Commercial activities and monetary gain

The Associations Incorporation Act 2009 (the Act) allows the incorporation of associations. These include those engaging in small-scale, non-profit, and non-commercial activities.

Organisations operating as commercial enterprises are not eligible for incorporation under the Act.

Key factors in considering commercial activities

NSW Fair Trading looks at key factors to decide if an incorporated association is, or will be, engaged in commercial activities. These factors include:

• the proposed objects of the incorporated 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.

Understanding monetary gain

The Act also prohibits an incorporated association from providing monetary gain for its members. A breach of the Act could result in:

• cancellation of incorporation
• prosecution
• penalties.

An incorporated 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 incorporated association itself makes a monetary gain
• the incorporated association is for protecting a trade, business, or industry in which the members are interested, but it does not engage in or take part in any activities
• the incorporated association provides members with facilities or services for social recreational, or educational purposes
• members obtain monetary gain from the incorporated association as pay, such as, salary or wage for a proper purpose
• members obtain monetary gain from the incorporated association that they could not as non-members
• members compete for trophies or prizes in contests related to the incorporated association's goals.