Dear John,
I’m Secretary of Burnside Rotary Club in SA, and I am contacting you via the zone8specialisthub.au website, because of your advertised expertise in Club governing documents (constitutions and bylaws), and legal background.
As I’m sure you are aware, the ATO has this year imposed a requirement that Not-For-Profits (NFPs) must self-assess their tax exempt status annually and provide a declaration to the effect that the NFP has clauses in their “governing documents” prohibiting “the distribution of income or assets to members while it is operating and winding up”; and vouching that the NFP abides by those clauses. All the documentation I can find on the ATO website indicates that the ATO regard the “governing documents” to be rules or articles of association, constitution, rule book, or deed of trust. For Rotary clubs in South Australia, many or all (including Burnside) are Incorporated Associations under the SA Associations Incorporation Act 1985 (as amended) [the Act]. The Act requires associations incorporated under the Act to be NFPs, and includes specific clauses (55—Prohibition against securing profits for members, and 43—Distribution of assets upon winding up) which I believe satisfy the ATO requirement for specific NFP clauses.
Our Club Constitution, consisting of the RI mandated SRCC with appended clauses dictated by our District relating to Commonwealth and State legislation, does not explicitly contain such ATO mandated clauses. Neither do our By-Laws. Both documents however explicitly note that the Club is an Association incorporated under and subject to the Act.
1/ Given the Club is an Association incorporated under and subject to the Act, and that is acknowledged in the Club Constitution and By-Laws, is it a reasonable interpretation that the Act can also be considered a Club “governing document”, as well as the Club Constitution and By-Laws?
2/ If so, is it reasonable to conclude that the 2 clauses (43 and 55) in the Act which address the specific NFP behaviour required, satisfy the ATO requirement for such clauses to be explicitly present in the Club “governing documents”?
3/ If it cannot be taken that the Act is a “governing document” of the Club as an Incorporated Association, are we then forced to replicate the relevant clauses from the Act in the Club Constitution &/or By-Laws [I have always understood that it was good legal practice that in layered documents such as this, a clause should only appear in the document with highest precedence, not be replicated is subsidiary documents?]
This is the nub of my problem – although there are other issues I’ve stumbled across while looking at these documents, like lack of definition of quorum; contradictory clauses in the District amended SRCC etc etc
Anyway I hope I have explained our Club’s problem adequately and you have enough information to make suggestions.
Regards, John Rockliff, Secretary RC Burnside (District 9510)