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Set Up a Foundation in Australia

Set Up a Foundation in Australia

A foundation is a type of entity that is included in the not-for-profit types of structures. Therefore, if you want to set up a foundation in Australia, you will need to observe the rules and regulations prescribed for these entities.

As a general rule, the registration of a foundation will follow the same steps for company incorporation in Australia, only that certain differences will appear, considering the not-for-profit purpose of this structure (as opposed to the commercial purpose of regular legal entities).

You can find out from our team of consultants in company formation in Australia the steps you must follow in order to incorporate a foundation.

What are the characteristics of a foundation in Australia?

If you want to set up a foundation in Australia, you must know that the structure must have a not-for-profit purpose. This applies to foundations, trusts, charities, non-governmental organizations and other types of entities.

Some of the main characteristics are presented below:

  1. develop a charity purpose or an activity that is in the interest of the community (public benefit);
  2. it obtains its funds through fundraising and other similar methods of raising capital;
  3. it benefits from a special tax system, in the sense that the foundation can obtain tax benefits, deductions, exemptions, refunds, etc.

Why set up a foundation in Australia?

A foundation can be used as a way of raising capital for a given purpose, most likely in the benefit of the community. The most important aspect one must know is that the foundation goes through the process of company formation in Australia as a regular legal entity and that it has separate legal personality.

Therefore, its founders will be considered, from a legal point of view, separate from the foundation. In general, the foundation is used for raising capital from different sources, including the private sector or the public/governmental one.

The foundation is managed by a board of directors who will organize the strategy that must be followed by other persons working/involved in the foundation. The staff is generally comprised of specialists in various fields, selected in accordance with the activity of the foundation.

The foundation can operate as a not-for-profit entity or as a structure dedicated to developing charity activities.

What is a charitable foundation in Australia?

A charitable foundation will carry out activities that are prescribed by the Charity Act. Our consultants in company formation in Australia can present in-depth information related to this law.

In the list below, you can find out some of the highlights of the charity sector:

  • the structure is regulated by the Charity Act 2013;
  • Australia has more than 600,000 not-for-profit organizations;
  • charities can apply for endorsements with the Australian Taxation Office (ATO) by completing the Form NAT 2948;
  • charities should register with the Australian Charities and Not-for-Profits Commission (ACNC), but those that were active before 3 December 2012 are automatically registered with the institution.

The registration is voluntary, not mandatory, but entities that want to obtain tax reliefs and all the tax benefits that can be obtained from the status of a foundation are required to be registered with the ACNC before applying for tax benefits with ATO.

Please mind that if you want to register a foundation, you will need to go through the entire procedure for company formation in Australia.

Although the law provides for the possibility to purchase a shelf company in Australia when starting a business, which provides the benefit of not concluding most of the registration steps, as they have already been completed, this is not the case with a foundation.

This is given by the fact that a shelf company in Australia is incorporated solely for commercial companies and not for special structures like foundations, charities or trusts. We invite you to contact us for legal representation.