The most common legal structure for a not-for-profit group is the incorporated association. The merits include limited liability for members and the ability to buy or sell property and borrow money. Unincorporated associations are more flexible but liability is unlimited. A company limited by guarantee has higher compliance costs but can operate interstate. Co-operatives must fully conform to co-operative principles to be registered. Incorporated associations have obligations to the Registrar of Associations. A secretary must be appointed. Business activity may be conducted. An annual general meeting must be held. Minutes of meetings must be kept and financial reporting is mandatory. The Associations Incorporation Reform Act 2012 (Vic) has codified the duties of office holders and committee members. Tax must be paid on income unless tax-free status is granted or the association is a deductible gift recipient.


Not-for-profit Law Service

Justice Connect

Types of community organisations

Last updated

1 July 2021

The main types of community organisations are:

  1. unincorporated associations;
  2. incorporated associations;
  3. companies limited by guarantee;
  4. Indigenous corporations;
  5. co-operatives.

There are advantages and disadvantages to each type of community organisation.

For more information and free resources (including a web-based decision-making tool to help you work out which legal structure best suits your group), see Not-for-profit Law’s website.

Community organisations and COVID-19

Temporary regulatory changes have been implemented to assist community organisations to navigate the challenges imposed by the COVID-19 pandemic.

For more information about these changes, see:

1 Unincorporated associations

Groups are free to decide against registering a formal structure with the government. In the eyes of the law, such groups remain simply a collection of individuals; the law (generally) does not recognise the group as a separate entity. This might mean very little to the people in the group, as in their eyes they readily identify the existence of the group and its operation separate to the individuals who form it. However, it means that the unincorporated association’s office holders or committee members are personally liable for the association’s obligations (although it is possible to reduce this risk if each of them obtains insurance).

Although unincorporated associations do not have formal legal structures, most groups choose a collective name and adopt rules that set out the association’s aims, membership qualifications, any subscription fees, management of meetings, financial matters, dissolution and amendment of the rules.

The advantages of unincorporated associations are that their organisational structure is very flexible and usually the least costly and time consuming of the organisational structures.

The disadvantages of unincorporated associations are:

  • the office holders or committee members may be personally liable for the association’s debts (and actions in tort; for example, where a person is injured because of negligence) – this can be concerning for groups that run higher risk activities;
  • there is no perpetual succession – unless a trust is established, all property acquired by the association belongs to the individual members and therefore, every time the members (or at least the office holders) change, alterations may need to be made to documents relating to the association’s property (e.g. a lease);
  • there can be some complexity when gifts or trusts in wills are made to unincorporated associations;
  • the association generally cannot sue or be sued;
  • members may have difficulty enforcing the association’s rules when those rules are not being complied with; this is because courts have sometimes considered that the arrangement between members of an unincorporated association is private in nature and not one that a court should enforce;
  • members may not have clear contractual or proprietary rights in relation to the association (this can make obtaining insurance or leasing an office or meeting space difficult).

The rules of an unincorporated association may set out the duties of the office holders or committee members (e.g. the duty to act honestly in the best interests of the group and to manage any actual or potential conflicts of interest). For more information about these duties, see

It is unclear to what extent these duties are imposed on the office holders or committee members under the common law. In addition, unincorporated associations need to comply with other laws (see ‘Other laws’ in ‘Other issues to consider‘).

2 Incorporated associations

Overview of incorporated associations

There are over 38 000 incorporated associations in Victoria. Each Australian state has legislation governing incorporated associations.

Under the Associations Incorporation Reform Act 2012 (Vic) (‘Associations Act’), community organisations can formalise their association in a manner recognised by the law. This benefits the group, but also creates ongoing responsibilities.

The main advantages of incorporation are:

  • The liability of the association’s members (including the office holders) is limited. This means that the members are only personally liable to a limited extent for the association’s debts or liabilities during its operation, or for the expenses of its winding-up. (For more information, see ‘Incorporated associations’, below.)
  • The association can enter into contracts, sue or be sued, buy or sell property, raise or borrow money, and invest money in its own name. Importantly, the association can take out insurance and enter into funding agreements in its name.
  • The association has perpetual succession. This means that the group continues to exist, and to be recognised by the law and the public, even when the group’s members change.

