What is an incorporated association?

An incorporated association is a recognised legal entity that's usually established by a group of people who agree to act together as an organisation to achieve a common purpose. Examples of these include trader groups and business associations.

Unlike informal groups, incorporated associations can:

  • apply for and obtain government funding
  • accept gifts and bequests and raise revenue
  • buy and sell property and assets
  • incur debts and liabilities
  • enter into contracts
  • sue and be sued.

To be incorporated, a group must have at least 5 members and, in Victoria, meet the requirements of the Associations Incorporation Reform Act 2012 and associated regulations.

Benefits of incorporation

You can start an incorporated association for any legal purpose. This group structure is straightforward to start and it doesn't cost much to register.

Incorporation can offer many benefits to groups, such as:

  • the association continues to exist regardless of changes to committee members
  • enhances the credibility of businesses that are members of a reputable organisation
  • protects office bearers and members against personal liability for the organisation’s debts
  • opens up opportunities to access funding
  • helps attract partners looking for well governed organisations.

Incorporating your business group is not mandatory. If you do incorporate, there are rules you must follow and obligations you must meet.

How to register as an incorporated association

To incorporate your business association, you need to:

  1. Be clear about your group’s aims and confident that formalising your structure will help you achieve these.
  2. Hold a meeting with members of your group to vote on whether your organisation wants to incorporate.
  3. You must get a majority of votes to authorise a person to incorporate the association and either approve proposed rules that comply with the Associations Incorporation Reform Act 2012, or approve the adoption of model rules. This person must be at least 18 years old and live in Australia.
  4. Ensure the proposed name of your association is not similar to CAV's Victorian names register, or identical to any listed on ASIC organisations and business names register.
  5. Register to incorporate with CAV.

Other things to consider

Here are some things to consider before you register as an incorporated association:

Organisation name

It is suggested that you include the word ‘business’ or ‘trader’ in the registered name of your organisation. This will make it easier for potential members and partners to find your association.

Your name also helps people understand the key focus of your association relates to businesses, distinguishing it from community and other types of groups.

Membership requirements

Incorporated associations must have an approved constitution with rules that cover matters such as:

  • qualifications for membership
  • quorums for meetings
  • provisions for elections to the association’s committee.

Appointing a committee and meeting obligations

Incorporated associations usually have a committee that leads and oversees the association to deliver activities consistent with its aims and available resources.

Ideally committee members will be representative of the target business community in culture, gender, age and business types. This will help the association understand and represent the needs of businesses.

Committees are typically renewed each year at the association’s Annual General Meeting (AGM).

It is important that committee members are aware of their responsibilities and obligations and ensure they comply. More about doing this can be found [add link to Good Practice Guide].

Types of committee positions include president, vice-president, treasurer and secretary of the association. For information about their responsibilities see these CAV resources.

Profits and financial reporting

Incorporated associations are non-profit organisations. This means profits must be retained within the association to enable it to meet its objectives. Profits cannot be distributed to members.

Financial reporting obligations you will likely have as an incorporated association include:

  • arranging an auditor or independent reviewer to look at your annual financial reports
  • submitting financial reports to association members each year at your AGM
  • lodging an annual financial statement with CAV

Tax matters

Before you incorporate it is important to think about income tax and any tax concessions you may be seeking, and reflect clauses in your association’s rules to meet relevant Australian Tax Office (ATO) requirements.

For example, to be exempt from income tax, your association’s governing documents must prohibit you from distributing any funds to your members, whether in money, property or otherwise. For more about this visit ATO.

Registering an ABN

An incorporated association does not have to have an ABN.

However, you may wish to consider registering an ABN, as this may be needed for tax purposes, to secure a loan or to be eligible for a government grant.

More about registering an ABN is available from ASIC