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Commercial activities and monetary gain 

Incorporated associations

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
  • prosecution
  • penalties.

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.

Need more information?

Contact Registry Services
PO Box 22
Bathurst NSW 2795
Tel: 02 6333 1400
FreeCall: 1800 502 042

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