The Associations Act imposes certain obligations on incorporated associations, which are designed to protect the interests of members. These are not onerous but should be taken into account when a group is considering incorporating.

Incorporated associations: Fees

Incorporated associations must pay initial and ongoing filing fees. In summary:

  • The fee for incorporation of a new association varies between $37.58 and $217.93 (from 1 July 2021) depending on whether the model rules are adopted or whether the association devises its own rules. If an incorporated association is being created from another registered body, the fee for incorporation varies between $60.12 and $240.48.
  • The Associations Act requires certain information about the association’s operation to be reported yearly to the regulator of incorporated associations, Consumer Affairs Victoria (CAV). The main information is the annual statement. The cost of lodging the annual statement depends on the association’s annual revenue. As at 1 July 2021, the fees are:
    • tier one (revenue less than $250 000): $60.12;
    • tier two (revenue between $250 000 and $1 million): $120.24;
    • tier three (revenue over $1 million): $240.48.

However, note that Victorian incorporated associations that are registered with the Australian Charities and Not-for-profit Commission (ACNC) as charities do not have to lodge an annual statement with CAV or pay the annual fee for the financial year that ended on 30 June 2018 and subsequent years, so long as an annual information statement is completed and returned to the ACNC.

This exemption does not apply to charities that have been approved by the ACNC to have their financial details withheld from the ACNC register or that report to the ACNC as part of an approved reporting group.

An incorporated association’s rules

An association’s rules contain its purpose and internal processes. The rules are an instruction manual about how an association is to be run. In the Associations Act there is a list of matters that must be contained in the rules (e.g. a grievance procedure).

Associations that do not require a complex membership structure may find it easier to:

  • adopt the model rules (which are set out in schedule 4 of the Associations Incorporation Reform Regulations 2012 (Vic)); or 
  • use Not-for-profit Law’s ‘Rules Tool’ to create a customised set of rules.

Both sets of rules will contain all the matters required under the Associations Act.

An association’s rules can be changed when at least 75 per cent of the members voting at a general meeting approve passing a special resolution (members must have at least 21 days notice of a general meeting; the notice must say that a special resolution is intended to be passed and the wording of the resolution must be set out in the notice).

A change to an association’s rules is effective once CAV has approved the alteration. Associations registered as charities with the ACNC will then need to provide the ACNC with a copy of the amended rules via the Charities Portal (within 60 days for small charities and within 28 days for medium and large charities).

Incorporated associations: The legal duties of office holders

The legal duties of office holders, and the penalties for breaching them, are set out in the Associations Act.

An office holder includes a member of the committee, the secretary, and other people who have a position of control and influence over the association.

Broadly, office holders have a legal duty:

  • to act in good faith and for a proper purpose;
  • to act with reasonable care, diligence and skill;
  • to not misuse information or their position;
  • to disclose and manage conflicts of interest.

For more information about office holders’ legal duties, see

Given the benefits of incorporation – and that the incorporated association is a very common form of legal structure used by groups operating in Victoria – this form of organisational structure is discussed in more detail in ‘Incorporated associations’.

More information about the process of incorporation and the administration of incorporated associations is available at

3 Companies limited by guarantee

Overview of companies limited by guarantee

Groups may incorporate under the Corporations Act 2001 (Cth) (‘Corporations Act’). A group may incorporate as either a company limited by shares, or as a company limited by guarantee. Only the latter is discussed here, as it is the most appropriate company structure (and the most common structure) for community organisations.

In a company limited by guarantee, the members guarantee to pay a fixed but nominal amount in the event that the company does not have enough money to pay all its debts when it is wound-up.

In general, a company’s internal management is governed by:

  • the Corporations Act provisions that apply to that type of company (called ‘replaceable rules’);
  • a constitution (or a memorandum and articles of association for a company formed before 1 July 1998 that has not adopted a constitution); or 
  • a combination of both.

A company limited by guarantee must have a minimum of one member, three directors and a company secretary. It is possible for a person to hold more than one of these roles. A company limited by guarantee must comply with various requirements of the Corporations Act (especially in relation to meetings and the lodgment of accounts).

