This chapter in one minute
- Every state expects the people running a club or association not to take on debts it cannot pay. In New South Wales a committee member can even be made to pay the debt.
- The annual audit or verification looks back. Nothing in it asks whether the club can pay its way next year.
- So bring the accountant in from the start: setting up the books and software, setting the club up in BusinessSolvency, and building a three-year forecast each year.
- A forecast the accountant prepares, read at a meeting and minuted, is the kind of evidence that could support a committee member’s defence.
- The two worked examples show the difference: Riverbend’s committee acted in time and recovered; Coastline’s board carried on and ran out of cash.
The first bad year is the cheapest year to act, and the bank balance will not tell you it has arrived.
- Both clubs looked fine at the bank. Grants, a short-term loan and unpaid suppliers hid a trading loss.
- The forecast showed the gap a year or more ahead. That is when a levy, a price rise or a smaller project could still close it.
- The difference was a decision, minuted in time. Riverbend’s committee acted and recovered. Coastline’s board carried on, and its directors face the full company-director duty.
- The accountant is the person who can see it first. Involve them from the beginning, not when the bank calls.
Read the worked examples: Chapter 8D — Riverbend → · Chapter 8E — Coastline →
⚠ General information, not legal advice
This chapter explains the law in plain English as at October 2026. The Queensland, New South Wales and Western Australian rules have been checked against the legislation or the state government’s own pages. South Australia, Tasmania, the ACT and the Northern Territory were checked in October 2026. Queensland’s gaming-club reporting has been partly checked; the gaming audit deadline, the Liquor Act rules and other states’ licensed-club rules have not yet been checked. Confirm your position with your accountant or a solicitor.
In short: don’t wait for the annual check. The accountant can help set the club up properly, and then help it look ahead every year.
Forming a club or association is professional work today: the lawyer drafts the constitution and handles incorporation, the accountant sets up the ABN, GST, payroll and the books, and a consultant who knows the sector often helps with grants, licensing and how the club runs. Once the club is trading, many committees only see the accountant once a year, after the books are closed.
That is too late to be useful. By then the year is over. A committee that brings its accountant in from the start gets three things it cannot easily get any other way:
The accounting software (Xero, MYOB or QuickBooks), with the club’s point-of-sale, membership or registration system feeding into it, so the figures can be trusted.
The same figures set up in BusinessSolvency (2D.3 and Chapter 2C.6), with a three-year forecast built from the committee’s budget and plans.
A short letter each year, tabled at a meeting and recorded in the minutes. If things go wrong, this shows the committee asked and acted.
Remember this: where the accountant’s work fits the law
Two of the state laws in 2D.4 point straight at the accountant. In Queensland, a committee member’s defence is having reasonable grounds to expect the association can pay its debts. In Western Australia, a defence is relying on a competent, reliable person for information about solvency. A forecast the accountant prepares, read at a meeting and minuted, is the kind of evidence that could support either. Without it, the committee has very little to point to.
In short: two fictional Queensland clubs, with figures checked by the BusinessSolvency calculation engine. Each shows why the trouble started, what the warning signs were, and how it was, or could be, fixed.
These are the two demo clubs in the BusinessSolvency app. Read the story first, then the fix, then open the club in the app and see the same figures for yourself. Using them this way, an accountant could spot the same pattern in a real club a year or more earlier.
Riverbend Sports & Recreation Association Inc
The story. In FY2026 a new clubhouse was built with grants and a $70,000 loan. In FY2027 it cost more to run than the club earned: a loss of $48,880, and trading could not cover the loan repayments. The bank still showed $46,370, so on the surface all looked well.
The fix. The committee acted: a $30,000 members’ levy and price rises in FY2028, and a $40,000 solar grant in FY2029. By FY2030 the club makes a surplus of $25,925 and holds $122,575 in cash.
Read the story (8D) →
The committee’s plan, year by year (8D.5) →
For accountants: the numbers →
See it live: request alpha access →
Coastline Leagues & Community Club Ltd
The story. In FY2026 a $2.6 million renovation, $2 million of it borrowed. In FY2027 trade fell 8% and the club lost $717,000. A $400,000 short-term loan and slower payments to suppliers kept the bank at $458,790. Carrying on as before, it is $1.66 million overdrawn by FY2030.
The fix it still has time for. Take advice now from the accountant and an insolvency practitioner, stop borrowing to cover running costs, consider the safe harbour, cut costs to fit revenue, talk to the lender early, and tell the members. These options are set out, not modelled.
