Remuneration reporting requirements for Queensland associations from 1 July 2024

For financial years commencing on and after 1 July 2024, all Queensland incorporated associations will be required to disclose at the annual general meeting (AGM) the remuneration and other benefits provided to management committee members, senior staff and their relatives (relevant persons) during the previous financial year, even if the value is immaterial or no remuneration or benefits were provided.

The purpose of the disclosure requirement is to provide greater transparency and accountability within associations and enable members to understand the finances of the association.

Medium and large associations may already report to members to some extent on the remuneration and benefits of relevant persons and be better set up to implement the new requirements, although the lack of any materiality threshold will be an added challenge. Small associations may find them an added compliance burden and a potential source of member questions or concerns if there are disclosures to be made.

When a committee approves a payment or other benefit to a relevant person this will be a ‘related party transaction’ and there will often be a conflict of interest to be addressed. The new requirement does not alter the statutory and general law duties already imposed on committee members relating to conflicts of interest. Generally it is up to the committee to deal with the conflict and committees has not been required to report conflicts to members. The new requirement should prompt committees to review and update policies and procedures for identifying, recording and reporting related party transactions and conflicts of interest.

Legislative provisions

The new requirement is a statutory obligation imposed on each committee member, not the association. Section 70D of the Associations Incorporation Act 1981 (Qld) (the Act) requires the members of the management committee to ensure that prescribed details about remuneration and other benefits provided to relevant persons are disclosed at the AGM and regulation 9D in the Associations Incorporation Regulation 1999 (Qld) sets out the prescribed details (the Act Reporting Requirement). Failure to comply may result in a financial penalty being incurred by each committee member.

How to disclose

Remuneration and benefits can be disclosed in:

• the documents that the association is required under the Act to present at the AGM, including, for an ACNC-registered charity, a document that the association is required to give to the ACNC for the financial year; or
• a written remuneration statement for the financial year; or
• if no remuneration or benefits were paid or given, by oral statement made at the AGM and recorded in the minutes.

Even if remuneration or benefits provided to relevant persons have an immaterial value, or are no different to benefits provided to other persons, a written statement must be provided.

Though not required under the Act or by the ACNC to do so, if a small incorporated association, including an ACNC-registered charity, presents a financial statement to its AGM and lodges it with the ACNC to comply with the disclosure requirement, it must make the remuneration disclosure in a written statement even if the disclosure is also made in the financial statements.

Terminology

A senior staff member is a person who participates in making decisions that affect the whole or a substantial part of the activities of the association, or has the capacity to significantly affect the association’s financial standing.

A relative of a person means a spouse, parent, sibling, child, grandparent or grandchild of the person.

Remuneration includes salary, allowances and other entitlements but does not include reimbursement of out of pocket expenses. Remuneration and benefits include those defined as ‘compensation’ in AASB 124 which includes paid leave, profit-sharing arrangements, bonuses, long-term benefits and termination and retirement benefits and non-monetary benefits such as use of a car and free or subsidised goods or services.

Disclosure by ACNC-charities

Large size charities are required to report to the ACNC on the remuneration (including benefits) of ‘key management personnel’ including committee members, and related party transactions in their financial statements. Medium size charities are required to report on related party transactions in their financial statements and some are also required to report on remuneration of ‘key management personnel’. Charities of all sizes are required to provide information about related party transactions in their ACNC annual information statement. The Act Reporting Requirement covers aspects of ACNC reporting on both remuneration and benefits of key management personnel and related party transactions. The ACNC reporting requirements are different from the Act Reporting Requirement in some respects. For example:

• Both the ACNC and the Act Reporting Requirement only require disclosure of the aggregated amount of remuneration and benefits and the number of persons who received remuneration and benefits. However, if there is only one key management personnel, the amount of the remuneration and benefits does not need to be reported to the ACNC but must be disclosed to the AGM under the Act Reporting Requirement.
• The Act Reporting Requirement covers remuneration and benefits provided to ‘relatives’ of management committee members and senior staff whereas for medium and large size charities, the ACNC uses accounting standard AASB 124 Related Party Disclosures to define what a ‘related party’ is but has a different definition of ‘related party’ for small charities.

Given the differences, associations that are ACNC-charities will need to consider whether the disclosures in the financial statements provided to the ACNC will be sufficient to meet the Act Reporting Requirement. Bearing in mind that the financial statements will be publicly available on the ACNC register, charities that remunerate or provide benefits to only one person and are therefore not required to report the amount of that remuneration to the ACNC may prefer not to do so in their financial statements and instead provide a separate written statement to the AGM.

Materiality

There is no dollar materiality threshold for monetary remuneration or benefits and no value materiality threshold for non-monetary benefits. The Act Reporting Requirement, rather unhelpfully, states that whether free or subsidised goods or services constitute sufficient value to be considered as benefits depends on the following cumulative criteria:

• the overall value of the goods or services; and
• the reason the person was given the goods or services; and
• whether any other member has received similar goods or services in similar circumstances.

Committees will no doubt find it challenging to decide whether it is necessary to disclose free or subsidised goods or services provided to relevant persons, determine the value of the benefit and ensure that all disclosable benefits are recorded in sufficient detail.

Implementing the new requirement

An association with a financial year ending on 30 June will need to begin recording relevant remuneration and benefits from 1 July 2024 and make its first disclosure at the next AGM after 30 June 2025.

Committees should take steps to ensure they will be in a position to comply with, and decide how best to comply with, the Act Reporting Requirement.

If you would like assistance to work out how this change will impact your association, please do not hesitate to contact the team at NFPLawyers.

‍