© 2007 Environmental Defender's Office (Ltd) NSW
The information contained in this fact sheet is current as at 9 August 2006.
Environmental organisations may come together for a single issue such as opposing a particular development or because of a shared concern over broader environmental issues. Incorporation is the way a group can have a legal identity separate from its individual members.
Incorporation benefits individual members of the association by protecting them from legal liability for the actions of the incorporated association. If an association isn't incorporated, legal obligations are the responsibility of individual members. Incorporating allows an organisation to:
Incorporation involves some ongoing costs, administrative burdens and legislative responsibilities (see 7.5.3). You should consider carefully whether your group needs to incorporate or whether you can work through an already incorporated group.
Text Box 7.6
Defining Your Objectives
Spending time to properly define your objectives is a worthwhile exercise. There are at least three reasons to do so.
First, it can help to provide a constant reminder of your reason for being, guiding the decisions of your organisation and helping to resolve any internal disputes.
Second, it can help to ‘bulletproof' your organisation from take-over, provided you have defined your objectives in specific enough terms. Some organisations have faced take-over bids because they have defined their objects too broadly – for example, “ the protection of the environment” Framing your objects more specifically allows for more control over the organisation. For instance, “protecting the environment by working for the creation of national parks” Those who do not agree with the objectives can be prevented from joining or asked to leave.
Third, it may help you to pursue legal rights of redress, if necessary. In New South Wales , most environmental legislation allows any person to challenge a breach, or anticipated breach of environmental laws. However, Commonwealth legislation and other jurisdictions have stricter rules.
For instance, the Commonwealth Environmental Protection and Biodiversity Conservation Act requires any individual or organisation that wants to apply for an injunction to remedy or restrain a breach of the Act to be an ‘interested person or organisation'.[1]
In the case of an organisation, this means that the ‘organisation's objects or purposes [include] the protection or conservation of, or research into, the environment'.[2]
You should ensure that your objectives adequately reflect what you do (and thus provide a constant reminder of your reason for being), whilst also being mindful that they are not so narrowly defined as to debar you from legal proceedings.
There are three main steps to incorporating your association:
The members of the group must have a meeting to pass certain special resolutions to incorporate. A special resolution is one passed by a majority of at least three quarters of the members who are entitled to vote and who are present at a general meeting in person or by proxy. Members must be notified of the meeting at least 21 days in advance.[3]
The group must pass a special resolution to:
The New South Wales Office of Fair Trading has a set of model rules that can be adopted by the association. You should also consider the requirements for status as a charity and for entry onto the Register of Environmental Organisations (see below).
If a group does not already exist, five or more persons can appoint a committee of at least two people and agree to go through the above process.[5]
The association must reserve a name. If you are going to be active in the public domain, early incorporation can be a way of protecting your group name (and reputation). Failing to incorporate can mean that other groups – even development-oriented groups – can adopt your name and seriously undercut your cause and message (as some environmental groups have experienced). You can find out if a name is already taken by visiting the New South Wales Office of Fair Trading website at www.fairtrading.nsw.gov.au or calling 13 32 20.
You must then fill out an Application for Reservation of a Name (Form 3) accompanied by a fee of $37. This form can also be found on the New South Wales Office of Fair Trading website.
Apply for incorporation by lodging an Application for Incorporation of an Association (Form 1). This form can be found on the New South Wales Office of Fair Trading website at www.fairtrading.nsw.gov.au .
The form must be accompanied by a copy of the rules of the group unless the model rules have been adopted. The application must also be accompanied by a fee of $98.[6]
The existing committee members will be the first committee of the incorporated association and the person authorised to incorporate the association will become the association's first public officer, unless others are nominated or the rules state otherwise.[7]
Fees may change, so check with the New South Wales Office of Fair Trading for current information. For more information on incorporation, contact the New South Wales Office of Fair Trading.
Insurance
It is no longer compulsory for an incorporated association to hold public liability insurance,[8] although it is usually advisable to do so as it is possible to be sued. You may also consider taking out insurance policies for any property held by the association such as contents or motor vehicle insurance.
