EXPLANATORY STATEMENT
Issued by authority of the Assistant Treasurer
Australian Prudential Regulation Authority Supervisory Levies Determination 2024
The Australian Prudential Regulation Authority Supervisory Levies Determination 2024 (the Determination) ensures the recovery, from industries that are prudentially regulated by the Australian Prudential Regulation Authority (APRA), of the costs incurred in connection with supporting the integrity and efficiency of markets in which leviable bodies operate and promoting the interests of consumers in the financial system.
The legislative framework for these levies is established by the Financial Institutions Supervisory Levies Collection Act 1998, which prescribes the timing of payment and the collection of levies, and by levy imposition Acts that impose levies for each industry sector and enable the determination of levy amounts.
The Determination commences on 1 July 2024 and relates to the 2024-25 financial year (the current financial year).
Part 1 of the Determination contains machinery provisions, including the commencement provision, a list of the authorising legislation and definitions, and clarifies the application of reporting standards.
Part 2 of the Determination states the amount of levy revenue for the current financial year that is allocated under each of the various levy imposition Acts to cover the cost to the Commonwealth of funding certain regulatory activities and other industry funded activities.
Parts 3 to 9 of the Determination determine the amount of levy payable and other relevant parameters for the respective leviable bodies.
Details of the respective Parts contained in the Determination are set out in Attachment A.
The finance sector has been consulted on the 2024-25 supervisory levies through a Treasury and APRA discussion paper released on the Treasury’s website on 28 May 2024. The discussion paper outlined the potential impacts of the levies on each industry sector and type of institution regulated by APRA. In particular, stakeholders affected by the Determination are those entities that are subject to APRA levies: authorised deposit-taking institutions (ADIs); general insurers; life insurers; private health insurers; superannuation entities and providers of retirement savings accounts; and authorised non‑operating holding companies. This consultation process is a regular process that takes place following the Budget each year. All relevant stakeholders are familiar with the process, are able to anticipate the release of the paper and can participate in consultation effectively.
The consultation period closed on 11 June 2024. Seven submissions were received during the consultation process from stakeholders representing regulated entities. The submissions are publicly available on the Treasury’s website. Four of the submissions from superannuation and banking stakeholders each recommended an increase in the relevant maximum restricted levy amount proposed in the discussion paper, to enable better distribution of the levies across asset bases of entities within the various industries. In response to these recommendations, the maximum restricted levy amounts in the Determination are increased from the amounts set out in the discussion paper for the authorised deposit-taking institution industry (including providers of purchased payment facilities and foreign deposit-taking institutions), general insurance industry, life insurance industry and superannuation industry (including pooled superannuation trusts).
The Office of Impact Analysis has advised that a Regulatory Impact Statement is not required as supervisory levies are considered machinery in nature.
The Determination is a legislative instrument for the purposes of the Legislation Act 2003 and is subject to disallowance.
A statement of compatibility with human rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out in Attachment B.
ATTACHMENT A
Details of the Australian Prudential Regulation Authority Supervisory Levies Determination 2024
Part 1—Preliminary
Part 1 of the Determination contains machinery provisions, including the commencement provision, a list of the authorising provisions and definitions, and application of reporting standards.
The Determination is made under the following levy imposition Acts, which impose levies on regulated industries:
• the Australian Prudential Regulation Authority Act 1998;
• the Authorised Deposit‑taking Institutions Supervisory Levy Imposition Act 1998;
• the Authorised Non‑operating Holding Companies Supervisory Levy Imposition Act 1998;
• the General Insurance Supervisory Levy Imposition Act 1998;
• the Life Insurance Supervisory Levy Imposition Act 1998;
• the Private Health Insurance Supervisory Levy Imposition Act 2015;
• the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998; and
• the Superannuation Supervisory Levy Imposition Act 1998.
Subsection 1-5(1) provides that an expression used in Parts 2 to 9 of the Determination has the same meaning as in the Act referred to in the definition of ‘the Act’ in the respective Parts.
Subsection 1-5(2) sets out definitions relevant to the Determination.
Section 1-6 explains references to reporting standards with a particular identifier. These are references to reporting standards determined by APRA under section 13 of the Financial Sector (Collection of Data) Act 2001. As APRA sometimes remakes a reporting standard with the same identifier, section 1-6 ensures that the correct version is applied for the purposes of the Determination, based on the application provision in the version and the relevant reporting period. If the relevant reporting standard has been replaced by one with a different identifier, the later reporting standard applies instead.
