable for the debts of the company.
     
  • Company limited by shares. A company limited by shares can be public or proprietary and is often used for business purposes. Members' personal liability is limited to any unpaid subscription price for their own shares in the company.
     
  • Public company limited by guarantee. A company limited by guarantee must be a public company and is therefore subject to the more stringent disclosure and reporting requirements for public companies under the Corporations Act 2001. Companies limited by guarantee cannot issue shares. This is an advantage for not-for-profit organisations with a fluctuating membership as members do not have to buy shares in the company.

    Like a company limited by shares, this company structure limits liability of members. Instead of being limited to the amount payable for shares issued, liability is limited to the amount agreed to in a guarantee (e.g. the membership fee). However, members only need to contribute the guaranteed amount if the company is wound up. The company must include 'Limited' or 'Ltd' at the end of its name. This requirement may be waived for a not-for-profit organisation.

    Another requirement is that, as a public company, a company limited by guarantee must open its registered office for at least three hours each business day. If this requirement causes difficulty, arrangements could be made with a professional business (e.g. an accounting or law firm) to use their office as the company's registered office.

In general, companies have greater scope than incorporated associations in the activities that they can undertake.

The main issues with becoming a company are that companies are more highly regulated than other entities, and incorporation can also be expensive (at least $1000) and involve higher ongoing costs.

Registration as a co-operative company

A co-operative is a legal entity created, owned and controlled by its members. Members benefit by sharing and using the co-operative's products and services. 

Co-operatives can be set up for a wide range of social and economic activities such as retail, agriculture, irrigation, marketing and taxi services.  There are different types of co-operatives to suit different business needs.  A distributing co-operative has a share capital and may give returns or profits to members.  A non-distributing co-operative may or may not have a share capital and cannot give any returns or profits to members (other than the nominal value of shares). 

Sometimes, after an association becomes incorporated its circumstances have changed in one way or another:

  • Is the association undertaking new activities? 
  • Has the association started focusing more heavily on what was originally a secondary activity? 
  • Does the association wish to start distributing its profits in a different way?

If the association is evolving in a significant manner, the incorporated association’s structure may no longer be the most appropriate structure for the organisation. 

The good news is that there are options available for the incorporated association if this is the case.  It may be decided the association is better suited to the structure of a co-operative and would operate more effectively if it transferred from being an incorporated association to a co-operative company.  

The table below highlights some of the similarities and differences between incorporated associations and co-operatives to help decide if a co-operative structure would be more appropriate way to continue on.

For further information on any facet of the application process please contact Consumer Protection on 1300 30 40 74 or visit www.commerce.wa.gov.au/co-ops.

  Incorporated Association Co-operative Company
Associations Incorporation Act 2015 Co-operatives Act 2009
Trade for profit? Yes, able to trade and generate a profit but cannot distribute to members. Yes, may undertake trading activities to generate a profit.
Legal capacity and powers of an individual? Yes Yes
Can acquire property in entity's own name? Yes Yes
Financial benefit to members? As a not-for-profit entity any profits must be used to further the objects of the association. No financial benefits can be distributed to members.

May share in the resources and assets of the co-operative and benefit from its activities.

Members of distributing co-operatives may also receive direct distributions of profits.

Minimum number of members? 6+ members.

For a co-operative group: 2+ members. 

For a co-operative: 5+ active members.

Minimum number of directors or office bearers? No set number.  The rules must outline the structure of the management committee. No set number.  The rules must outline the structure of the board.  However it is recommended that the number of directors is not less than three, at least two of whom must be resident in Australia
Financial reporting obligations? Required to present annual accounts to members at every AGM. Required to present annual accounts to members at every AGM.  Annual report needs to be lodged with Department within 28 days after AGM. 
Audit requirements? Tier 2 associations must have accounts reviewed and Tier 3 associations must have accounts audited annually.  Small co-operatives with limited revenue, assets and employees do not need an audit.  All other co-operatives require one.
The Rules / Constitution? Rules should include all matters in Schedule 1 of the Act.  Associations can create their own rules or adopt the model rules. Rules should include all matters in Schedule 1 of the Act.  Co-operatives can create their own rules or may wish to adopt the model rules.

 

Incorporation under the Corporations (Aboriginal and Torres Strait Islander) Act (2006)

The Corporations (Aboriginal and Torres Strait Islander) Act (2006) provides a simple way for Aboriginal or Torres Strait Islander groups to incorporate. 

