EXPLANATORY STATEMENT
Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2006
Subsection 50(1) of the Australian Prudential Regulation Authority Act 1998 enables the Treasurer to make a determination on the amount of levy revenue that is to be available to cover the costs to the Commonwealth of providing market integrity and consumer protection functions for prudentially regulated institutions. This can be done either by specifying one retainable amount or by specifying a retainable amount for each class of levy.
This determination commences on 1 July 2006 and relates to the 2006‑07 financial year. The Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2005 is revoked upon commencement of this determination.
This determination states the amount of levy revenue which is allocated under each of the various levy imposition Acts to the Australian Securities and Investments Commission (ASIC) and to the Australian Taxation Office (ATO) in 2006‑07. These funds are allocated to ASIC and ATO activities in so far as those agencies provide, on behalf of the Commonwealth, relevant market integrity and consumer protection functions for prudentially regulated institutions. They will contribute towards the costs of ASIC and the ATO undertaking those functions.
The following table details the amounts allocated to activities undertaken by ASIC and the ATO under each of the financial sector levy imposition Acts.
Legislation | Allocated to ASIC ($) | Allocated to ATO ($) |
Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998 | 1,984,000 | 0 |
Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998 | 0 | 0 |
General Insurance Supervisory Levy Imposition Act 1998 | 1,328,000 | 0 |
Life Insurance Supervisory Levy Imposition Act 1998 | 1,580,000 | 0 |
Retirement Savings Account Providers Supervisory Levy Imposition Act 1998 | 0 | 0 |
Superannuation Supervisory Levy Imposition Act 1998 | 8,208,000 | 3 800 000 |
Total | 13,100,000 | 3 800 000 |
The finance sector has been consulted on the 2006‑07 supervisory levies, including the allocation of costs to ASIC and the ATO, through a Treasury and Australian Prudential Regulation Authority consultation paper released on 12 May 2006 and a number of follow-up meetings to discuss the issues in the paper.
This determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2006 was enacted to specify the amount of levy revenue to be allocated for the costs incurred by the Commonwealth in providing market integrity and consumer protection functions for prudentially regulated institutions. This determination was introduced under the authority of the Australian Prudential Regulation Authority Act 1998, which empowers the Treasurer to make such determinations. The policy objective of this legislation is to ensure that the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) have the necessary funding to perform their roles effectively in maintaining market integrity and protecting consumers within the financial sector. The determination, which came into effect on 1 July 2006, revokes the previous determination from 2005 and allocates specific amounts to ASIC and ATO activities as outlined in the financial sector levy imposition acts. This allocation is intended to support the Commonwealth’s efforts in overseeing prudentially regulated institutions.
Scope and Application
The Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2006 applies to the allocation of funds from various financial sector levies to the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) for the financial year 2006-07. This legislation arises from subsection 50(1) of the Australian Prudential Regulation Authority Act 1998, which allows the Treasurer to determine the retainable amount of levy revenue to cover Commonwealth costs associated with market integrity and consumer protection for prudentially regulated institutions. The determination revokes the Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2005 and provides specific allocations for each levy imposition Act, ensuring that ASIC and the ATO have the necessary resources to perform their functions. The allocation includes amounts for activities such as the supervision of authorised deposit-taking institutions, non-operating holding companies, general insurance, life insurance, and superannuation, with particular emphasis on the allocation to ASIC for superannuation supervisory activities. The determination ensures that these funds are specifically directed towards the relevant functions undertaken by ASIC and ATO, thereby supporting their roles in maintaining market integrity and protecting consumers within the prudentially regulated financial sector.
Key Provisions
The Australian Prudential Regulation Authority (Commonwealth Costs) Determination 2006 (sections 1–4) outlines the specific amounts of levy revenue allocated to the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) for the 2006-2007 financial year. These funds are to be used for activities related to market integrity and consumer protection functions for prudentially regulated institutions. Section 2 specifies the amount allocated from each levy, such as the Authorised Deposit-taking Institutions Supervisory Levy Imposition Act 1998, which allocates $1,984,000 to ASIC and nothing to the ATO. The total allocation across all specified levies amounts to $13,100,000 for ASIC and $3,800,000 for the ATO.
The obligations imposed by the Determination require the relevant authorities, including ASIC and the ATO, to ensure that the allocated funds are used strictly for the purposes of providing market integrity and consumer protection functions. The levy revenues must be utilised to cover the costs associated with these functions. The Determination mandates that any surplus or deficit resulting from the levy revenue must be accounted for in accordance with the applicable financial regulations and reporting requirements.
In terms of breaches and consequences, the Explanatory Statement does not explicitly detail offences or penalties for non-compliance with the Determination itself. However, any misuse or misallocation of funds could potentially lead to financial discrepancies that may be subject to audit and review by the relevant oversight bodies. The overarching financial legislation and regulations under which ASIC and the ATO operate may impose penalties or corrective measures for any misuse of funds or non-compliance with financial regulations. These penalties could range from financial penalties to corrective actions as mandated by the relevant authorities.