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Legal entity

An 'entity' is a 'thing' that has a real existence, an essential nature, independent of other 'things', and that is treated in a distinct way in the eyes of the law. In Australia, each legal entity has a special character because of the laws (usually Commonwealth and/or State) that bring it into existence and/or dictate how it can and must operate. This section focuses on understanding the essential differences between legal entities and on key documents that are of interest to different legal entities.

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• C01 - Company Ltd (Listed)
  A listed public company is incorporated by registration with ASIC and listed by ASX. It reports to ASIC (including financial reports) and the ATO (NAT 0669-6.2009) and reports to others under rules dictated by ASIC and the ASX. It operates under the Corporations Act 2001 (Cth). It is a 'public' company because it raises capital by selling shares in the company publicly. It has more than 50 non-employee shareholders. Its shares are bought and sold on the stock exchange under rules dictated by ASIC and the ASX.
  
  

• C02 - Company Ltd (Unlisted)
  An unlisted public company is incorporated by registration with ASIC. It reports to ASIC (including financial reports) and the ATO (NAT 0669-6.2009) and reports to others under rules dictated by ASIC. It operates under the Corporations Act 2001 (Cth). It is a 'public' company because it has more than 50 non-employee shareholders and it raises capital by selling shares in the company publicly under rules dictated by ASIC.
  
  

• C03 - Company Large Pty
  A large proprietary company is incorporated by registration with ASIC. It reports to ASIC (including financial reports) and the ATO (NAT 0669-6.2009) and reports to others under rules dictated by ASIC. It operates under the Corporations Act 2001 (Cth). It is a 'private' company because it has less than 50 non-employee shareholders and it raises capital by selling shares in the company privately (that is, to persons determined by the Board of Directors) under rules dictated by ASIC. It is 'large' because ASIC deems it to be large (that is, it has an annual revenue of more than $25 million, it owns assets worth more that $12.5 million, it employs more than 50 employees, etc.) and therefore requires it to operate under different rules than a small proprietary company.
  
  

• C04 - Company Small Pty
  A small proprietary company is incorporated by registration with ASIC. It reports to ASIC (including financial reports if the company is foreign-controlled or if directed by ASIC to do so) and the ATO (NAT 0669-6.2009) and reports to others under rules dictated by ASIC. It operates under the Corporations Act 2001 (Cth). It is a 'private' company because it has less than 50 non-employee shareholders and raises capital by selling shares in the company privately (that is, to persons determined by the Board of Directors) under rules dictated by ASIC. It is 'small' because ASIC deems it to be small (that is, it has an annual revenue of up to $25 million, it owns assets worth up to $12.5 million, it employs up to 50 employees, etc.) and therefore requires it to operate under different rules than a large proprietary company.
  
  

• C05 - Company Limited By Guarantee
  Usually charitable or not-for-profit organisations register as an association. However, because associations are registered and controlled at the State level, this is sometimes not appropriate. At the national level, a charitable or not-for-profit organisation will generally be registered as a public company limited by guarantee. Limited by guarantee means the liability of the company's members is limited to the amount the members undertake to contribute to the property of the company if it is wound up. A company limited by guarantee is incorporated by registration with ASIC. It reports to ASIC (including financial reports) and to the ATO and to others under rules dictated by ASIC. A company limited by guarantee may be considered as a charitable or not-for-profit organisation by the ATO for tax purposes or as a taxable entity by the ATO depending upon the nature and purpose of its business. It operates under the Corporations Act 2001 (Cth). It is a 'public' company because ASIC requires it to operate under similar rules to other public companies, especially in reporting. See ASIC's rules.
  
  

• C06 - Disclosing Entity
  A disclosing entity is not a separate entity but circumstances (related to the need for efficient and effective disclosure to investors re: prospectus, the issue of securities, takeover, etc.) that turn one of the other entities operating under the Corporations Act 2001 (Cth) into a 'listed disclosing entity'. This was introduced to ensure that certain business entities (both listed and non-listed entities) disclose material information periodically and continuously. A disclosing entity is required to report to ASIC particular information in addition to their normal reporting requirements (such as financial reports) and report to others under rules dictated by ASIC.
  
