The Reform Agenda at both State and Federal levels, together with ongoing compliance requirements, impose significant governance challenges for clubs. The position is exacerbated for clubs involved in gaming and its monitoring. This month we provide a recap of significant governance issues and offer some practical steps for consideration.

Associations Reform

Clubs should now be well aware that the Associations Incorporation Reform Act 2012 (“the Reform Act”) came into effect from 26 November 2012 (see Clubs Connect January/February 2013 and Club Connect October 2012). The Reform Act, including Regulations providing new model rules, replaces the Associations Incorporation Act 1981 (the Old Act) and the old model rules. There are significant changes in the Reform Act and the new model rules which will impact on clubs that are now covered by the Reform Act.

Clubs that are companies limited by guarantee, and therefore covered by the Commonwealth Corporations Act 1981, are not affected by the Reform Act

Schedule 1 of the Reform Act sets out the matters that must be provided in the Club’s Rules (ie the Club’s Constitution). The new model rules are contained in Schedule 4 of the Associations Incorporation Reform Regulations 2012 (“the Reform Regulations”).

A review of the Club’s Constitution for those clubs covered by the Reform Act is required. Such a review will avoid any inadvertent but undesirable application of the new Model Rules to the Club’s Constitution. We suggest that Clubs consider the following steps in undertaking a review of the Club’s Constitution:

Check that the Club’s Constitution covers each of the mandatory matters listed in Schedule 1 of the Reform Act. If a matter is not covered in the Club’s Constitution, then the relevant model rule will be implied into the Club’s Constitution. This may not be a desirable outcome for a club.
Compare the Club’s Constitution to the model rules. A Club can have a different approach to a mandatory matter than that provided for by the model rules.
The Clubs with liquor and/or gaming operations should ensure any statutory requirements are dealt with in the Club’s Constitution.
For Clubs seeking particular affiliation with a peak body or governing organisation, check whether there are any additional requirements to be provided in the Club’s Constitution.
Consider and confirm that the purpose and rules satisfy any other relevant statutes, eg. the Income Tax Assessment Act 1997.
Consider any other matters that may be particular to your Club and its membership.
Having identified the necessary changes, prepare an action list and timeline. For example, the changes to the Constitution must be passed by members as a Special Resolution. Check the requirements for calling a meeting of members, either an Annual General Meeting or otherwise.
Clubs will find the process time consuming, but necessary as a principle of good governance. Clubs can find considerable assistance on these reforms at www.pilch.org.au and the Reform Act and Reform Regulations can be accessed at www.austlii.edu.au .

Liquor and Gaming

The Victorian Commission for Gambling and Liquor Regulation (“VCGLR”) has issued some timely reminders affecting clubs with gaming and liquor operations.

Since the introduction of the new gaming model in August 2012, the previous “Tatts Pokies” and “Tabaret” signs are no longer appropriate and must be removed by 6 March 2013. If gaming venues wish to replace the signs, they must comply with the Gambling Regulation (Signage) Regulations 2005 and importantly consider any Local Council requirements.
It is the Club’s responsibility to ensure that employees working in the gaming machine area have received Responsible Service of Gaming (“RSG”) training and can provide a copy of each employee’s RSG Certificate on request by a VCGLR inspector.
VCGLR has also again reminded that all liquor licensees must be aware of the Responsible Liquor Advertising and Promotions Guidelines where alcoholic drink promotions are undertaken. VCGLR has warned that if it believes that advertising or promotions are likely to encourage irresponsible consumption of alcohol or are not in the public interest, then disciplinary action may result. VCGLR has warned that the Alcoholic Drink Promotion Guidelines also apply to social media.
Further information can be accessed from the VCGLR website.

Club Income Tax Reforms

The Federal Government announced in May 2011 that clubs that previously enjoyed full income tax exemption would be liable to pay income tax on unrelated business income. Unrelated business income is considered to be profits from gaming, bar and catering sales. For a full description of these reforms, see Club Connect June 2012. The Federal Government has now deferred the commencement of the Unrelated Business Income Tax to:

1 July 2014 (for unrelated business activities commenced after 7.30pm (AEST) on 10 May 2011); or
1 July 2015 (for unrelated business income activities commenced prior to 7.30pm (AEST) on 10 May 2011).
Unrelated business activities are considered to be matters that are not directly related to the purpose of the club. As noted in earlier editions of Club Connect, it is important that clubs assess their own position and develop strategies to deal with these issues. The Federal Government has indicated that the Mutuality Principle will still apply notwithstanding the introduction of the Unrelated Business Income Tax.

Article Published in Club Connect March 2013