Fact Sheet 1: Incorporation

What is incorporation?
Incorporation is the creation of a legal entity which has rights and liabilities separate from its members. Incorporated organisations include companies incorporated under the Corporations Law, associations incorporated under the Associations Incorporation Act 1984, P&C Associations incorporated under the Federation of Parents and Citizens Associations Incorporation Act 1976, etc…

Why become incorporated?
Incorporation gives a school parent body a "legal personality." This means that an incorporated school parent body may enter into legal agreements, own assets and borrow money from financial institutions as an Association. Individual members will not be required to act as guarantors nor personal signatories to contracts or legal agreements. If an Association is incorporated, any debt or liability will be against the Association itself, rather than its individual members. Personal action normally cannot be taken against individual members unless they have been personally negligent.

Does the Federation of Parents and Citizens' Association recommend incorporation for school parent bodies?
Incorporation is essential for Associations that operate a Before/After School childcare centre; Vacation Care program; employ staff - e.g. canteen supervisors, uniform shop coordinators, OOSH employees, or enter into legal agreements. The choice to become incorporated is, of course, left to the discretion of each affiliate. The decision should be made by majority vote at a general or special meeting.

Is incorporation expensive?
A one-off administration fee of $100.00, to cover the administrative costs, will be imposed. This amount also covers the cost of the Certificate of Incorporation and copies of the relevant legislation which are sent to each Association. Incorporation through Federation's Act frees the association from ongoing fees and the requirement to lodge an annual public report. Incorporated Associations are, however, required to send to the Federation of P&C Associations of NSW a copy of their audited annual financial statements within one month of the annual general meeting. These will be kept for seven years.

What type of constitution will incorporated P&C associations be required to adopt?
Any P&C Association wishing to become incorporated will be obliged to adopt the prescribed constitution without amendment. This constitution has been endorsed by the Minister and gazetted. It is available from Federation or from our website. You are at liberty to change your by-laws. By-laws, however, must, at all times, complement the constitution and provide members with further information about how constitutional requirements will be implemented on a day-to-day basis.

How will our association proceed with incorporation?
Federation will handle all details relating to incorporation. Any association wishing to become an incorporated body should contact the Federation for a package of materials.

What name will our association adopt after incorporation?
The name of an Association incorporated under the Act will be "(name of relevant government school) Parents and Citizens Association". There is no need to add the letters "Inc" or the word "Incorporated" after your name.

Does an incorporated association need a registration number?
No.

Do we need to report to the Department of Fair Trading?
No.

Do we need to have our books audited if we are incorporated?
Yes. Your books must be audited annually. As the result of recent amendments, incorporated P&C Associations do not have retain a qualified Chartered Accountant or Tax Auditor. They are free to use anyone other than an officer-bearer of the association who possesses appropriate skills and experience in auditing and financial record management and does not have a personal or business relationship with an officer of the Association.

Do we need an Australian business number (ABN)?
Yes. Whether incorporated or not, all Associations require an ABN. Without one they will not be regarded as an income tax exempt, not for profit charity and may be liable for income tax on all profits.