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Service Agreement Information Kit for Funded Organisations

2.3 Entering into a new Service Agreement

An organisation usually only has one Service Agreement with a specific department at any point in time. The exceptions to this are where:
  • the organisation is funded by the Department of Health and Human Services through separate Service Agreements for provision of disability and other services.
  • an organisation also enters into an agreement as a member of a consortium
  • the department has approved multiple agreements with groups/divisions and/or regions because the organisation is a state-wide organisation or operates in multiple areas across the state, and has presented a convincing business case to the department. 

The department when entering into a new Service Agreement with an organisation requires the documentation and information, listed below. 

Organisational contact details and legal status

Before a department can enter into a new Service Agreement and fund an organisation, it must ensure that the organisation is a legal entity established under either an Act of Parliament or other relevant legislative framework.

Organisations are required to maintain their legal status, and advise the department within five business days should their status change.

An organisation's legal status may be governed by one of the following Acts of Parliament:

  • Associations Incorporation Reform Act 2012 (Vic): This Act replaced the Associations Incorporation Act 1981 (Vic) from 26 November 2012. The new Act enables not-for-profit organisations to incorporate with minimal cost. This type of incorporation is suited to organisations that do not fit the criteria for incorporation under other Acts. In Victoria, Consumer Affairs Victoria administers this Act. Similar legislation applies in other states. Further information about the new Act can be found at: http://www.consumer.vic.gov.au/clubs-and-not-for-profits/incorporated-associations (external link, opens in a new window)
  • Co-operatives Act 1996 (Vic): Organisations registered and incorporated under this Act are autonomous associations of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Cooperatives are user owned businesses.
  • Corporations Act 2001 (Cth): This Act enables public or private companies that are normally created for profit to incorporate. A charity or other non profit organisation can also incorporate under this Act as a company limited by guarantee. A company limited by guarantee has no share capital, as no profit sharing is contemplated. The Act imposes certain filing and other obligations on these companies, including the lodgement of annual directors' reports and annual audited financial reports to the Australian Securities and Investments Commission.
  • Health Services Act 1988: This Act relates to organisations that provide health services within Victoria. It outlines standards and requirements that must be met by organisations covered under this Act. Examples of organisations in this category are public hospitals, private or denominational hospitals, and community health centres.
  • Individual Acts of Parliament: Organisations can be created by individual Acts of Parliament. These organisations are governed by their own legislation and in some cases are subject to other legislation such as the Public Administration Act 2004 (Vic) and the Financial Management Act 1994 (Vic).
  • Local Government Act 1989 (Vic): The department can enter into a service agreement with a council constituted under the Local Government Act. This includes city councils, rural city councils or shire councils.
  • Trustee Act 1958 (Vic): This Act governs the use and creation of trusts. A trust is a legal structure in which one or more legal persons (the trustee) may, for example, holds the legal title to property, shares or money on behalf of another person or persons.

In some circumstances, the department may also fund individuals (known legally as a 'natural person'). In essence, they must be a person at least 18 years of age, must have the mental capacity to understand the Service Agreement, must not be under any court order and must not be bankrupt.

Copies of documentation demonstrating an organisation’s legal registration can be required by the department, typically this would be in the form of an incorporation certificate or company registration certificate.

Organisations will also be asked to complete a form listing the organisation contact and taxation details, which includes provision of their Australian Business Number (ABN).

Details for the electronic transfer of payments

Payments to the organisation will only be made to a registered financial institution. When entering a new Service Agreement, organisations are required to fill in the form Details for the Electronic Transfer of Payments and to attach a cancelled deposit slip for the account or have the financial institution validate (stamp) the completed attachment.

eBusiness agreement

Organisations must be registered with eBusiness to be able to authorise staff to register and access their organisation’s funding and payment details, data collection requirements and service standards and guidelines through the Service Agreement Module on My Agency.

Where organisations are not registered with eBusiness, the details in the eBusiness Access Agreement for Organisations need to be filled out and the agreement signed. Once eBusiness approves the application, it will provide the organisation’s nominated person (with an individual username and password) along with guidelines and instructions on how to register themselves as a user on eBusiness.

Copies of financial statements/annual reports

Organisations that do not have a current Service Agreement with any of the departments would normally be asked to provide their financial statements or annual reports. Finance staff from the department use this information to analyse the financial position and sustainability of the organisation, prior to authorising funding and entering into the Service Agreement.

Conflict of interest

When entering into a new Service Agreement, an organisation is required to confirm that it has no actual or potential conflict of interest and that no actual or potential conflict of interest is likely to arise during the term of the Service Agreement. These requirements are described further in Chapter 3 (Refer to 3.5).