A company limited by guarantee will report to the Australian Securities and Investments Commission (ASIC). It will have different reporting requirements depending on its size (or ‘tier’) and whether it is endorsed as a deductible gift recipient (DGR) for tax purposes.

Broadly, the relevant tiers are:

  • tier one: annual revenue less than $250 000 and with no DGR status;
  • tier two:
    • annual revenue less than $250 000 with DGR status,
    • annual revenue between $250 000 and $1 million with no DGR status;
  • tier three: annual revenue over $1 million (with or without DGR status).

If a company limited by guarantee is registered as a charity with the ACNC, it is generally exempt from reporting requirements under the Corporations Act and only needs to notify ASIC of a limited number of things (e.g. a change of name). Instead, a charitable company must report annually to the ACNC and notify the ACNC of changes to the organisation. The ACNC does not charge fees and sets out a slightly different tier regime for financial reporting (see Charities’ reporting requirements’ in ‘Registering as a charity’ in ‘Other issues to consider‘).

For more information about ACNC reporting requirements, and the differences in reporting to ASIC, see ACNC’s website.

Companies limited by guarantee: Fees

From 1 July 2021, the fee for incorporating a company limited by guarantee is $422. Companies limited by guarantee that are not registered as charities must pay other fees, including ASIC’s annual review fees. These fees range from $52 to $1281, depending on the company’s size.

For more information, see:

Also, in 2018 the federal government introduced the ASIC industry funding model. This introduced an annual levy payable by ASIC-regulated entities, including companies limited by guarantee (see Registered charities are exempt from this levy.

Companies limited by guarantee: The legal duties of directors

Similar to office holders in an incorporated association, the directors (and, in some situations, other company office holders) of companies limited by guarantee have legal duties they need to understand and comply with. The Corporations Act contains defences and penalties in relation to these legal duties.

For companies limited by guarantee that are registered charities, most of these duties are set out in ACNC governance standard 5, rather than in the Corporations Act.

Companies limited by guarantee: When this structure can be preferable

A company limited by guarantee can be a preferable option to an incorporated association or a co-operative if your group:

  • thinks it might want to carry on business (regular activities) outside Victoria; or
  • intends to be a large organisation.

For a comparison of an incorporated association and a company limited by guarantee, and tips about when to use which structure, see

4 Indigenous corporations

Overview of Indigenous corporations

Indigenous corporations incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (‘CATSI Act’) can be for-profit or not-for-profit. The structure of a not-for-profit Indigenous corporation is similar to the structure of a company limited by guarantee. The Indigenous corporation structure has been designed to take into account Indigenous customs and traditions.

Members of an Indigenous corporation may elect to have limited liability.

Indigenous corporations are regulated by a specialist regulator, the Office of the Registrar of Indigenous Corporations (ORIC), not ASIC. ORIC has additional regulatory powers to those of ASIC (e.g. the power to call meetings of members and to appoint special administrators).

Organisations that are incorporated as Indigenous corporations must have the words ‘Aboriginal corporation’, ‘Torres Strait Islander corporation’, ‘Aboriginal and Torres Strait Islander corporation’, ‘Torres Strait Islander and Aboriginal corporation’ or ‘Indigenous corporation’ in their name.

Indigenous corporations: Eligibility

To be eligible to register as an Indigenous corporation, organisations must satisfy the registration require­ments set out in the CATSI Act.

Registered Indigenous corporations must have:

  • at least five members (although it is possible to request an exemption on certain grounds; e.g. the corporation is a sole trader) who are 15 years old or older;
  • at least 51 per cent of the members are Aboriginal or Torres Strait Islander peoples (as defined);
  • a ‘rule book’ (i.e. a constitution) that governs the corporation’s activities and complies with the CATSI Act.

Organisations that must be Indigenous corporations

Corporations managing or holding land under the Native Title Act 1993 (Cth) and the Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth) must incorporate as Indigenous corporations. Indigenous organisations receiving grants of more than $500 000 from the National Indigenous Australians Agency of the Australian Government must be incorporated under the CATSI Act.

Advantages of incorporating as an Indigenous corporation

The advantages of incorporating as an Indigenous corporation include:

  • the corporation’s rules or constitution can take into account Indigenous customs and traditions;
  • registering as an Indigenous corporation is free and there are no ongoing fees under the CATSI Act;
  • corporations may be exempt from producing annual reports (especially corporations with a small revenue);
  • corporations can access free advice and support from ORIC; and
  • Indigenous corporations deal with a specialist regulator (ORIC), rather than with ASIC.

