Explanatory Statement
ASIC (Supervisory Cost Recovery Levy—Annual Determination) Instrument 2020/1073
This is the Explanatory Statement for the ASIC (Supervisory Cost Recovery Levy—Annual Determination) Instrument 2020/1073. The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).
Summary
1. The instrument relates to levies imposed on ASIC’s regulatory population. These industry levies are imposed on an annual basis. The annual levies are aimed at recovering ASIC’s regulatory costs for the financial year.
2. This instrument specifies certain matters about size and composition of ASIC’s regulated population and of the metrics that apply to each industry sub-sector within that regulated population for the 2019-20 financial year.
Purpose of the instrument
3. The purpose of the instrument is to specify certain matters that are used in the formulae specified in the ASIC Supervisory Cost Recovery Levy Regulations 2017 (the Cost Recovery Regulations). The Cost Recovery Regulations are made for the purposes of the ASIC Supervisory Cost Recovery Levy Act 2017 (the Cost Recovery Act).
4. The matters are the sub-sector population and the sub-sector metrics in relation to the basic levy component and the graduated levy component.
5. This instrument, together with ASIC (Supervisory Cost Recovery Levy—Regulatory Costs) Instrument 2020/1074, provide ASIC with the figures to enable it to calculate the levies payable by each leviable entity for the 2019-20 financial year. ASIC will use the figures in these instruments in preparing the invoices for the levies which will be sent out to the industry in January 2021.
6. The Cost Recovery Regulations prescribe 7 sectors and 52 sub-sectors for the 2019–20 financial year as follows:
(a) the corporate sector (comprising 6 sub-sectors);
(b) the deposit-taking and credit sector (comprising 6 sub-sectors);
(c) the investment management, superannuation and related services sector (comprising 8 sub-sectors);
(d) the financial advice sector (comprising 4 sub-sectors);
(e) the market infrastructure and intermediaries sector
(comprising 24 sub-sectors);
(f) the insurance sector (comprising 3 sub-sectors);
(g) the large institutions sector (comprising 1 sub-sector).
7. Either a basic levy component or a graduated levy component is applied to each sub-sector. A leviable entity may form part of 2 or more sub-sectors in a sector. The amount of levy payable by a leviable entity is the sum of each levy component the entity has for the financial year.
8. The basic levy component and the graduated levy component, for a leviable entity for a sub-sector for a financial year, is worked out according to formulae specified in the Cost Recovery Regulations.
9. ASIC confirms that:
(a) before ASIC made this instrument for the financial year, it was satisfied, having regard to information provided to ASIC, that the instrument is consistent with the objectives stated in subsection 9(2) of the Cost Recovery Act; and
(b) this instrument was made after the last day by which returns relating to the financial year must be lodged with ASIC under section 11 of the Collection Act. ASIC determined that day to be 1 October 2020.
Consultation
10. Section 17 of the Legislation Act 2003 (the Legislation Act) provides that, before a legislative instrument is made, the rule-maker must be satisfied that there has been undertaken any consultation that is considered by the rule-maker to be appropriate, and reasonably practicable to undertake.
11. In determining whether any consultation that was undertaken is appropriate, the rule-maker may have regard to any relevant matter, including the extent to which the consultation drew on the knowledge of persons having expertise in fields relevant to the proposed instrument.
12. ASIC did not engage in consultation before making this legislative instrument. The reason why no consultation was undertaken was because the instrument specifies numbers and amounts that are calculated based on the information contained in the returns lodged with ASIC under section 11 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017 (the Collection Act).
13. In certain circumstances, ASIC may give a leviable entity a notice (a default notice) stating the amount that, in ASIC’s opinion, is the levy payable by the leviable entity for a financial year. These circumstances, which are set out in section 12 of the Collection Act, includes where a person has failed to provide to ASIC a return containing information relating to the leviable entity or ASIC is not satisfied with information provided by a person in a return.