Part 2—Australian Prudential Regulation Authority (Commonwealth costs)
Section 2-1 of the Determination sets out definitions that are relevant to this Part.
Section 2-2 of the Determination states the amount of levy money for the current financial year (being the financial year commencing on 1 July 2024) that is allocated under each of the various levy imposition Acts to the Commonwealth. Subsection 50(1) of the Australian Prudential Regulation Authority Act 1998 (APRA Act) requires the Minister, being the relevant Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to make a determination of the amount of ‘levy’ (as defined under subsection 50(6) of the APRA Act) that is to be available to cover the costs to the Commonwealth:
• incurred in connection with supporting the integrity and efficiency of markets in which leviable bodies operate;
• incurred in connection with promoting the interests of consumers in markets in which leviable bodies operate;
• incurred in connection with administering the function of making determinations about the release on compassionate grounds of benefits that are in a superannuation entity or retirement savings account;
• incurred in connection with governing and maintaining the Superannuation Transaction Network; and
• relating directly or indirectly to the regulation of leviable bodies.
The method used is specifying an amount for each class of levy (under paragraph 50(1)(b) of the APRA Act).
The levy revenue is intended to recover costs incurred by:
• the Australian Taxation Office (ATO);
• the Gateway Network Governance Body Ltd (GNGB); and
• the Treasury.
These funds are allocated to ATO activities to support, on behalf of the Commonwealth, the integrity and efficiency of markets in which leviable bodies operate; to the GNGB in promoting the efficiency and effectiveness of the Superannuation Transaction Network; and to Treasury to administer a grant to fund a superannuation consumer advocate, supporting the Government’s objective to promote improved member outcomes. The funds will contribute towards the costs of the ATO, GNGB and Treasury undertaking those functions.
The following table details the amounts allocated to activities undertaken by the ATO, GNGB and Treasury under each of the levy imposition Acts.
Item | Matter | Amount ($) | Purpose of amount |
1 | Amount of the levy money payable to the Commonwealth under the Authorised Deposit‑taking Institutions Supervisory Levy Imposition Act 1998. | $0 |
|
2 | Amount of the levy money payable to the Commonwealth under the General Insurance Supervisory Levy Imposition Act 1998. | $0 |
|
3 | Amount of the levy money payable to the Commonwealth under the Life Insurance Supervisory Levy Imposition Act 1998. | $0 |
|
4 | Amount of the levy money payable to the Commonwealth under the Superannuation Supervisory Levy Imposition Act 1998. | $47,900,000 | $15,300,000 of the amount is for the ATO to administer the Superannuation Lost Member Register and Unclaimed Superannuation Money frameworks, and $30,300,000 for the early Compassionate Release of Super program.
$1,300,000 of the amount is for the GNGB which governs the Superannuation Transaction Network.
$1,000,000 of the amount is for Treasury to administer a grant to fund a superannuation consumer advocate. |
5 | Amount of the levy money payable to the Commonwealth under the Authorised Non‑operating Holding Companies Supervisory Levy Imposition Act 1998. | $0 |
|
6 | Amount of the levy money payable to the Commonwealth under the Private Health Insurance Supervisory Levy Imposition Act 2015. | $0 |
|
7 | Amount of the levy money payable to the Commonwealth under the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998. | $0 |
|
Section 2-3 also states that under subsection 50(1A) of the APRA Act, the proportion of amounts of levy money paid to APRA, on behalf of the Commonwealth, for the current financial year is to be credited to the APRA Special Account on an ongoing basis.
Part 3—Authorised deposit-taking institutions supervisory levy
Part 3 of the Determination relates to the levy imposed by the Authorised Deposit‑taking Institutions Supervisory Levy Imposition Act 1998 on authorised deposit-taking institutions (ADIs).
Section 3-1 sets out definitions that are relevant to this Part.
The table in section 3-2 provides the amounts and percentages that have been determined for respective classes of ADI. Subsection 7(3) of the Authorised Deposit‑taking Institutions Supervisory Levy Imposition Act 1998 requires the Treasurer or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the maximum restricted levy amount for each financial year;
• the minimum restricted levy amount for each financial year;
• the restricted levy percentage for each financial year;
• the unrestricted levy percentage for each financial year; and
• how an ADI’s levy base is to be worked out.
Section 3-3 provides how an ADI’s levy base is to be worked out.
