The corporations power

The idea

Section 51(xx) gives the Commonwealth power to make laws with respect to constitutional corporations. Every problem on this power resolves into a short sequence. Ask first whether the entity is a constitutional corporation. Ask next what a law may do to it. Ask last whether the law also reaches people who are not corporations.

A constitutional corporation is a foreign corporation, or a trading or financial corporation formed within the limits of the Commonwealth. Character is found in substance and not in the statutory label. It is a question of fact and degree. Trading extends beyond buying and selling to any activity of a commercial nature carried on with a view to earning revenue, even where no profit results.

Once the entity qualifies, the power is wide. It supports a law regulating the activities, functions, relationships and business of the corporation, and the conduct of those through whom it acts. The power does not support the formation or incorporation of corporations, and it tightens sharply when a law reaches a person only because that person deals with a corporation.

Where it comes from

The character test comes from the WA Football Case. A professional league that charged admission and sold television and advertising rights was a trading corporation because trading formed a sufficiently significant proportion of its overall activities. Mason J preferred that formulation. Barwick CJ asked instead whether trading was a substantial corporate activity, and Murphy J whether it was not insubstantial. State Superannuation Board treats the difference as one of emphasis, so prefer Mason J.

The same test governs financial corporations, so substantial financial dealings are enough whatever the entity's dominant undertaking (State Superannuation Board). Where a corporation has barely begun business its current activities reveal nothing, so its character is taken from the purpose for which it was formed (Fencott v Muller). The statutory label never decides. A State authority declared not to be a body corporate was still a trading corporation because it ran a railway business (Queensland Rail).

The reach of the power is stated most fully in WorkChoices. A law is within s 51(xx) if it regulates the activities, functions, relationships or business of a constitutional corporation, or the conduct of those through whom it acts including its employees. Strickland had already held that the power extends at least to regulating the trading activities of a trading corporation, and requires a substantial connection between the law and the corporation. Dingjan marks the outer limit, holding that a law reaching people who are not corporations is valid only where it has real significance for the corporation.

How it is examined

The corporations power is examined as a problem question. It is a staple of the mid semester exam and returns in the finals at 2019 Q3(b) and 2023 Part B(b). In 2025 it was worth ten plus four marks. The marks follow the three questions in order.

1. A fact pattern plants an entity with mixed activities, often a fete committee or a charity restaurant, and asks whether it is a constitutional corporation.
2. A WorkChoices style provision regulates the corporation or its employees, and asks whether it is supported.
3. One limb of that provision reaches a contractor or an individual, and asks whether that limb survives.
4. A shelf or newly formed company appears with no trading history, testing whether you switch to its purpose.
5. A statute labels its authority as not a corporation, testing whether you look past the label.

How to argue it

Take the three questions in turn and anchor each in the facts.

Start with character. Ask whether trading forms a sufficiently significant proportion of the entity's activities, weighing the figures the problem gives you. The Commonwealth will point to the scale of trading revenue, admission charges and dealings such as television and advertising rights. The challenger will argue that the trading is slight and incidental to religion, education or leisure. A charitable or altruistic purpose does not stop trading being trading, and the statutory label does not decide. Where the entity has barely begun business, take its character from the purpose for which it was formed.

Turn next to the reach over the corporation. Once the entity qualifies, a law regulating its activities, functions, relationships or business, or the conduct of its employees, is supported (WorkChoices). The Commonwealth may add that s 51(xxxv) does not read down s 51(xx), so a law on the corporation's relationship with its employees need not be confined to interstate industrial disputes.

Turn last to any limb that reaches a person who is not a corporation. That limb is valid only if the law operates on the corporation with real significance for it (Dingjan). The challenger will argue that the limb merely relates to the corporation's business and may bite where the corporation is untouched. Ask the practical as well as the legal operation of the law. If the limb can operate without affecting the corporation, it fails for a tenuous connection.

Where one limb overreaches, the endpoint is not to condemn the whole provision. The offending limb falls while the neighbouring limbs stand. On a marginal trader the point is finely balanced, so the conclusion should name the proportion of trading as the pivotal factor. Note also that s 51(xx) does not support incorporation, so a provision that brings a corporation into existence is outside the power.

Practice problems

One hundred exam-style problems across twelve topics. Pick a topic, read the problem, write your own answer in IRAC, then reveal the Pass and H1 exemplars and the examiner's comments. Step through in order or jump to a random one. Nothing you type is saved or sent anywhere.

The trap

The costliest error sits in the third question. A WorkChoices style provision will often list several limbs. One limb reaches an individual only because that person deals with a constitutional corporation. That limb must be tested against Dingjan on its own. It can fail for a tenuous connection even where every neighbouring limb is valid, and a student who validates the provision as a whole loses those marks.

A second trap is the marginal trader. Fund raising and an altruistic purpose do not disqualify an entity, but truly slight or incidental trading does, so weigh the proportion on the facts rather than the label.

Key authorities

• s 51(xx) — a foreign corporation, or a trading or financial corporation formed within the limits of the Commonwealth.
• WA Football Case — trading is a sufficiently significant proportion of a corporation's overall activities, a question of fact and degree.★
• State Superannuation Board — the same test governs financial corporations, and a corporation that has barely begun business is judged by its purpose.★
• Fencott v Muller — a shelf company with no trading history takes its character from the objects for which it was formed.
• Queensland Rail — substance and current activities govern, not the statutory label.★
• Strickland — the power extends at least to regulating the trading activities of a trading corporation, and requires a substantial connection.★
• WorkChoices — a law regulating the activities, functions, relationships or business of a corporation, or those through whom it acts, is valid.★
• Dingjan — a law reaching people who are not corporations is valid only where it has real significance for the corporation.★