14. The amount stated in the default notice is taken to be the levy payable by the person for the financial year, unless the contrary is proved. While the issue of default notices involves the exercise by ASIC of a discretionary power where the amount of the levy stated in the default notice is based on ASIC’s opinion, it is anticipated that ASIC would only have cause to issue default notices in a minority of cases.
Operation of the instrument
15. The legislative instrument applies in relation to the 2019–20 financial year.
16. The instrument specifies certain matters (numbers and amounts) that are used in the formulae specified in the Cost Recovery Regulations.
Sub-sector population
17. Section 6 of the instrument specifies the sub-sector population for the financial year. The sub-sector population, in relation to a sub-sector, for a financial year, means the number of entities that form part of the sub-sector at any time in the financial year.
18. ASIC worked out the number of entities that form part of the sub-sector at any time in the financial year based on the information contained in ASIC’s registers and in the returns lodged with ASIC under section 11 of the Collection Act.
Sub-sector metrics—basic levy component and the graduated levy component
19. Section 7 of the instrument specifies the sub-sector metric in relation to the basic levy component and the graduated levy component for the financial year.
20. The sub-sector metric in relation to the basic levy component is the sum of the amounts of the basic rate entity metric for each leviable entity that forms part of the sub-sector for the financial year. The basic rate entity metric for each leviable entity for each sub-sector is the entity’s entity metric for that sub-sector for the financial year. However, not all sub-sectors have an entity metric. In those cases, the basic rate entity metric for each leviable entity for that sub-sector will be 1.
21. The sub-sector metric in relation to the graduated levy component means a number that is the sum of the amounts of the graduated entity metric for all leviable entities that form part of the sub-sector for the financial year. The graduated entity metric means the entity’s entity metric for the sub-sector for the financial year.
22. The following table gives a brief description of the entity metric to which the numbers specified in the table in section 7 of the instrument relate. If Part 3 of the Cost Recovery Regulations does not make provision for an amount to be the entity metric for a sub‑sector, then the following table describes the entity metric as “not applicable”.
Column 1 | Column 2 | Column 3 | |
Item | Sub-sectors | Description of entity metric | |
|
| Basic levy component (as applicable) | Graduated levy component (as applicable) |
1 | Auditors of disclosing entities | Total of the fees paid or payable to the entity for the auditing and review of financial reports |
|
2 | Australian derivative trade repository operators | Number of days the repository was operated |
|
2A | Benchmark administrators | Number of days the entity administered the financial benchmark |
|
3 | Corporate advisors |
| Gross revenue |
4 | Credit intermediaries |
| Number of credit representatives |
5 | Credit providers |
| Gross amount of credit provided |
6 | Credit rating agencies |
| Number of days the licence was held |
7 | Custodians | “Not applicable” |
|
8 | Deposit product providers |
| Value of deposits |
8AA | Entities subject to close and continuous monitoring | Alternative thresholds based on total value of deposits or number of relevant providers |
|
8A | Established specialised market operators | Number of days the market was operated |
|
9 | Exempt CS facility operators | Number of days the facility was operated |
|
10 | Exempt market operators | Number of days the market was operated |
|
11 | Insurance product distributors | “Not applicable” |
|
12 | Insurance product providers |
| Gross amount of premiums and other revenue |
13 | Large futures exchange operators | Number of days the exchange was operated |
|
14 | Large futures exchange participants |
| Messages and lots |
15 | Large proprietary companies | “Not applicable” |
|
16 | Large securities exchange operators | Value of all transactions on exchange |
|
17 | Large securities exchange participants |
| Messages and transactions |
18 | Licensees that provide only general advice to retail clients or wholesale clients | “Not applicable” |
|
19 | Licensees that provide personal advice on relevant financial products to retail clients |
| Number of financial advisers |
20 | Licensees that provide personal advice to only wholesale clients | “Not applicable” |
|
21 | Licensees that provide personal advice to retail clients on only products that are not relevant financial products | Number of days the licence was held |
|
22 | Listed corporations |
| Market capitalisation |