  

• C07 - Managed Investment Scheme
  A managed investment scheme (also known as 'managed funds', 'pooled investments' or 'collective investments') is incorporated by registration with ASIC. The responsible entity must be a Australian public company (such as C01 or CO2 above) that holds an Australian financial services (AFS) licence authorising it to operate the scheme. It reports to ASIC (including financial reports) and the ATO and reports to others under rules dictated by ASIC. It operates under the Corporations Act 2001 (Cth). Generally in a managed investment scheme people are brought together to contribute money to get an interest in investments such as cash management trusts, property trusts, Australian equity (share) trusts, many agricultural schemes (e.g. horticulture, aquaculture, commercial horse breeding), international equity trusts, some film schemes, timeshare schemes, some mortgage schemes, and/or actively managed strata title schemes.
  
  

• C08 - Taxable Association
  Not all associations are considered to be Not-For-Profit (NFP) nor want to be considered as an NFP. Some associations are taxable. A taxable association reports to the ATO (NAT 0669-6.2009).
  
  

• C09 - Taxable Society
  Not all societies are considered to be Not-For-Profit (NFP) nor want to be considered as an NFP. Some societies are taxable. A taxable society reports to the ATO (NAT 0669-6.2009).
  
  

• C10 - Taxable Club
  Not all clubs are considered to be Not-For-Profit (NFP) nor want to be considered as an NFP. Some clubs are taxable. A taxable club reports to the ATO (NAT 0669-6.2009).
  
  

• C11 - Taxable Organisation (other)
  Not all organisations are considered to be Not-For-Profit (NFP) nor want to be considered as an NFP. Some organisations are taxable. A taxable organisation reports to the ATO (NAT 0669-6.2009).
  
  

• C12 - Cooperative Ltd
  A cooperative is incorporated by registration with the State in which it operates, in Australian Capital Territory, New South Wales, Northern Territory, Queensland, South Australia, Tasmania, Victoria, or Western Australia. It reports to the State body and the ATO (NAT 0669-6.2009).
  Cooperatives Act (ACT) 2002,
  Co-Operatives Act (NSW) 1992 ,
  Co-Operatives Act (NT),
  Cooperatives Act (QLD) 1997,
  Co-operatives Act (SA) 1997,
  Cooperatives Act (Tas.) 1999,
  Co-Operatives Act (Vic.) 1996, or
  Co-Operatives Act (WA) 2009.
  
  

• C13 - ASIC-registered Australian body
  A 'registered Australian body' is an entity formed or incorporated in Australia considered by ASIC to be a body corporate that is 'registrable', that applies to ASIC for registration, and is registered. Registrable bodies include bodies incorporated at the State level (that are not companies, recognised companies, exempt public authorities, corporations sole, foreign companies or financial institutions). Certain unincorporated bodies are also registrable. If a registrable Australian body wishes to carry on business in one or more states or territories outside its home jurisdiction, it must be registered under Part 5B.2 of the Corporations Act 2001 (Cth). An association which is registered under a State law not recognised in other States and considered by ASIC to be a registrable Australian body can go to ASIC and become a registered Australian body.
  
  

• COR - Strata Title Corporate Body
  It reports to the ATO (NAT 4125-6.2009).
  
  

• IND1 - Individual Contractor
  Individual operating as an independent contractor (sole trader) reports to the ATO as an individual. See ATO (NAT 1908).
  
  

• IND2 - Individual Person
  Persons who are employees, retirees, pensioners, unemployed, etc. report to the ATO as individuals.
  
  

• NFP1 - Unincorporated Association
  You don't have to be incorporated to be a Not-For-Profit association and many are not. They report to the ATO (NAT 7967).
  
  

• NFP2 - Incorporated Association
  An Incorporated Association is incorporated by registration with the State in which they operate, in Australian Capital Territory, New South Wales, Northern Territory, Queensland, South Australia, Tasmania, Victoria, or Western Australia. It reports to the State body and the ATO (NAT 7967).
  Associations Incorporation Act (ACT) 1991,
  Associations Incorporation Act (NSW) 1984,
  Associations Act (NT),
  Associations Incorporation Act (QLD) 1981,
  Associations Incorporation Act (SA) 1985,
  Associations Incorporation Act (Tas.) 1964 ,
  Associations Incorporation Act (Vic.) 1981, or
  Associations Incorporation Act (WA) 1987 .
  