Indigenous corporations: Reporting requirements

The reporting requirements of Indigenous corp­orations vary according to the corporation’s registered size:

  • small corporation (with a consolidated gross operating income of less than $100 000): a general report only;
  • small corporation (with a consolidated gross operating income of between $100 000 and $5 million): a general report, financial report and audit report (or, if eligible, a financial report based on reports to government funders);
  • medium corporation (with a consolidated gross operating income of less than $5 million): a general report, financial report and audit report (or, if eligible, a financial report based on reports to government funders);
  • large corporation (with a consolidated gross operating income of $5 million or more): a general report, financial report, audit report and directors’ report.

Indigenous corporations: The rights and duties of members

Broadly, members of an Indigenous corporation have the same rights and obligations as members of an incorporated association or company limited by guarantee. The CATSI Act sets out the duties and obligations of directors and other office holders in an Indigenous corporation. These duties are consistent with those of a director of a company limited by guarantee (discussed above).

For more information about setting up an Indigenous corporation, see ORIC’s step-by-step guide.

5 Co-operatives

Overview of co-operatives

In 2014, the Co-operatives Act 1996 (Vic) (‘Co-operatives Act’) was replaced by the Co-operatives National Law (CNL), which was applied in Victoria by the Co-operatives National Law Application Act 2013 (Vic). The CNL has been applied in all Australian states and territories.

Co-operatives registered under the Co-operatives Act had their registration automatically transferred to the CNL. The CNL allows co-operatives to operate freely across state and territory borders, without requiring separate registration and reporting in each state or territory.

Not all groups are eligible to register as a co-operative. The registrar of co-operatives has to be satisfied that the registration requirements have been met.

There are two forms of co-operatives:

  • distributing co-operative;
  • non-distributing co-operative.

distributing co-operative should be formed if members will receive a share of any profit (during operation or winding-up) or a return on capital if the co-operative is winding-up.

A non-distributing co-operative (which may or may not issue shares, or be guaranteed by the government) should be formed if any profit is going to be reinvested back into the co-operative, or if members receive only the original value of their shares on winding-up. Non-distributing co-operatives are not-for-profit organisations.

The obligations and costs that apply to the registration of a co-operative are similar to those that apply to the registration of an incorporated association (i.e. $33.07 from 1 July 2021). The fee to apply for approval of a proposed name and rules varies between $82.67 and $375.75 (from 1 July 2021), depending on whether a non-distributing or a distributing co-operative is being established.

Co-operatives’ registration requirements

A co-operative must function in accordance with co-operative principles, which are focused on providing democratic member participation and control (one member, one vote).

If a proposed arrangement does not accord with the principles, CAV must be satisfied that there are special reasons why the co-operative should be registered. Current incorporated bodies may change to co-operatives if they meet the registration requirements.

Co-operatives’ financial reporting

Financial reporting for co-operatives is broken into two categories according to their size and fundraising activities: small and large co-operatives.

A small co-operative is a co-operative that, in a particular year, did not raise funds from the public issue of securities, and satisfies at least two of the following criteria:

  • the consolidated revenue of the co-operative and the entities it controls (if any) is less than $8 million for the previous financial year; 
  • the value of the consolidated gross assets and the entities it controls (if any) is less than $4 million at the end of the previous financial year; 
  • the co-operative and the entities it controls (if any) had fewer than 30 employees at the end of the previous financial year.

Small co-operatives only need to submit a simplified annual report to CAV within five months of the end of a financial year, unless their rules require them to have their accounts audited.

All co-operatives that do not fall within the definition of a small co-operative are large co-operatives. Large co-operatives must have their financial statements audited in accordance with the Corporations Act and obtain an auditor’s report. These financial statements, the auditor’s report and annual report must be lodged with CAV within five months of the end of a financial year.

For more information about setting-up and running a co-operative, see the website of Consumer Affairs Victoria.

The Business Council of Co-operatives and Mutuals is Australia’s peak body for co-operatives and mutuals and has useful free information on its website.

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