Part 3 incorporates matters from:
• Reporting Standard ARS 720.0 ABS/RBA Statement of Financial Position; and
• Reporting Standard ARS 323.0 Statement of Financial Position (Licensed ADI).
Those reporting standards are disallowable legislative instruments and are available on the Federal Register of Legislation.
Part 4—Authorised non-operating holding companies supervisory levy
Part 4 of the Determination relates to the levy imposed by the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998 on authorised non‑operating holding companies (NOHC) in the general insurance and ADI sectors.
Section 4-1 sets out definitions that are relevant to this Part.
Section 4-2 determines the amount of levy payable by an authorised NOHC in relation to the current financial year. Subsection 7(1) of the Authorised Non-operating Holding Companies Supervisory Levy Imposition Act 1998 requires the Treasurer, or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), to determine, by legislative instrument, the amount of levy payable by an authorised NOHC for a financial year.
Part 5—General insurance supervisory levy
Part 5 of the Determination relates to the levy imposed by the General Insurance Supervisory Levy Imposition Act 1998 on companies authorised under the Insurance Act 1973 to carry on insurance business.
Section 5-1 sets out definitions that are relevant to this Part.
The table in section 5-2 provides the amounts and percentages that have been determined for a general insurance company. Subsection 8(1AA) of the General Insurance Supervisory Levy Imposition Act 1998 specifies that the amount of levy payable by a general insurance company for a financial year is the sum of the general component and the special component.
The current financial year general component levy
For the current financial year, the general component will fund the operations of the APRA. Subsection 8(3) of the General Insurance Supervisory Levy Imposition Act 1998 requires the Treasurer, or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the maximum restricted levy amount for each financial year;
• the minimum restricted levy amount for each financial year;
• the restricted levy percentage for each financial year;
• the unrestricted levy percentage for each financial year; and
• how a general insurance company’s levy base is to be worked out.
Section 5-3 provides for how a general insurance company’s levy base is to be worked out.
The current financial year special component levy
For the current financial year, the special component will fund the costs of the National Claims and Policies Database. This component was levied for the first time in the 2006‑07 financial year following amendments to the General Insurance Supervisory Levy Imposition Act 1998.
Section 5-4 provides for how a general insurance company’s special levy component is to be worked out. Subsection 8(3) of the General Insurance Supervisory Levy Imposition Act 1998 requires the Treasurer, or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the special maximum levy amount for each financial year;
• the special minimum levy amount for each financial year;
• the special levy percentage for each financial year; and
• how a general insurance company’s eligible premium income (EPI) is to be worked out.
Section 5-5 determines how a general insurance company’s EPI is to be worked out to calculate the special component.
Part 5 incorporates matters from:
• Reporting Standard GRS 300.0 Statement of Financial Position;
• Reporting Standard GRS 800.1 Policy Data: Public and Product Liability and Professional Indemnity Insurance; and
• Reporting Standard LOLRS 800.1 Policy Data: Public and Product Liability and Professional Indemnity Insurance.
Those reporting standards are disallowable legislative instruments and are available on the Federal Register of Legislation.
Part 6—Life insurance supervisory levy
Part 6 of the Determination relates to the levy imposed on life insurance companies (being companies registered under section 21 of the Life Insurance Act 1995) by the Life Insurance Supervisory Levy Imposition Act 1998.
Section 6-1 sets out definitions relevant to this Part.
The table in section 6-2 provides the amounts and percentages of levy that have been determined for a life insurance company. Subsection 7(3) of the Life Insurance Supervisory Levy Imposition Act 1998 requires the Treasurer, or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the maximum restricted levy amount for each financial year;
• the minimum restricted levy amount for each financial year;
• the restricted levy percentage for each financial year;
• the unrestricted levy percentage for each financial year; and
• how a life insurance company’s levy base is to be worked out.
Section 6-3 provides for how a life insurance company’s levy base is to be worked out.
Although this Determination does not specifically mention friendly societies, they are leviable bodies because they are registered under the Life Insurance Act 1995 and consequently fall under the definition of ‘life insurance company’ in the Financial Institutions Supervisory Levies Collection Act 1998. As subsection 16C(1) of the Life Insurance Act 1995 notes, item 11 of Schedule 8 to the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 provided that friendly societies existing then are taken to be registered under the Life Insurance Act 1995.
Part 6 incorporates matters from Reporting Standard LRS 300.0 Statement of Financial Position. This reporting standard is a disallowable legislative instrument and is available on the Federal Register of Legislation.
