Introduction of the Associations Incorporation Act 2015
The Associations Incorporation Act 2015 (“the 2015 Act”) became law on 1 July 2016 and on that day the Associations Incorporation Act 1987 (“the 1987 Act”) was repealed. The 2015 Act is far more comprehensive than the 1987 Act. The 2015 Act must be complied with by all incorporated associations i.e. including those incorporated before the 2015 Act came into effect on 1 July 2016.
The 2015 Act has new provisions concerning:
- the process of incorporation;
- the rules of an incorporated association;
- special resolutions;
- amending the rules of an incorporated association; and
- the winding up of an incorporated association.
The 2015 Act requires all incorporated associations (including those incorporated prior to the commencement of the 2015 Act) to amend their rules (often referred to as the “constitution”) so that those rules are compliant with the 2015 Act. This must be done by all incorporated associations by 30 June 2019.
The rules of an incorporated association will be deemed to comply with the 2015 Act if that incorporated association chooses to adopt the “model rules” prescribed by regulations made under the 2015 Act being the Associations Incorporation Regulations 2015. However the model rules may not be appropriate for all incorporated associations and careful consideration needs to be given as to whether the model rules suit the purposes of the particular incorporated association or whether tailor made rules compliant with the 2015 Act should be adopted.
Another major change to the incorporated associations regime introduced by the 2015 Act is the financial reporting requirements. These financial reporting requirements must be dealt with by all incorporated associations now.
If the incorporated association’s financial year runs from 1 July to 30 June, the incorporated association must comply with the new financial reporting requirements from 1 July 2016.
If the incorporated association’s financial year runs from 1 January to 31 December, the incorporated association must comply with the new financial reporting requirements from 1 January 2017.
Incorporated associations are now classified into one of three tiers based on the revenue for the financial year. This will determine the financial reporting obligations under the 2015 Act; namely:
- Tier 1 financial year revenue is less than $250,000.
- Tier 2 financial year revenue is $250,000 or more but less than $1,000,000.
- Tier 3 financial year revenue is or exceeds $1,000,000.
The financial reporting requirements differ based on which tier an incorporated association falls into. For example tier 2 and tier 3 incorporated associations must conduct an audit of their accounts each financial year however tier 1 incorporated associations are only required to do so in limited circumstances such as if the incorporated associations rules provide that an annual audit must be conducted.
The 2015 Act creates offences for not complying with the financial reporting requirements of the 2015 Act.
- Within 6 months after the end of each financial year, a tier 1 incorporated association not preparing financial statements using the cash or accrual method (as appropriate) of accounting.
- A tier 2 incorporated association financial report for the financial year is not reviewed in accordance with Divisions 5, 6 and 7 of the 2015 Act.
- If the majority of members at a general meeting resolve that the financial report for the financial year be audited, and the association does not present at the Annual General Meeting:
- the financial report for the financial year audited as required; and
- a copy of the auditor’s report.
If you require assistance reviewing and amending your incorporated association’s rules to ensure that they are compliant with the 2015 Act or if you require advice as to your incorporated association’s financial reporting obligations or other requirements under the 2015 Act please contact us.
The contents of this publication are not legal advice to anybody who receives it and should not be treated as legal advice. You should not take any action following reading this publication without legal advice concerning its application or relevance to your own circumstances.
SUBSCRIBE TO OUR BLOG TO GET THE LATEST NEWSSIGN ME UP
How to find the right lawyer in a Commercial Dispute case
If you or your business is facing litigation, either because another party is threatening it, or because you feel you have a right to take action, what do you do first and where do you seek help? It has been said that litigation is a contest in which the court is the umpire. It is […]Read More
Binding Financial Agreements What are they? Do I need one?
A Binding Financial Agreement (“Financial Agreement or BFA”) allows married or defacto couples to agree in writing how their property would be distributed between them if they separate or if they have already separated. What are the benefits of a binding financial agreement? A BFA can: make clear what the initial and ongoing financial contributions […]Read More