Proposed changes to the SEV rules of association

SEV held a Special General Meeting on Thursday 19 September 2024 to consider a proposal to amend our rules of association (also known as our constitution) to ensure they comply with income tax-exempt and charitable status requirements. A summary of the approved changes is provided below. 

Proposed amendments and rationale

It is important to note that this action did not change the intent or operation of SEV. The reason for it was to allow continued operations without alteration.

SEV has always operated as a not-for-profit incorporated association, and this status has meant that the organisation was exempt from lodging income tax returns. A recent ATO ruling has changed this process; if we did not become registered with the Australian Charities and Not-for-profits Commission (ACNC) as a charity, we would have been obliged to lodge a statement each year with the ATO to be assessed for our not-for-profit status.

Not registering as a charity would have created considerable uncertainty for us, whereas a successful application with the ACNC meant that SEV could continue to operate as it has, and has eliminated the need for a recurring yearly applications for income tax-exempt status.  

Charities are required to have a ‘winding up’ clause, in which any surplus assets are distributed to another charity chosen by the members with similar purposes. Our previous rules stated that in the event of winding up, surplus assets would be distributed to an institution with similar aims and objectives, but they didn't specify that any such entity must also be a charity:

23. Winding up or cancellation of the Association The Association may be wound up voluntarily by a 75% majority of its Members present at an AGM. At least 21 days’ notice in writing shall be given to the Executive Officer (EO) of intention to move for the winding up of the Association and notice of such motion shall be circulated to all members at least 21 days before the meeting at which it is to be discussed. No Member shall receive any financial benefits therefrom, and in the event of the Association being wound up, any funds remaining after meeting its legal obligations and commitments, shall be transferred to an institution with similar aims and objectives. All payments shall be authorised by the Committee or the Members in a General Meeting.

The approved amendment to this part of our rules states that in the (unlikely) event of SEV having to wind up, surplus assets would be distributed to one or more registered charities, and that those charities would be similar to, or inclusive, of the purpose(s) of SEV. This complies more clearly with ACNC requirements, which allows us to be confident of retaining our not-for-profit and income tax-exempt status into the future. The wording below was suggested as part of the legal advice we sought and received in regard to this issue.

The following special resolutions to amend the constitution were put members at the SGM that took place at 5.00pm on Thursday 19 September 2024, and were approved unanimously:

1. That clause 23 of the existing constitution setting out the rules of the association be amended so that it reads:

23. Surplus assets not to be distributed to members The Association may only be voluntarily wound up by the passing of a special resolution of members at an AGM. If the Association is wound up, any surplus assets must not be distributed to a member or a former member of the Association, unless that member or former member is a charity described in the following clause. 23.1 Distribution of surplus assets Subject to the Associations Incorporations Reform Act and any other applicable Act, and any court order, any surplus assets that remain after the Association is wound up must be distributed to one or more registered charities:    (a) with charitable purpose(s) similar to, or inclusive of, the purpose(s) of the Association, and    (b) which also prohibit the distribution of any surplus assets to its members to at least the same extent as the Association.The decision as to the charity or charities to be given the surplus assets must be made by a special resolution of members at or before the time of winding up.