Part 7—Private health insurance supervisory levy
Part 7 of the Determination relates to the levy imposed on private health insurers (being a body registered under the Private Health Insurance (Prudential Supervision) Act 2015) by the Private Health Insurance Supervisory Levy Imposition Act 2015.
Section 7-1 sets out definitions that are relevant to this Part.
Section 7-2 provides for the amount of levy for a single policy and a policy that is not a single policy.
Section 7-3 provides for how the amount of levy is worked out for a single policy. Section 8 of the Private Health Insurance Supervisory Levy Imposition Act 2015 requires the Minister, being the relevant Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the levy amount, which must be calculated having regard to the number of complying health insurance policies on issue (subject to a maximum supervisory levy amount that is applicable per policy); and
• the day on which private health insurers must assess the number of each type of policy they have on issue for the purposes of determining the amount of supervisory levy payable (being the census day).[1]
The purpose of Part 7 is to ensure that the cost of supervising private health insurers will be recovered through a levy on all complying health insurance policies that apply on the census day. Section 7-4 provides the day that is the census day.
The amount of levy for each single policy will be the total cost to supervise private health insurers divided by the sum of the aggregate number of single policies and twice the number of other policies on issue on the census day, but not exceeding $2 per single policy.
The amount of levy for all other policies will be twice the levy amount for a single policy. The amount of levy for policies with more than one person insured is the same regardless of the actual number of people covered.
Part 8—Retirement savings account providers supervisory levy
Part 8 of the Determination relates to the levy imposed on providers of retirement savings accounts (RSA providers) by the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998.
Section 8-1 sets out the definitions that are relevant to this Part.
The table in section 8-2 provides the amounts and percentages that have been determined for an RSA provider. Subsection 7(3) of the Retirement Savings Account Providers Supervisory Levy Imposition Act 1998 requires the Treasurer, or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the maximum restricted levy amount for each financial year;
• the minimum restricted levy amount for each financial year;
• the restricted levy percentage for each financial year;
• the unrestricted levy percentage for each financial year; and
• how an RSA provider’s levy base is to be worked out.
Section 8-3 provides for how an RSA provider’s levy base is to be worked out.
Part 9—Superannuation supervisory levy
Part 9 of the Determination relates to the levy imposed by the Superannuation Supervisory Levy Imposition Act 1998 on superannuation entities.
Section 9-1 sets out definitions that are relevant to this Part.
The table in section 9-2 provides the amounts and percentages that have been determined for a superannuation entity. Subsection 7(3) of the Superannuation Supervisory Levy Imposition Act 1998 requires the Treasurer or another Treasury portfolio Minister (see section 19 of the Acts Interpretation Act 1901), by legislative instrument, to determine:
• the maximum restricted levy amount for each financial year;
• the minimum restricted levy amount for each financial year;
• the restricted levy percentage for each financial year;
• the unrestricted levy percentage for each financial year; and
• how a superannuation entity’s levy base is to be worked out.
Section 9-3 provides for how a superannuation entity’s levy base is to be worked out.
Part 9 incorporates matters from:
• Accounting Standard AASB 1056 Superannuation Entities;
• Reporting Standard SRS 320.0 Statement of Financial Position; and
• Reporting Standard SRS 800.0 Financial Statements.
Those standards are disallowable instruments and are available on the Federal Register of Legislation.
Schedule 1—Repeals
Item 1 repeals the Australian Prudential Regulation Authority Supervisory Levies Determination 2023.
Section 7 of the Acts Interpretation Act 1901 ensures that the repeal does not affect any obligation or liability incurred under the repealed determination.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Australian Prudential Regulation Authority Supervisory Levies Determination 2024
This Legislative 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.
Overview of the Legislative Instrument
The Determination ensures the recovery of APRA’s costs, and the costs incurred in connection with supporting the integrity and efficiency of markets and promoting the interests of consumers in the financial system from industries that are prudentially regulated by APRA. The legislative framework for these levies is established by the Financial Institutions Supervisory Levies Collection Act 1998, which prescribes the timing of payment and the collection of levies, and various levy imposition Acts.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
[1] The data to be used for levy calculation purposes is based on the data provided to APRA under form HRF 601.0 Statistical Data – Cover Page and form HRF 601.1 Statistical Data – by State (which forms part of Reporting Standard HRS 601.0 Statistical Data by State) and is the data as per the end of June in the previous financial year.