Incorporation as an Association
For a group of people who want to form a community organisation, the first question they need to answer is what sort of organisation they want to form. Community organisations is a general term including sporting and social groups, action groups, and welfare organisations. The most important legislation is the Associations Incorporation Act 1964 (Tas) (the Act). The Consumer, Building and Occupational Services provides comprehensive information on the process of incorporation.
The following is a brief summary of the process. To be eligible to incorporate as an association under the Associations Incorporation Act 1964 (Tas), a group must have a set of objectives and rules, at least five members and be for a purpose permitted by the Act. Section 2(1)(a) of the Act states that the types of associations which may be incorporated under the Act include those associations which are formed for the purpose of:
- religious, educational, benevolent or charitable benefit;
- providing medical treatment or attention;
- promoting or encouraging literature, science or art;
- recreation or amusement;
- establishing, managing, carrying on or beautifying a community centre;
- administering superannuation or retirement benefits schemes;
- promoting any of the above or similar purposes.
The primary purpose of the association must not be to earn profit for the association’s members. This does not mean that the association cannot provide facilities or services to its members for social, recreational, educational or other purposes. Nor does it prevent members from receiving a fair payment for services to, or on behalf of, the association, or on money lent to the association.
Payments of wages and interest must be incidental to the running of the association. An association cannot have as an object the paying of wages, salary, interest or any other financial gain to its members.
Many organisations such as ‘Meal on Wheels’ or child care centres have, as their primary activity, the provision of goods or services for which they charge. Such organisations are eligible to incorporate if their primary function is charitable, that is, if their aim is to provide relief or assistance to the public or a defined section of the public.
An association may conduct trade which helps to support its principal non-trade object. There is no problem with an association having trading or fundraising activities which are not substantial in number or value in relation to the association’s other activities, and so long as profits of those activities are not distributed to members.
Some groups that would otherwise be eligible to incorporate under the Act may have their applications refused because of their large size, or the nature of the activities.
This is to ensure that groups in positions of great trust, or who are responsible for large amounts of money or property, will have greater duties to audit and to disclose than those required under the Act. Such groups would have to seek incorporation under the Corporations Act 2001 (Cth).
How to apply for Incorporation
To apply for incorporation an existing group must hold a general meeting of members, for which the following things must be done:
- all members must be given reasonable notice of the meeting (generally 21 days), and of the fact that two special resolutions are to be considered by the meeting;
- in the notice, members must be informed that those ‘special resolutions’ are that a constitution suitable for incorporation be adopted, and that a person be authorised to apply for incorporation.
- Members should be given access to the constitution prior to the meeting. At the meeting, a quorum (as defined by any existing rule of the association, if any) should be present, and at least three-quarters of those who vote must approve a set of rules and objects for incorporation and authorise a person to apply for incorporation.The constitution adopted should cover all the rule requirements provided for in Schedule 1 ‘Model Rules for an Association’ of the Associations Incorporation (Model Rules) Regulations 2007 (Tas). Many groups find it convenient to adopt a constitution in the form of the ‘Model Rules’.
- Once the group has resolved to incorporate, and has authorised a person to apply for incorporation, the next step is to apply for incorporation.
The relevant form ‘Application for Incorporation of an Association’ must be lodged with Consumer, Building and Occupational Services. The forms are available at Service Tasmania or online.
See Consumer, Building and Occupational Services for more information on incorporation.
An association may not be incorporated under:
- a name that is identical or similar to the name of an existing company, friendly society, building society, cooperative or an existing registered business name; or
- except with the consent of the Minister, a name that in the opinion of the Commissioner is undesirable, or of a kind that the Minister has directed the Commissioner not to accept.
The Act requires an incorporated association to have the word ‘incorporated’ or the abbreviation ‘Inc’ at the end of its name. The Act also requires every notice, advertisement, cheque, receipt, or other document given or issued by the association to contain the name of the association in legible characters.
The Consumer, Building and Occupational Services website provides a table of costs. There is an ongoing yearly cost, which is the fee payable on lodgement of the annual return. The Commissioner may waive these fees if the association can establish that they cannot pay these fees. A waiver must be applied for, in writing, to the Commissioner.