Third Dimension – Amendments to the legislation for incorporated associations in New South Wales, Western Australia, South Australia and Tasmania

September, 2016

By Andrew Egri, Lawyer

A number of States have recently amended the legislation that applies to incorporated associations. Incorporated associations will be pleased to hear that, to varying degrees, the amendments reduce the regulatory burden placed on such organisations.

New South Wales

The Associations Incorporation Amendment (Review) Act 2016 No 1 (NSW) (NSW Act) makes a number of minor amendments to the Associations Incorporation Act 2009 (NSW).

The main provisions that incorporated associations should be aware of relate to:

(a) Management committee duties

The NSW Act amends the existing legislation by introducing a duty that requires each committee member to carry out his or her functions for the benefit, so far as is practicable, of the association, and with due care and diligence (for an article on that duty, see “Is Ignorance Bliss? An Examination of the Duty of Care and Diligence”).

(b) Personal liability of members

If a committee member does or omits to do something in good faith in the lawful execution of his or her functions, he or she will not be held to be personally liable.

These amendments will come into force on 1 September 2016. NSW associations should ensure they are aware of the amendments, and that their governing documents / rules are updated accordingly.

Western Australia

The Associations Incorporation Act 2015 (WA) (WA Act), which came into force on 1 July 2015, completely replaced the Associations Incorporation Act 1987 (WA). The WA Act has a number of changes that incorporated associations should be aware of, including:

(a) Financial reporting

The WA Act introduces three different levels of financial reporting and accountability for associations, which is based on their annual revenue:(i) 6 months before the critical time; or

(i) Tier 1 associations are those with revenue of less than $250,000 per annum and will not be required to have their accounts reviewed by an accountant or an auditor.

(ii) Tier 2 associations are those with revenue greater than or equal to $250,000 but less than $1,000,000 per annum, and will be required to keep accurate financial reports in line with the Australian Accounting Standards. These records must be reviewed by an accountant.

(iii) Tier 3 associations are those with revenue greater than or equal to $1,000,000 per annum, and will be required to keep accurate financial reports in line with the Australian Accounting Standards. These reports must then be reviewed by an auditor.

(b) Management committee

There are new obligations for committee members, including a:

(i) duty of care and diligence;

(ii) duty to act in the best interests of the association and for a proper purpose; and 

(iii) duty not to misuse their position or any information.

A person cannot sit on the management committee if they:

(i) are an undischarged bankrupt or whose affairs are being dealt with under insolvency law;

(ii) have been convicted of an offence involving fraud or dishonesty which has a period of imprisonment of three months; or

(iii) have been convicted of an offence in connection with the promotion, formation or management of a body corporate.

(c) Privacy

The privacy of members has been further protected by the changes to the law. The membership register is still only accessible by association members, however, the WA Act will restrict how that information can be used.

There is also greater flexibility for how members can provide their contact details to an association. A member may now provide an email address or a post office box instead of their residential address.

(d) Internal dispute resolution process

The WA Act will require that each association has an internal dispute resolution process within its rules. If a dispute remains unresolved, then the rules must set out a way for it to be heard by the State Administrative Tribunal (SAT).

(e) Amalgamation

The new law provides a process for two or more associations who wish to amalgamate into a new incorporated association. This is a similar process to that used in other incorporated associations legislation, however, it has not been used in Western Australia previously.

(f) Winding up or cancellation

There will be a simplified process whereby associations may choose between winding up (which is a more formal process using a liquidator) or cancellation of incorporation (which is a simpler process without the need of a liquidator).

(g) Contact address of association

Each association will be required to notify the Commissioner of its current address. If the address of the association is changed, the Commissioner will also need to be notified within 28 days of the change occurring.

Importantly, all associations will have three years from 1 July 2016 to ensure that either their rules comply with the new law, or to adopt the new model rules.

South Australia

The Statutes Amendment (Commonwealth Registered Entities) Act 2016 (SA) (SA Amending Act) proposes amendments to the Associations Incorporation Act 1985 (SA) (SA Act).

The amendments are expected to come into force on 1 January 2017, from which South Australian incorporated associations registered as charities with the ACNC will only need to submit information to the ACNC. However, charitable incorporated associations will continue to be regulated under the SA Act.

The SA Amending Act also reduces the regulatory burden on charitable fundraising by amending the Collections for Charitable Purposes Act 1939 (SA). Charities that previously required a fundraising licence will still be required to notify the Minister if they intend to fundraise in South Australia. However, they will not be required to go through the application and reporting requirements associated with obtaining a separate fundraising licence.

Tasmania

The Associations Incorporation Amendment Act 2016 (Tas) proposes a number of minor amendments to the Associations Incorporation Act 1964 (Tas).

The main provisions that incorporated associations should be aware of relate to:

(a) Charities exempt from double reporting

Tasmanian incorporated associations registered with the ACNC will be exempt from providing duplicate financial reports to both the ACNC and the Commissioner for Corporate Affairs. Those charitable incorporated associations that provide annual financial statements to the ACNC will no longer be required to provide financial statements to the Commissioner. The Commissioner can still request a copy of the information that has been supplied to the ACNC.

(b) Aligning the audit and financial reporting requirements with the ACNC’s requirements

Tasmanian incorporated associations have been required to undertake financial audits and submit audited statements regardless of their size. The requirement for audited statements will no longer apply to incorporated associations with an annual revenue of less than $250,000.

These amendments will come into force on 1 October 2016. Tasmanian associations will need to ensure they are aware of the amendments, and update their financial reporting practices accordingly.

All New South Wales, West Australian, South Australian and Tasmanian incorporated associations should ensure they are aware of the upcoming changes to the associations legislation, and seek appropriate legal advice regarding the required amendments to their governing documents.

This article originally appeared in Third Dimension- Winter 2016

Contact Mills Oakley

Vera Visevic | Partner
T: +61 2 8289 5812
E: vvisevic@millsoakley.com.au

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