Legal Entity Status for Community Groups

From Dry Tropics Wiki
Jump to: navigation, search


Summary

A group can function in a variety of ways, but however you choose to operate, your structural, financial and workplace, health and safety responsibilities need to be carefully considered.

Although there are many exceptions, in general the two most common ways for a volunteer community group to function are either:

Unincorporated

  • Often run by an appointed coordinator – with our without a committee.
  • Unable to apply for funding independently, but may be auspiced by another organisation that can hold funds on the group’s behalf.
  • May or may not have a bank account, but are not usually registered for GST.
  • Usually without an ABN, so will need to complete a ‘Statement by Supplier’ form to receive funds.

Incorporated

  • Has a constitution.
  • Operates with a committee and holds an annual general meeting (AGM).
  • Holds a group bank account and may have a group ABN.
  • Not usually GST registered unless turning over more than $100,000 per/annum.
  • May employ project officers.

Your legal entity status means how the law will apply to your group depending on which status you choose. Your group could choose to be a company, an incorporated association or remain unincorporated. Each status comes with a set of responsibilities and conditions. When deciding on the legal status for your group, make sure you have the necessary skills and resources to comply with the legal requirements.

Unincorporated

Most groups start off as non-incorporated groups, at least until their membership base is stable, and they are agreed on their objectives. When you have gained a bit of experience in attracting grants and implementing projects, incorporation is often the next step.

An advantage of remaining unincorporated is that a funds distribution organisation can carry the financial responsibility of grant acquittal and administration. Some organisations may request an administrative fee for this, usually about 10 per cent of the total grant money.

Incorporated

Incorporation gives you some independence when you are applying for funding and grants, and entering into legal contracts as you no longer require an incorporated organisation to manage the funds on your behalf. It also comes with greater responsibilities.

Incorporation is a method of registering that gives an association legal advantages, in return for accepting certain legal responsibilities.

When you incorporate your association, it becomes a legally separate entity with the same powers as an individual. An incorporated association can own land, sign a lease and appear in court.

An incorporated association and its members are legally separate. Under normal circumstances, it provides protection to the management committee from personal liability for the actions of the incorporated association, provided they are carried out in good faith and due diligence.

However, with these benefits come obligations and responsibilities. Your incorporated association must comply with both the Associations Incorporation Act 1981 and the Associations Incorporation Regulation 1999. Your incorporated association's financial affairs will need to be audited or verified annually and financial statements lodged. Any member of the public can access copies of the documents that you are required to provide to the Office of Fair Trading, including a copy of your rules, annual returns and financial statements.

Related information

Tree planting on bank of a wetland within the Bowling Green Bay catchment 2011 © NQ Dry Tropics
Tree planting on bank of a wetland within the Bowling Green Bay catchment 2011 © NQ Dry Tropics

This is a legacy website. Content is not being updated but is kept as an archive.
Updated NRM information is now held in the NQ Dry Tropics NRM Information Portal at http://nrm.nqdrytropics.com.au/.
while corporate information about NQ Dry Tropics is held on our main website at http://www.nqdrytropics.com.au
NQ Dry Tropics Website