The Associations Incorporation Act 2009 (the Act) facilitates the incorporation of associations engaging in small-scale, non-profit and non-commercial activities.
Organisations operating as commercial enterprises are not eligible for incorporation under the Act.
NSW Fair Trading takes into account a number of key factors when considering if an association is or is likely to be engaged in commercial activities, including:
- the proposed objects of the association
- the nature and extent of the proposed activities, including dealings with the public
- if the commercial money-making activities will be a major part of its operations
- if the proposed activities will be undertaken in a normal commercial manner
- if goods or services are restricted to members or available to the general public
- if it is operating on a profit basis rather than a cost-recovery basis
- if it is operating in competition with businesses undertaking the same commercial activities.
The Act also prohibits an association from providing pecuniary (monetary) gain for its members. A breach of the Act could result in:
- cancellation of incorporation
An association provides monetary gain for its members if it:
- carries on an activity for the purpose of securing monetary gain for its members
- has capital that is divided into shares or stock held by members
- holds property in which the members have a disposable interest.
Activities not considered as securing pecuniary gain include, where:
- the association itself makes a monetary gain
- the association is established for the protection of a trade, business, industry or calling in which the members are engaged or interested, but the association does not engage or take part in
- the association provides members with facilities or services for social, recreational, educational or other similar purposes
- members obtain monetary gain from the association in the form of remuneration (ie salary/wage) for a proper purpose
- members obtain monetary gain from the association that they could otherwise gain if they were not a member
- members compete for trophies or prizes in contests directly related to the objects of the association.