Eligibility for membership is limited to Aboriginal or Torres Strait Islander persons and their spouses if the spouses meet the membership requirements in the rules.  Some Aboriginal or Torres Strait Islander corporations may make provision in their rules for associate membership.  This allows those persons, who are not entitled to become full members under the membership rule, to become associate members.  Associate members have the same rights and responsibilities as a member. They are not entitled to vote at meetings of the corporation or stand for election to the governing committee.

Unlike incorporated associations, Aboriginal or Torres Strait Islander corporations allow groups to share profits and engage in trading activities that incorporated associations are restricted from doing.

Office of the Registrar of Indigenous Corporations 

Assistance and advice on forming an Aboriginal or Torres Strait Islander corporation is available from the Office of the Registrar of Indigenous Corporations.

PO Box 2029   WODEN    ACT   2606
Telephone:    1800 622 431
Email:    info@oric.gov.au
Website:    www.oric.gov.au

Transferring to another jurisdiction

The Commissioner for Consumer Protection has authority to approve an incorporated association’s transfer into a company limited by guarantee, an Aboriginal Corporation or a Co-operative.

Steps for transfer of incorporation

  1. Decide on the whether the change of corporate structure is suitable and obtain approvals if relevant, from government funding agencies, affiliated bodies or accreditation bodies or any other entities where existing statutory or contractual obligations are currently held.
  2. Send a notice in accordance with the current rules of the meeting to transfer incorporation by special resolution to ALL members, whether they have voting rights or not.
  3. Convene the meeting and pass the changes by special resolution.
  4. Submit the application for approval to transfer incorporation under another law using AssociationsOnline and a copy of the special resolution within one month of the meeting. The application should be accompanied by the prescribed fee and the following information:
    • a statement as to the reasons for the intended transfer;
    • a statement as to whether the entity to which the association intends to transfer is subject to rules that prohibit the distribution of profits to that entity’s members;
    • a statement declaring that the association’s creditors are not likely to be materially prejudiced by the transfer; and
    • if the association receives funding, evidence that the association’s funding bodies have been advised of the proposed transfer.
  5. If approval to transfer is granted, make an application within the approved timeframe to the relevant regulatory body.
  6. Once registered with the relevant regulatory body, submit to the Department copies of the certificate of registration.

Things to consider before transfer

A change in corporate structure from the Associations Incorporation Act 2015 to the Corporations Act 2001 (Corporations Act) may affect any existing statutory or contractual obligations with government funding agencies, affiliated bodies or accreditation bodies.

Any existing property, rights or obligations may not be recognised despite section 100(2) of the Act which provides that transfer of incorporation does not affect the identity of the association which is to be taken to be the same body before and after the transfer of incorporation.

Consequently associations should consider what approvals, if any, they should obtain before calling a general meeting of members to consider a change in corporate structure.  

Associations are responsible for making their own enquiries as the Department of Commerce cannot do so on their behalf.  Associations should consider obtaining legal advice before embarking on this process. 

Examples of arrangements which may be affected and notifications which should be made or approvals sought are:

  • Associations that have been appointed as trustee of trust land or hold a lease should contact the relevant regulatory body to ensure their tenancy arrangements will not be affected by their proposed change of corporate structure.
  • Associations that own land should make enquiries as to the process of updating the title to reflect the change of corporate structure.
  • Associations that have gaming or liquor licences should contact the Department of Local Government, Sport and Cultural Industries - Racing, Gaming and Liquor to ascertain if their licences will affected by their proposed change of corporate structure.
  • An association legislated under the School Education Act 1999 (WA).  For example school councils, non-government schools, parents and citizens’ may require prior approval from the Minister of Education prior to passing the passing of the special resolution to transfer.

Important Information about applying to transfer to a company limited by guarantee

It is recommended that associations seeking to transfer to the Corporations Act 2001 should first apply to Australian Securities and Investments Commission (ASIC) to reserve the name before submitting the application.  

Once the application for approval to transfer incorporation under another law has been approved by Consumer Protection.  An application using the ASIC Form 202 - Application for registration of a body corporate as an Australian company must be made.

You should ensure that the company limited by guarantee complies with the reporting and regulatory requirements of the Corporations Act.  Detailed information on the requirements of setting up and running a company limited by guarantee can be found on www.asic.gov.au.  ASIC should be contacted for further information. 

