Modernising Processes of Incorporated Associations

Modernising Processes of Incorporated Associations

The laws affecting incorporated associations have not been substantially reformed since 2007. Queensland Parliament intends for the Associations Incorporation and Other Legislation Amendment Act 2020 (Qld) (‘Act’) to assist thousands of people involved in community groups by modernising processes. The amendments are aimed to simplify processes, improve internal governance, reduce red tape, and enhance government practice.

Amendments Currently in Force

We draw your attention to the following amendments now in force:

  • Associations can use communications technology to conduct general meetings without provision for technological usage in their rules.
  • An incorporated association has the discretion to adopt or replace the model rules at any time. To effect this change, the association must:
  1. pass a special resolution at a general meeting; and
  2. apply to the Office of Fair Trading (OFT) for registration within 3 months of passing the resolution.
  • Should the incorporated association be experiencing financial difficulty, committee members may voluntarily appoint an administrator to place the association into voluntary administration.
  • An incorporated association may apply to the Office of Fair Trading to cancel the association, thereby avoiding a lengthy winding up process. To be eligible, the association must not:
  1. have any outstanding debts or liabilities;
  2. have any outstanding fees or penalties under the Associations Incorporation Act 1981; and
  3. must not be a party to any legal proceedings.
  • An individual will be eligible to sit on a management committee after 5 years from the later of:
  1. the day the conviction is recorded;
  2. the day the individual is released from prison;
  3. the day any other occur order relating to the conviction or term of imprisonment is satisfied.

Notwithstanding, conviction of any indictable offence or of a summary offence leading to imprisonment may affect that individual’s eligibility.

  • The maximum penalty for breaches of some provisions will be increased to 20 penalty units.
  • Upon an incorporated company being wound up or cancelled, information pertaining to how surplus assets, property or money is vested will be published by gazette notice rather than regulation.
  • Should the Chief Executive determine that property under the Collections Act 1966 is unlikely to reach the intended beneficiaries, they may vest that property to the Public Trustee by gazette notice rather than by regulation.

Expected Amendments: 30 June 2021

Further amendments are expected to take effect by 30 June 2021. It would be prudent for incorporated associations to take note of these amendments now to plan for and accommodate these amendments moving forward.

In the future, using a common seal will be optional and the secretary of an association will have to be 18 years or older. To simplify processes, duplicated reporting requirements for charities on the ACNC register will be removed.

Significantly, management committees and members will be given increased responsibilities and liabilities, notably:

  • Penalties will apply to management committees that fail to carry out their functions in the best interests of the association, with due care and diligence;
  • Members of the management committee will have a duty to prevent the association from trading while insolvent;
  • Penalties will apply to committee members and officers who use their position to gain a benefit or cause detriment to the association; and
  • Management committee members will have to disclose when they have material personal interests in a matter, remuneration or other benefits given to them, to senior staff and to their relatives.

Finally, the powers of Office of Fair Trading inspectors will extend to allow for entry and seizure methods.

Expected Amendments: 30 June 2022

It is expected that by 30 June 2022, incorporated associations will be required to have an internal grievance procedure or dispute resolution process in place. This amendment is aimed at reducing the need to resort to litigation to resolve a matter. The Office of Fair Trading will develop model rules as part of a consultation process with industry bodies that may be used in default. If the association wants to use their own dispute resolution process, they must include it in their rules by passing a special resolution.

If you would like to be part of the consultation process, you can register your interest by emailing [email protected].

How we can help you

If you have any questions or concerns regarding the above amendments, please do not hesitate to contact us. We consider it would be prudent for all incorporated associations to begin discussing the upcoming amendments, particularly those that carry penalties as outlined above.


Written by Claudia Smith , Lawyer

Discretionary trusts now impacted by NSW duty and land tax surcharges

On 24 June 2020, the State Revenue Legislation Further Amendment Act 2020 (NSW) was enacted (“the Act”). The Act is relevant to trustees of discretionary trusts (including discretionary testamentary trusts) who in their capacity as trustee, own or will purchase property under the trust, and also have trust deed which do not prevent foreign beneficiaries of the trust from receiving a benefit under same.

Pursuant to the amendments made under the Act, a Trustee can now be classified as a ‘foreign person’ for the purpose of making payment of NSW Duty and Land Tax surcharges, on property transactions whereby the existing trust deed does not prevent a foreign person from being a beneficiary.


From 21 June 2016, ‘foreign persons’ became liable to pay:

  • a surcharge purchaser duty (currently 8% of the market value of the property) on the acquisition of residential property in NSW (Chapter 2A of the Duties Act 1997); and
  • a surcharge land tax (currently 2% of the unimproved value of the land) for any residential property in NSW owned as at 31 December each year (section 5A of the Land Tax Act 1956 (NSW).