  

• P1 - Partnership
  A Partnership operates according to legislation at the State level in Australian Capital Territory, New South Wales, Northern Territory, Queensland, South Australia, Tasmania, Victoria, or Western Australia. It reports to the ATO (NAT 2297-6.2009).
  Partnership Act (ACT) 1963,
  Partnership Act (NSW) 1892,
  Partnership Act (NT),
  Partnership Act (QLD) 1891,
  Partnership Act (SA) 1891,
  Partnership Act (Tas.) 1891,
  Partnership Act (Vic.) 1958, or
  Partnership Act (WA) 1895.
  
  

• P2 - Limited Partnership
  A Limited Partnership is registered at the State level in New South Wales, South Australia, Tasmania, Victoria, Queensland, or Western Australia. It operates under State legislation but is also required to to conduct certain activities such as fundraising according to Corporations law under rules dictated by ASIC. It reports to the ATO (NAT 2297-6.2009).
  Partnership Act (NSW) 1892,
  Partnership Act (QLD) 1891,
  Partnership Act (SA) 1891,
  Partnership Act (Tas.) 1891,
  Partnership Act (Vic.) 1958, or
  Partnership Act (WA) 1895.
  
  

• S1 - Super Fund - APRA regulated
  A super fund which is regulated by the Australian Prudential Regulatory Authority (APRA) (that is, all regulated super funds which are not SMSFs).
  
  

• S2 - Super Fund - Self-managed (SMSF)
  A self-managed superannuation fund (SMSF) is what is commonly called a Superannuation Trust. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. To properly operate as an SMSF and receive the tax benefits, it needs to seek to be regulated by the ATO and for this to be approved. (See Notes.) It reports to the ATO (NAT 71606-6.2009). It operates under SISA. SMSF is defined by s.17A of SISA. It can be a single-member fund or a multi-member fund. The members can be the trustees. In the deed for a single member fund the member is a trustee and one of the trustees must be the member.
  
  

• T01(D) - Testamentary Trust
  A Testamentary Trust is one that comes into existence upon the death of a person (the testator) for the assigned purpose of administering (what the ATO calls) their 'Deceased Estate'. The testamentary trust may arise from a will or a codicil which acts as the Trust Deed, setting up the testamentary trust upon the death of the testator and naming the executor(s) as trustee(s). Often the will establishes the testamentary trust to provide for children who have yet to reach their adulthood or who are handicapped and therefore need to be protected by the trustee(s). A testamentary trust may also result from an order of a court to vary or modify the provisions of the will or codicil, or to distribute the Deceased Estate of a person who died intestate. It may be called upon to report to the court and/or report to the ATO (NAT 2297-6.2009).
  
  

• T02(F) - Fixed Trust
  Many trusts are what is commonly called a 'Fixed Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. It reports to the ATO (NAT 2297-6.2009). A Fixed Trust names beneficiaries who are persons who have fixed entitlements to all of the income generated in the trust and all of the capital contained the trust. That is, the trustee is bound to make a distribution to the beneficiaries in a 'fixed' or predetermined manner, as set out in the trust deed. One of the reasons for setting the trust up as a fixed trust is to remove that discretionary power from the Trustees. The fixed entitlement may be specified as a fraction or a percentage. A fixed trust could therefore be used to carry out business operations or investments by a family in which the members of the family involved could benefit from these operations in a predetremined manner. One complication: The ATO includes Charitable Trusts under its definition of a 'fixed trust' for the purpose of registration of a 'charitable trust' with the ATO. Charitable trusts are not ‘fixed trusts’ as we have defined them because charitable trusts are trusts for particular social purpose and therefore do not have named persons as beneficiaries.
  
  

• T03(H) - Hybrid Trust
  Some trusts are what is commonly called a 'Hybrid Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. It is set up to own property and earn an income. As in a Fixed Trust, beneficiaries may have entitlements to a fixed proportion of a particular part of of the income generated in the trust in the year and/or of the capital contained in the trust at the end of the year, but, as in a Discretionary Trust, the Trustees will have complete discretion to distribute some part of this income and/or capital, to these or to any other beneficaries. It reports to the ATO (NAT 2297-6.2009).
  