Although the transfer process is relatively straightforward, there are several steps required and it is recommended that associations first contact the Consumer Protection Associations Branch on 1300 30 40 74 to find out how best to proceed. 

Amalgamating existing incorporated associations

There may be situations where it makes sense to merge the activities of two or more incorporated associations together and continue on as a single incorporated association.  This process is known as amalgamation.

To begin the amalgamation process it is necessary for each of the merging associations to pass its own special resolutions confirming the:

  • terms of the amalgamation;
  • name and objects of the new group; and
  • proposed rules for the new group 

More information on the requirements for a special resolution is provided in Altering the Rules

Once the above process has been completed, an application to amalgamate the associations should be submitted to the Department of Commerce using AssociationsOnline along with the prescribed fee.
 
If the Commissioner is satisfied that the:

  • required special resolutions have been passed in accordance with the Act;
  • proposed new body is eligible for incorporation; and
  • rules of the new body comply with the requirements of the Act,

a certificate of incorporation will be issued for the new body and each of the amalgamating incorporated associations will be automatically cancelled. 

Transfer of amalgamating associations’ property and liabilities

Once the new body has been incorporated:

  • the property of all the former associations vest with the new incorporated association;
  • the rights and liabilities of the former associations become the rights and liabilities of the new incorporated association;
  • any proceedings by or against the former associations that existed immediately prior to the incorporation of the new association may be continued by or against the new body; and
  • any pre-existing agreements of the former associations will apply to the new incorporated association (unless the agreements state otherwise).

Insolvent associations

An insolvent association is one that is unable to pay its debts when due for payment.  An insolvent association cannot apply for cancellation or be wound up voluntarily.  It will need to make an application to the Supreme Court to be wound up.

If there is a concern that an association may be insolvent, it is recommended that no further debt is incurred until the financial position of the association has been established.

If it is not possible to restructure, refinance or obtain additional funding it may be necessary to appoint a voluntary administrator or contact a liquidator. 

Liquidation is the orderly winding up of an organisation’s affairs.  It involves realising the organisation’s assets, cessation or sale of operations and distributing the realisation proceeds among its creditors.

Voluntary administration involves an external administrator investigating the organisation’s affairs and providing a recommendation to the creditors.

If the association is unsure where to begin it is recommended to do the following:

  • Make a list of all possible creditors and how much is owed to each.
  • Arrange to have the association’s accounts audited.
  • Contact creditors and see if an agreement can be reached regarding the debt.
  • Discuss the situation with a finance professional or a lawyer. 

Any association that may be insolvent is encouraged to seek professional advice to determine its rights, obligations and options.

Becoming an unincorporated association

Where an incorporated association has decided to wind up, there may be some members who wish to carry on some or all of the old association’s activities.

Despite the many benefits of being an incorporated entity, it is still possible to undertake a wide range of activities under the status of an unincorporated association.  The major disadvantage to operating in this way is members become personally liable for any debts or liabilities that the group might incur.

If this course of action is being contemplated, the old association’s assets or property cannot in general be handed on to those running the unincorporated association.  This could only occur if it can be established that the unincorporated association was formed for a charitable purpose.  There may be legal objections to such a distribution.

Even if an association chooses to continue in an unincorporated form, the group should still seek advice about the organisation's compliance requirements in relation to matters such as taxation, occupational safety and health and employment awards. 

Although this guide primarily addresses statutory requirements for incorporated associations in Western Australia, much of the information could be used as a guide for running an efficient unincorporated association.

Contents

INTRODUCTION TO THE INC GUIDE

TRANSITIONING TO THE ASSOCIATIONS INCORPORATION ACT 2015

INTRODUCTION TO INCORPORATED ASSOCIATIONS

BECOMING AN INCORPORATED ASSOCIATION

THE MANAGEMENT COMMITTEE

RECORD KEEPING

MEETINGS

ALTERING THE RULES

GRIEVANCES AND DISPUTES

ACCOUNTS AND AUDITING

TAXATION

FUNDRAISING

GRANTS

EMPLOYMENT

DISCRIMINATION AND HARASSMENT

INSURANCE AND RISK MANAGEMENT

OCCUPATIONAL SAFETY AND HEALTH AND WORKERS' COMPENSATION

VOLUNTEERS

SPORTING AND RECREATIONAL CLUBS

COPYRIGHT

THE END OF THE ROAD