Read the story (8E) →
What the board could do now (8E.6) →
For accountants: the numbers →
See it live: request alpha access →
How an accountant could use the two examples with a real club
Does your club have a new facility, a recent loan, tied grants, or fees paid in advance making the bank look better than it is?
In your club’s forecast: trading cash against loan repayments, short-term debts against short-term assets, and any levy, grant or borrowing covering a gap.
Riverbend’s levy, price rises and grant, or Coastline’s list of options, are the kinds of choices to put to the committee.
Then put it in writing to the whole committee or board, and ask for it to be minuted. See the sample letter in 2D.3 ↓
In short: The two examples show the problem and the fix. BusinessSolvency is how a committee and its accountant could see the same pattern in their own club, early enough to act. The figures the accountant already holds, plus a three-year look ahead, in words a committee can follow.
- The same figures, imported once. Clubs keep their books in Xero, MYOB or QuickBooks like any business, so the import works the same way (Chapter 6).
- Club wording. Choose the Clubs & Associations sector. Reports read “Surplus or Deficit”, there are no drawings or dividends, and tax is 0% or the non-member share (Chapter 2C.3).
- The Solvency Forecast. Three years ahead, each tested against the Sustainable Cashflow Formula, with a flag when levies, grants or new borrowing are covering a trading gap.
The accountant’s annual routine and the questions worth asking the treasurer are in Chapter 2C.5; the AGM timetable is in Chapter 2B.6. When the forecast shows a shortfall, the accountant puts it in writing to the whole committee or board, not just the treasurer. For example:
Dear Committee,
With this year’s financial statement I have prepared a three-year cash forecast, based on the budget and plans the treasurer provided. It shows that cash coming in could fall short of cash going out by about $[amount] in [year], mainly because [reason, for example the running costs of the new clubhouse].
I recommend the committee discusses this at its next meeting, records its decision in the minutes, and does not take on new borrowing or commitments until there is a plan to close the gap.
In short: whatever the state and whatever the legal form, the people in charge must not let the club take on debts it cannot pay.
| Where | What the law says |
|---|---|
| Queensland | Since 22 June 2022, management committee members must prevent the association incurring a debt where there are reasonable grounds to expect it is, or would become, insolvent (Associations Incorporation Act 1981, section 70I). Maximum penalty 60 penalty units. More detail in Chapter 2B.3. |
| New South Wales | A committee member commits an offence if the association incurs a debt when there were reasonable grounds to expect it would become insolvent, and it later ends up insolvent, wound up or deregistered (Associations Incorporation Act 2009, section 68). Maximum penalty 50 penalty units or one year’s imprisonment, or both. The committee member can also be jointly and severally liable for the debt with the association. |
| Victoria | Committee members must make sure the association does not continue to operate if it is insolvent, and oversee its financial affairs (Consumer Affairs Victoria). |
| Western Australia | A management committee member commits an offence if the association incurs a debt while insolvent, or becomes insolvent by incurring it, and there were reasonable grounds to expect that (Associations Incorporation Act 2015, section 127). Fine up to $5,000. |
| South Australia | If the association incurs a debt when there are reasonable grounds to expect it will not be able to pay all its debts as they fall due, any committee member or person who took part in its management at the time could commit an offence (Associations Incorporation Act 1985, section 49AD). Maximum penalty $5,000 or one year’s imprisonment, and the court can also order the person to pay some or all of the debt. A defence is available if the debt was incurred without the person’s authority or consent, or there was no reasonable cause to expect the association could not pay (Law Handbook SA). |
| Northern Territory | The Associations Act 2003 includes an offence headed “Incurring debts not likely to be paid” (section 90), and the court has powers where debts are unlikely to be paid (section 91). An officer of the association, or anyone who took part in managing it, could commit this offence if the association incurs a debt when there were reasonable grounds to expect it could not pay its debts as they fell due. Maximum penalty 400 penalty units or 2 years’ imprisonment, the heaviest in this table. A defence is available if the debt was incurred without the person’s authority or consent, or there was no reasonable cause to expect it could not be paid. After a conviction, the court can declare the person personally responsible for all or part of the debt, on application by the Commissioner or a liquidator (section 91). Penalty as in the Act as enacted (2003) and the 2005 reprint; confirm it in the current reprint. |
| Tasmania, ACT | Neither Act has a specific offence for committee members who let the association incur debts it cannot pay (Associations Incorporation Act 1964 (Tas); Associations Incorporation Act 1991 (ACT), checked October 2026). That does not leave committee members free of the duty: Justice Connect’s Not-for-profit Law guide (March 2026) says officeholders in every state and territory have a duty not to incur a debt that would make the association insolvent, and a club that cannot pay its debts can be wound up. |
| Club companies | Most licensed clubs are companies limited by guarantee. Their directors carry the Corporations Act section 588G duty in every state, and Director Penalty Notices for unpaid PAYG withholding, GST and super (Chapter 2A). Being an unpaid volunteer does not lessen it. |
| Registered charities | On top of the rules above, ACNC Governance Standard 5 requires the charity’s Responsible People to make sure it is not allowed to operate while insolvent (Chapter 2C.1). |
In short: a club with gaming machines could need a full audit whatever its size.
