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Help Sheet

Legal structures

Do you really need to set up an organisation?

You don't have to be part of an organisation to do good work- you can go it alone, and many successful people have. You can work on the basis of ad hoc and informal ringarounds when anything needs to be done, and avoid getting bogged down in inflexible structures.

If you get to a certain size, though, you'll need to set up procedures and systems, and that means organising. Furthermore, a formal organisation can, be a powerful way of getting your message across and achieving your goals.

Becoming a legal entity

If you want your organisation to have a legal status, you have a number of options - you can become

All of these forms have their advantages and disadvantages. For smaller organisations, the choice is generally between company status and incorporation. Limited companies are highly regulated; incorporated associations are lightly regulated. Setting up a company is complicated and expensive; incorporating as an association is comparatively cheap and simple. Unless your organisation is very big indeed, or carries on a lot of business, your best option will probably be to become an incorporated association.

If you become a company, however, that brings you under federal law, and you are then entitled to operate in every state in Australia. If you become an incorporated association, you are incorporated under the law of one state and are entitled to operate in that state only. If you decide to become an incorporated association but you want to operate in several states - and 'operate' here includes fundraising - you have two choices; you can become incorporated in all those states, or all states, separately (which will probably mean that you will have to have a committee resident in each state, adding considerably to the complexity of your governance structures) or you can become what is called a Registered Australian Body. This is generally the preferable option.

To become a Registered Australian Body it is generally necessary to become incorporated (as an association or a co-operative) in one state first. You then need to fill out more forms, submit more documents, and pay more fees to ASIC. If you are a charity registered with the Australian Charities and Not-for-Profits Commission (the ACNC) some, but not all, of these requirements are relaxed.

Incorporating - and even taking the further step of becoming a Registered Australian Body - is not the same thing as registering as a charity, or getting entitlement to tax exemption, or obtaining permission to raise funds from the public. All those have to be applied for separately. To become a charity you must apply to the ACNC; that is a federal agency, so you have to do it only once. To be entitled to tax concessions you must meet the requirements of the Australian Tax Office; that is a federal agency, so you have to do it only once. To obtain permission to raise funds from the public you must get approval from the relevant state body, and as that remains a state responsibility you have to do it eight times, once in each state and territory, however stupid and unnecessary that may seem.

Our Community Pty Ltd   www.ourcommunity.com.au   ABN 24 094 608 705
National Headquarters: 51 Stanley St, West Melbourne Victoria 3003 Australia
(PO Box 354 North Melbourne 3051 Victoria)
Telephone (03) 9320 6800   Fax (03) 9326 6859   Email service@ourcommunity.com.au

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