23 | Managed discretionary account providers | Number of days the licence was held |
|
24 | Margin lenders | Number of days the licence was held |
|
24A | New specialised market operators | Number of days the market was operated |
|
25 | Operators of investor directed portfolio services |
| Gross revenue |
25A | Operators of notified foreign passport funds and regulated former notified funds |
| Value of Australian assets |
26 | Overseas market operators | Number of days the market was operated |
|
27 | Over-the-counter traders |
| Number of persons acting on behalf of the entity |
28 | Payment product providers |
| Gross revenue received in connection with non‑cash payment products issued by the entity less expenses incurred from dealing in non‑cash payment facilities |
29 | Public companies (unlisted) | “Not applicable” |
|
30 | Registered company auditors | “Not applicable” |
|
31 | Registered liquidators |
| Appointments, notices and lodged documents |
32 | Responsible entities |
| Value of assets in all registered schemes |
33 | Retail over-the-counter derivatives issuers | Number of days the licence was held |
|
34 | Risk management product providers | Number of days the licence was held |
|
35 | Securities dealers |
| Value of transactions in securities |
36 | Small and medium amount credit providers | Gross amount of credit provided |
|
38 | Small futures exchange operators | Number of days the exchange was operated |
|
39 | Small securities exchange operators | Number of days the exchange was operated |
|
40 | Small securities exchange operators with self-listing function only | Number of days the exchange was operated |
|
41 | Superannuation trustees |
| Value of assets in all registrable superannuation entities |
42 | Tier 1 clearing and settlement facility operators | Number of days the facility was operated |
|
43 | Tier 2 clearing and settlement facility operators | Number of days the facility was operated |
|
44 | Tier 3 clearing and settlement facility operators | Number of days the facility was operated |
|
45 | Tier 4 clearing and settlement facility operators | Number of days the facility was operated |
|
46 | Traditional trustee company service providers | Number of days the licence was held |
|
47 | Wholesale electricity dealers | “Not applicable” |
|
48 | Wholesale trustees |
| Value of assets in all unregistered managed investment schemes |
23. ASIC worked out each sub-sector metric based on the information contained in ASIC’s registers and in the returns lodged by the leviable entities with ASIC under section 11 of the Collection Act.
Commencement and date of effect
24. This instrument is a disallowable legislative instrument.
25. The instrument commences on the day after it is registered on the Federal Register of Legislation, but it takes effect in accordance with paragraphs 11(3)(a) and 11(4)(a) of the Cost Recovery Act. This means the instrument takes effect at the end of the special disallowance period, being a period of 5 sitting days after the instrument has been tabled in both Houses of Parliament. The instrument does not take effect to the extent it is disallowed by either House of Parliament.
Retrospective application
26. Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act does not apply to this instrument: see subsection 9(9) of the Cost Recovery Act.
Legislative authority
27. Section 73 of the Cost Recovery Regulations, which is made for the purposes of subsection 9(6) of the Cost Recovery Act, enables ASIC to make an annual determination specifying matters required or permitted by those regulations.
28. ASIC makes this instrument under section 73 of the Cost Recovery Regulations.
Statement of Compatibility with Human Rights
29. The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.
Attachment
Statement of Compatibility with Human Rights
This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
ASIC (Supervisory Cost Recovery Levy—Annual Determination) Instrument 2020/1073
Overview
1. Section 73 of the ASIC Supervisory Cost Recovery Levy Regulations 2017, which is made for the purposes of subsection 9(6) of the ASIC Supervisory Cost Recovery Levy Act 2017, enables ASIC to make an annual determination specifying matters required or permitted by those regulations.
2. The instrument relates to levies imposed on ASIC’s regulatory population. These industry levies are imposed on an annual basis. The annual levies are aimed at recovering ASIC’s regulatory costs for the financial year.
3. This instrument specifies certain matters about size and composition of ASIC’s regulated population and of the metrics that apply to each industry sub-sector within that regulated population for the 2019-20 financial year.
Assessment of human rights implications
4. This instrument does not engage any of the applicable rights or freedoms.
Conclusion
5. This instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.