The legal structure you choose for your charity should meet its current needs and allow for future development.
Charities can have a range of incorporated or unincorporated legal structures. There may be more than one legal structure that works for your charity.
Your charity's legal structure will affect many things, such as:
- its legal identity (whether it can be sued)
- its governance structure (who makes certain decisions)
- the way meetings are held
- the minimum number of members it must have
- who is liable for its debts
- other specific responsibilities like reporting or other compliance obligations.
Choosing a legal structure
When choosing a structure for your charity, ensure you understand the responsibilities that go with it. Your decision on legal structure will need to take into account:
- your charity's size, and how complex its activities will be
- whether your charity will have employees or volunteers
- the accountability your charity will have to its members and the community
- the potential personal liability of members or office holders for actions they take on behalf of the charity
- whether your charity will be applying for government grants
- whether your charity will want to operate in more than one Australian state or territory, or even overseas
- your charity’s eligibility for tax concessions.
The advantage of having an incorporated legal structure is that you can do things in the name of the organisation, such as rent an office, borrow money, apply for government grants or take out insurance. Otherwise, you may need to do these things, for example, in the name of an individual committee member.
If you are establishing a new charity, you may need to get professional advice to help you choose a legal structure that suits your needs.
You will need to decide on your organisation's legal structure before you apply for an Australian Business Number (ABN).
Each legal structure has advantages and disadvantages – it is important to consider these in relation to your charity’s circumstances.
Choosing a legal structure is an important decision, so consider getting legal and other professional advice early, and ensure that advice is specific to your situation.
All organisations wishing to register with the ACNC must ensure their governing document (for example, the constitution, rules or trust deed) is right for the charity's legal structure and meets ACNC registration requirements.
You may also need professional advice to help prepare your charity's governing document.
Incorporated legal structures
An incorporated association is an organisation incorporated in a state or territory under the laws of that state or territory. Its structure establishes it as a legal entity separate from its individual members.
An incorporated association is the most common legal structure for registered charities.
The name of an incorporated association will be something like 'XYZ Incorporated' or 'XYZ Inc.'
State and territory incorporating regulators provide 'model rules' that incorporated associations can use as a governing document.
See our guidance about the regulation of charities in each state and territory to find the relevant regulator in your area, as well as for more information about incorporated associations and charity registration.
A company limited by guarantee is the next most common structure for registered charities.
The name of an organisation structured as a company limited by guarantee will be something like 'XYZ Limited' or 'XYZ Ltd.'
Companies limited by guarantee are registered as companies with the Australian Securities and Investments Commission (ASIC).
See our guidance on companies limited by guarantee for more information.
Proprietary limited companies can be identified by ‘Pty Ltd’ at the end of their name.
Generally, the proprietary limited company structure is not suited to charities.
This is because charities must be not-for-profit, and a proprietary limited company usually allows shareholders to receive private benefits.
Private benefits can be in the form of:
- dividends and through profits realised on the sale, transfer or forfeiture of shares
- receiving a distribution from the net assets of the company on winding up.
However, there are certain circumstances in which a proprietary limited company may be an acceptable structure for a charity. For example:
- when the sole member of the company is another registered charity
- when the company is a corporate trustee of a charitable trust.
A co-operative is a type of entity which exists for the benefit of its members. It is only suitable as a charity legal structure if it has rules to prevent surpluses or profits being distributed to members. These kinds of co-operatives are referred to as non-distributing or non-trading co-operatives.
Organisations structured as co-operatives generally include the words 'Co-operative' and 'Limited' or 'Ltd' in their name.
The Co-operatives National Law is uniform legislation aimed at regulating co-operatives in the same way across Australia. The regulations under the Co-operatives National Law contain 'model rules' for co-operatives.
You need to check the requirements for rules for co-operatives with the regulator in your state or territory.
Some Aboriginal and Torres Strait Islander organisations are registered as corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act).
These corporations are regulated by the Office of the Registrar of Indigenous Corporations (ORIC). They usually have a name like ‘XYZ Aboriginal Corporation.'
For more information on Indigenous corporations, see the ACNC and ORIC’s joint guidance on Aboriginal and Torres Strait Islander corporations applying for charity registration, and guidance about the obligations of Aboriginal and Torres Strait Islander corporations to ORIC and the ACNC.
Unincorporated legal structures
If your charity is not incorporated, it could be:
- a trust (such as a private or public ancillary fund), or
- an unincorporated association (a less formal structure, with no separate legal identity).
Legal structure and Australian Business Register listing
When applying for charity registration, the ACNC does not impose limits on the type of legal structure a charity can choose – the only exceptions being individuals/sole traders, and partnerships.
When you apply to register your organisation as a charity, you will be asked to confirm its legal structure. The legal structure may be set out in the organisation's governing document. The organisation's entity type will be listed on the Australian Business Register (ABR) – if this entity type does not correctly match the legal structure, please contact the ABR to correct the information.
The table below sets out the different legal structures that organisations applying to be registered as charities may have, and the correct ABR type for each. In addition, there are other structures which may be able to be registered.
It is very important that your organisation's entity type as recorded on the ABR matches your organisation's governing document.
|Legal structure||ABR entity type|
Other Incorporated Entity
Trust (including testamentary trust created in a Will)
Discretionary Investment Trust OR
Australian Public Company (does not have Pty in its name)
Australian Public Company
Australian Private Company (has Pty in its name)
Australian Private Company
Other Unincorporated Entity
Individuals, sole traders, government entities and partnerships are ineligible to register as charities.
Other organisation types
Registrable Australian bodies
Registrable Australian bodies are registered by and have certain obligations to the Australian Securities and Investments Commission (ASIC), and can operate in all states and territories.
It is not a different type of legal entity, but certain legal entities can become a registered Australian body.
Some organisations, like incorporated associations, can only operate in their ‘home’ state or territory (the jurisdiction in which they are incorporated). By becoming a registered Australian body, these organisations can operate nationally.
Parents & Citizens associations
Parents & Citizens associations (P&Cs), or Parents & Friends associations (P&Fs), are organisations set up to support schools.
Some P&Cs are a type of incorporated entity, however they are not usually regulated by a state or territory incorporating regulator.
Not all P&Cs are eligible for charity registration as they may be government entities.