Under the Revenue Ruling G010, the Chief Commissioner had the discretion to exempt liability for purchaser surcharges incurred in relation to duty and land tax. Since the implementation of Revenue Ruling G010 on 13 September 2017, many trustees have seen to the amendment of their discretionary trusts to ensure that foreign persons are excluded from receiving a benefit in accordance with the Revenue Ruling G010.

The Amendments

The Act has now introduced the retrospective legislation that was referred to in paragraph 9 of the Revenue Ruling G010.

The Act has made the following amendments to existing legislation:

  • The Act inserts section 104JA thereby amending Schedule 1 of the Duties Act 1997 (NSW);
  • The Act inserts section 5D into the Land Tax Act 1956 (NSW); and
  • The Act inserts Schedule 2 into the Land Tax Management Act 1956 (NSW).

What this means

The amendments to the Act come into force as of 1 January 2021. This means that up until 31 December 2020, all trustees of discretionary trusts have the opportunity to make amendments to existing trust deeds to ensure that their respective deeds include a provision outlining that the amendments per the Act do not, and will not apply.

A trustee must meet the following amendments to comply with the requirements of the Act:

  • no potential beneficiary of the trust can be a foreign person (the ‘no foreign beneficiary requirement’); and
  • the terms of the trust must not be capable of amendment in a manner that would result in a foreign person being a potential beneficiary (the ‘no amendment requirement’).

In the event a trust deed is not amended prior to 31 December 2020, the trustee will be considered a foreign trustee and the following implications will take effect:

  • Surcharge purchaser duty will apply to the purchase of residential property within NSW;
  • Land tax surcharge will apply annually on the residential property in NSW;
  • Land tax surcharge will be applicable for the land tax years of 2017, 2018 and 2019; and
  • The trust will have no entitlement to receive a refund for surcharge duty or surcharge land tax already paid in the transactions undertaken in the aforementioned land tax years.

Should Revenue NSW conduct an audit, a copy of the trust deed or amended deed together with a declaration as to same, may be requested. If a foreign beneficiary has not nor will not intend to benefit from a current trust, then making amendments to a current trust deed prior to 31 December 2020 would be ideal.

No power of amendment or variation?

The majority of trust deeds will include rules that bind a trustee as well as containing broad powers to amend and/or vary the trust instrument. There are trust deeds however which may include limited powers for variation and/or amendments and in this circumstance, those particular trusts require diligent review.

We make reference to the Commissioner’s Practice Note CPN 004, version 2, which specifies that that trusts which cannot be amended and are not covered in the practice note will be dealt with on a case by case basis.

Our recommendation

If a foreign person has never benefited and likely will not benefit from the trust, we recommend that amending the trust prior to 31 December 2020 is the best course of action. We emphasise that any trustee and/or beneficiary to a discretionary trust seeking to make an amendment to same in accordance with the Act, must ensure that the no foreign beneficiary requirement and the no amendment requirements are complied with.

In the event a trust does not allow for a variation and/or amendment clause, we note that the trustee and/or beneficiary should make a request to Revenue NSW for a determination as to how the trust could be amended to guarantee compliance with the Act, prior to 31 December 2020.

If you require any assistance in making amendments to your current trust deeds to comply with the Act or if you would like to discuss your current trust deed with us, our solicitors at JHK Legal are happy to assist.


Written by Elyzia Menounos

FIRB approvals for Business – COVID-19, National Security and Beyond

Australia’s foreign investment rules have recently undergone major temporary changes in response to the economic fallout of the COVID-19 pandemic. The Australian government is considering further permanent changes due to national security concerns. This article considers those changes and the likely impacts on business.

What is FIRB approval?

The Foreign Investment Review Board (“FIRB”) is a body that advises the federal Treasurer on Australia’s foreign investment policy and administration.

Among other functions, FIRB examines proposed investments in Australia pursuant to the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“Act”) and related legislation and provides recommendations as to whether relevant investments should be approved. FIRB is an advisory only and ultimately decisions regarding foreign investment remain with the Treasurer. Nonetheless, the process is usually referred to as seeking “FIRB approval”.

FIRB considers investment by “foreign persons”, which include:

  • individuals not ordinarily resident in Australia;
  • corporations in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government hold “substantial interests”;
  • corporations in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government together hold “substantial interests”; and
  • foreign governments.[1]

A “substantial interest” is an interest of 20% or more.[2] There are also detailed and wide-reaching rules to determine interest held on trust and or through associates of foreign entities.