In Queensland, an association that would otherwise only need verification must have an audit if any other law requires it, including the Gaming Machine Act 1991 (Queensland Government). The Queensland Government’s Club IQ guide puts it simply: a club that operates under the Gaming Machine Act 1991 or the Liquor Act 1992 must also follow the financial reporting requirements of those Acts. The Gaming Machine Act 1991 has its own rules on a licensee’s accounts and audits, including an audit of gaming operations (section 302), what must be done with the audit report (section 304), keeping accounting records (section 308) and, for clubs, a community benefit statement to go with the audit report (section 305). The Queensland Government’s gaming compliance forms say the community benefit statement is for “a category 2 licensee (club) with more than 50 gaming machines”. A gaming club also reports during the year: a monthly reconciliation of each gaming machine (Form 42), monthly variances (Form 61), a quarterly report (Form 64) and a half-yearly report (Form 69). A club already working to that rhythm can fit a quarterly BusinessSolvency review into it with little extra effort. Licensed clubs also answer to the liquor and gaming regulator, and club companies to ASIC. That is one more reason the accountant needs to be involved early: the reporting a licensed club owes is more than most volunteer committees expect.
In New South Wales, registered clubs also follow the Registered Clubs Act 1976 and its Regulation. The Registered Clubs Regulation 2025, in force from 1 September 2025, requires financial reporting to the board club by club where practicable (for amalgamated clubs), caps members’ requests for financial statements at five years, lets gaming-machine profit reports to members use either the financial year or the gaming machine tax year, and has top executive salaries disclosed in aggregate, in line with the Corporations Act (NSW Government).
Still to be checked
The Gaming Machine Act section numbers above come from the Act’s table of provisions. The deadline for the gaming audit report, the Liquor Act 1992 reporting rules for clubs, and the licensed-club rules in Victoria, Western Australia, South Australia, Tasmania, the ACT and the Northern Territory have not yet been checked for this manual. Confirm them with the Office of Liquor and Gaming Regulation or your state’s regulator.
Key sources drawn on in this chapter
- Queensland Government — Previous law changes for incorporated associations (22 June 2022); Explanatory Notes, Associations Incorporation and Other Legislation Amendment Bill 2019 (section 70I)
- Queensland Government — Appointing an auditor or verifier (audit where another law requires it, including the Gaming Machine Act 1991)
- Gaming Machine Act 1991 (Qld) — table of provisions, sections 295 to 309 (AustLII, as at 1 February 2024); Queensland Government open data — Club Community Benefit Statements 2003–2012
- Queensland Government — Club IQ: Financial reporting requirements (clubs under the Gaming Machine Act 1991 or Liquor Act 1992 must also follow those Acts’ reporting rules)
- Business Queensland — Compliance forms for gaming machine licensees (community benefit statement for clubs with more than 50 gaming machines; monthly, quarterly and half-yearly returns), checked October 2026
- NSW Government — Registered Clubs Regulation 2025 (18 August 2025; in force 1 September 2025)
- NSW Legislation — Associations Incorporation Act 2009, sections 30A, 67 and 68
- Consumer Affairs Victoria — Committee and committee members (incorporated associations)
- WA Legislation — Associations Incorporation Act 2015, section 127; Consumer Protection WA — Committee and officer duties
- Associations Incorporation Act 1985 (SA), section 49AD; Legal Services Commission SA — Law Handbook, “Possible offences when an association is ending”
- Associations Act 2003 (NT), sections 90 and 91 (as enacted, Act No. 56 of 2003, and reprint as in force 14 December 2005); NT Law Handbook — Community organisations
- Associations Incorporation Act 1964 (Tas), as in force; Associations Incorporation Act 1991 (ACT), republication 41 (6 December 2025)
- Justice Connect Not-for-profit Law — Insolvency and incorporations and CLGs, March 2026
- ACNC — Charities and insolvency; Companies limited by guarantee