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WORKCHOICES AND NON - PROFIT ORGANISATIONS
“Trading” and “financial”
Under the Workplace Relations Act a Constitutional Corporation must be a trading organisation that is incorporated under the Corporations Act 2001. The substantial part of its activities being trading activities ( not necessarily the predominant work) and that it engages in significant financial activities (regardless if it was formed for such purpose).
In a decision of the Full Bench of the NSW Industrial Court the Children’s Medical Research Institute, a non-profit organisation, was found not to be covered by the Federal Industrial Relations system as the institute’s trading activities were secondary to its primary charitable activities.
The Children’s Medical Research Institute’s constitution clearly stated that where its objects encompassed any trading activities, they were secondary to its primary charitable objects.
The institute did not derive revenue from any financial activities as such, but rather from a mixture of grants, donations and passive investments (whereby money is given to another corporation to manage those investments over a period of time).
The Full Bench said:
“The expression ‘financial corporation’ is not a term of art and does not have a special or settled legal meaning”.
“It is by virtue of the discussion of a commercial element and its application to the facts of the corporations in the authorities, which illustrate the threshold test for financial activities of the nature engaged in by the respondent, the test being whether the corporation engages in commercial dealings” .
“The financial activities of the respondent consist of investments which have a capital value and produce revenue through dividends. It has savings accounts which produce some income through interest. The financial investments that generate investment income and dividends for the respondent were initially derived from non-commercial sources, such as a public appeal in securities, government funding and charitable donations. They are now sourced from similar non-commercial, charitable sources in addition to reinvested dividends and investments”
It should be noted that the Full Bench not only relied on these observations but also from a closer analysis of the financial activities of the respondent.
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