  

• T04(T) - Discretionary Trust - Trading
  Many trusts are what is commonly called a 'Discretionary Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. Unlike a Fixed Trust the beneficiaries who have entitlements to all of the income generated in the trust in the year and/or all of the capital contained the trust at the end of the year is at the complete discretion of a person or persons defined in the trust deed, usually the Trustees. This particular Discretionary Trust earns most of its income from trading activities. It reports to the ATO (NAT 2297-6.2009).
  
  

• T05(S) - Discretionary Trust - Service
  Many trusts are what is commonly called a 'Discretionary Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. Unlike a Fixed Trust the beneficiaries who have entitlements to all of the income generated in the trust in the year and/or all of the capital contained the trust at the end of the year is at the complete discretion of a person or persons defined in the trust deed, usually the Trustees. This particular Discretionary Trust earns most of its income from service activities, management activities or both. It reports to the ATO (NAT 2297-6.2009).
  
  

• T06(I) - Discretionary Trust -Investment
  Many trusts are what is commonly called a 'Discretionary Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. Unlike a Fixed Trust the beneficiaries who have entitlements to all of the income generated in the trust in the year and/or all of the capital contained the trust at the end of the year is at the complete discretion of a person or persons defined in the trust deed, usually the Trustees. This particular Discretionary Trust earns most of its income from investment activities. It reports to the ATO (NAT 2297-6.2009).
  
  

• T07(M) - Cash Management Unit Trust
  Some trusts are what is commonly called a 'Cash Management Unit Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. Like in a Fixed Unit Trust, beneficiaries have entitlements to a fixed proportion of all of the income generated in the trust and all of the capital contained in the trust represented as a unit of the total number of units that make up the trust. A Cash Management Trust brings together and pools relatively small amounts from individual unit holders allowing them to invest in short-dated securities (such as treasury notes and bank bills) that have traditionally required large minimum investments. It reports to the ATO (NAT 2297-6.2009).
  
  

• T08(P) - Public Unit Trust (Listed)
  Some trusts are what is commonly called a 'Public Unit Trust (Listed)'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. It is set up to own property and earn an income. Like in a Fixed Unit Trust, beneficiaries have entitlements to a fixed proportion of all of the income generated in the trust and all of the capital contained in the trust represented as a unit of the total number of units that make up the trust. However, in a Public Unit Trust ownership of these entitlements can be bought and sold publicly. A listed public unit trust is one that is listed by the ASX and whose whose units are offered to the public under rules set by the ASX. A listed public unit trust has 50 or more beneficaries. It reports to the ATO (NAT 2297-6.2009).
  
  

• T09(Q) - Public Unit Trust (Unlisted)
  Some trusts are what is commonly called a 'Public Unit Trust (Unlisted)'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. It is set up to own property and earn an income. Like in a Fixed Unit Trust, beneficiaries have entitlements to a fixed proportion of all of the income generated in the trust and all of the capital contained in the trust represented as a unit of the total number of units that make up the trust. However, in a Public Unit Trust ownership of these entitlements can be bought and sold publicly. An unlisted public unit trust is one whose whose units are offered to the public under rules set by the trust deed. An unlisted public unit trust has 50 or more beneficaries. It reports to the ATO (NAT 2297-6.2009).
  
  

• T10(U) - Fixed Unit Trust (any other)
  Some trusts are what is commonly called a 'Fixed Unit Trust'. Like any Trust it begins life by the execution of a Trust Deed by the trustees and, like any Deed, the format of the Deed is dictated by State law in the State which will have jurisdiction. It reports to the ATO (NAT 2297-6.2009). Like a Fixed Trust, a Fixed Unit Trust names beneficiaries who are persons who have fixed entitlements to all of the income generated in the trust and all of the capital contained in the trust. That is, the trustee is bound to make a distribution to the beneficiaries in a 'fixed' or predetermined manner, as set out in the trust deed. The fixed entitlement is in this case defined by assigning to each of the beneficiaries a number of units of the total number of units that make up the trust.