Public Officer
The public officer is responsible for lodging documents such as the annual return.[9] Within 14 days of taking office, a public officer must notify the Director-General of the New South Wales Office of Fair Trading of their name and address.[10]
Committee
The committee must have at least two members upon incorporation. However, the number of the committee depends on the rules of the association. The model rules require the committee to consist of the office bearers (president, vice-president, treasurer and secretary) and three ordinary members. A committee member can hold more than one position. A register must be kept with the name and address of each committee member and the date on which they became a member.[11]
An incorporated association is required to meet once a year within six months of the end of the financial year.[12] This meeting is usually referred to as the annual general meeting or AGM. Incorporated groups must lodge an annual statement with the New South Wales Office of Fair Trading within one month of the AGM. It is the responsibility of the public officer to ensure that this statement is lodged.[13]
This statement must contain a report on the financial situation of the organisation[14] and must be accompanied by: a certificate stating that it was submitted to the annual general meeting; any resolutions that were passed by this meeting with regard to the report; and the prescribed fee.[15]
Procedures
The constitution or a set of rules should provide general requirements about how meetings and affairs should be conducted. Even if it is not required by the rules of your association, it is good practice for an incorporated association to appoint a chairperson or convener to ensure that meetings are conducted properly.
Any decisions the association makes must be recorded as written minutes which are confirmed or amended at the next meeting.[16] These minutes must provide an accurate record of what took place. It is also important to keep a record of who attends each meeting or at least the number of people who attend. These records help to facilitate the effective operation of the group. Complying with the constitution and ay legal requirements can also help prevent messy take-overs and internal disputes. It is hard to fall back on the letter of the law when the group has acted informally for years. Good governance will also build the group's credibility for submissions, funding applications and other external documents.
An association must also ensure that proper accounting records are kept which correctly record and explain the transactions of the association and its financial position.[17]
A charity is a not-for profit organisation that has been set up exclusively or mainly for charitable purposes. Charitable purposes are grouped under four broad headings – relief of financial hardship, advancement of education, advancement of religion and other charitable purposes for the benefit of the community. Conservation and protection of the environment are considered charitable purposes for the benefit of the community.
There is no registration scheme for charities in New South Wales , but there is a registration scheme for conducting charitable fundraising appeals under the Charitable Fundraising Act 1991.
A group must hold an authority to fundraise under this Act. An authority may be granted for an indefinite period of time and number of events. To register, an organisation only needs to have one or more charitable purposes and conduct fundraising for that purpose.
For more information about the requirements of registration for fundraising, contact the NSW Department of Gaming and Racing.
Not-for-profit organisations with a charitable purpose are generally exempt from payroll tax.[18]
Organisations with charitable purposes can apply to the Office of State Revenue for exemption from stamp duty under the Stamp Duties Act.[19]
Contact the Office of State Revenue on 1300 139 814 or www.osr.nsw.gov.au/ for more information about tax and stamp duty exemptions.
The Federal Government keeps a Register of Environmental Organisations approved for tax deductibility under the Income Tax Assessment Act 1997. Any money paid into the public fund of a registered organisation can be claimed by the person giving the money as a tax deduction.
The Commonwealth Department of Environment and Heritage administers this register. To be eligible for the Register, there are a number of criteria that must be satisfied. A number of these criteria must be included in the constitution of the organisation. In order to be eligible, an organisation must:
For information on eligibility for the Register of Environmental Organisations, visit the Commonwealth Department of Environment and Heritage website at www.deh.gov.au
Charities also need to apply for additional endorsement through the Australian Taxation Office to receive income tax concessions (deductible gift recipient status and income tax exemption). Organisations can do this when registering for an Australian Business Number.
Not-for-profit organisations are not exempt from goods and services tax (GST). However, Income Tax Credit can be claimed to offset tax paid.
For more information about how the tax system affects your organisation contact the Australian Tax Office at www.ato.gov.au/nonprofit or seek advice from an accountant.
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© 2007 Environmental Defender's Office (Ltd) NSW |
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