The Act applies to proposed acquisitions by foreign persons of assets, securities or interests in Australian land (including agricultural land, commercial land, residential land, and mining or production tenement). Generally, an acquisition will be generally be a “notifiable action”, and therefore require FIRB approval, if it involves:[3]

  • a foreign person acquiring either:
    • a substantial interest in an Australian entity;
    • an interest in Australian land; or
    • a “direct interest” in an Australian agribusiness;[4] and
  • it exceeds certain monetary thresholds. These thresholds vary depending on the circumstances and the type of investment.

COVID-19 Response

On 29 March 2020, the Federal Government announced that, as a temporary measure due to COVID-19, all monetary thresholds for the purposes of FIRB consideration were reduced to zero.

Government’s stated concern was that Australian assets and businesses might be subject to acquisition by foreign entities seeking to take advantage of the economic situation created by COVID-19.[5]

The changes were implemented through the Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 (Cth) (“COVID-19 Regulations”). Notably, the COVID-19 Regulations do not have a set end date – the changes will remain until repealed.

The COVID-19 Regulations mean that nearly all transactions involving foreign persons now require FIRB approval. As a result, the timeframe for FIRB processing applications has increased from thirty days to some 6 months.  Notwithstanding this FIRB has indicated that priority will be given to applications relating to “investments that protect and support Australian businesses and jobs”.[6]

Proposed Permanent Changes

On 5 June 2020, the government further announced proposed permanent changes to the Act and related legislation in response to national security concerns. These changes are intended to be made through amendments to the Act this year and to be in force by 1 January 2021.[7] Draft legislation and regulations were released for public consultation on 31 July 2020.[8]

Mandatory FIRB approval will be required for all foreign investments in “national security businesses”, regardless of the value of the investment. The draft regulations define “national security businesses” as including businesses supplying goods or technology to the Australian Defence Force or intelligence agencies, as well as holders of critical infrastructure (such as electricity, ports, gas, and telecommunications).[9]

The Treasurer will also be given a new ‘call-in’ power to review investments that would not otherwise reviewable if he or she believes that the proposed action poses a national security concern. In exceptional circumstances, the Treasurer will also have a ‘last resort’ power to impose conditions, vary existing conditions or force divestment of any realised investment when national security concerns are later identified.[10]

The government’s proposed changes to the Act will also:

  • Provide further powers to enforce conditions imposed on applicants;
  • Create a single Register of Foreign Ownership of Australian Assets. Previously, registers were held only for certain assets such as agricultural land, water and residential land; and
  • Simplify the fee structure for applications.[11]


Due to the COVID-19 pandemic and national security concerns, the Australian government has tightened rules around foreign investment:

  • As a temporary measure due to COVID-19, all monetary thresholds are currently reduced to zero. This means that nearly all transactions involving foreign entities now require FIRB approval.
  • Timeframes for processing have increased from 30 days to 6 months.
  • Further permanent changes are proposed from 1 January 2021, which will require FIRB approval for all foreign investments in sensitive businesses, including those involved in military procurement and infrastructure.
  • The compliance and enforcement regime will be expanded.
  • The Treasurer will be granted new “call in” and “last resort” powers to intervene in transactions on national security grounds.

These changes will impact many businesses proposing to enter into transactions with foreign entities.

How we can help you

JHK is assisting many businesses and individuals affected by COVID-19 and the responses by governments to the crisis. If you are involved in a transaction that may require FIRB approval or if you have any other enquiry, please do not hesitate to contact us.

Written by Matthew Paul, Lawyer



[1] Section 4 Act.

[2] Section 4 Act.

[3] Section 47 Act.

[4] Generally, this is an interest of at least 10%, or 5% if the person who acquires the interest has entered into a legal arrangement relating to the businesses of the person and the entity – section 16 Foreign Acquisitions and Takeovers Regulation 2015 (Cth)

[5] https://firb.gov.au/qa-temporary-changes-foreign-investment-framework

[6] https://firb.gov.au/qa-temporary-changes-foreign-investment-framework

[7] https://www.abc.net.au/news/2020-06-05/foreign-investment-restrictions-tighten-australian-businesses/12324276

[8] https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/foreign-investment-review-board-consultation-exposure.

[9] Exposure Draft Regulation (Definition of National Security Business) https://treasury.gov.au/consultation/c2020-99761

[10] Foreign Investment Reform (Protecting Australia’s National Security) Bill 2020 (Cth) Draft Explanatory Memorandum, pp. 13-14.

[11] Draft Explanatory Memorandum, Chapters 3-5.