EXPLANATORY STATEMENT
Issued by the authority of the Attorney-General
Bankruptcy (Estate Charges) Act 1997
Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011
Statutory basis
Subsection 7(2) of the Bankruptcy (Estate Charges) Act 1997 (the Act) provides that the Minister may make a legislative instrument determining the percentage payable as the Realisations Charge on amounts received by trustees, controlling trustees and debt agreement administrators.
Purpose
The Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011 (the Determination) replaces the Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2010.
The Determination increases the Realisations Charge from 4% to 4.4%.
Background
In the 2010–11 Budget, additional funding was provided to the Insolvency and Trustee Service Australia (ITSA) to improve information and services for debtors in financial stress, including by increasing online information and service delivery, and to implement changes introduced by the Bankruptcy Legislation Amendment Act 2010. As part of this, the Government is increasing the realisation charge on funds realised in an administration to a level which substantially recovers the cost of ITSA’s regulation and enforcement activities. Both debtors and creditors benefit from ITSA’s regulation and enforcement activities which help preserve the integrity of the personal insolvency system.
Following the commencement of the Bankruptcy Legislation Amendment Act 2010, these activities now include a new process for reviewing trustees’ remuneration and a new infringement notice regime to deal with minor offences under the Bankruptcy Act 1966 (the Act). The new funding will also fund investigations resulting from non-compliance with the new section 77CA of the Act.
Commencement
The Determination commences on 1 July 2011.
Consultation
The Determination has been prepared in consultation with ITSA. Consistent with the Australian Government’s Cost Recovery Policy, outlined in the Australian Government Cost Recovery Guidelines, stakeholders likely to be affected were consulted on the proposed increase in the Realisations Charge. The consultation process included the release of a discussion paper detailing the proposed increase. The discussion paper was provided to members of the Bankruptcy Reform Consultative Forum, which operates as ITSA’s Cost Recovery Reference Group and published on the Attorney-General Department’s website.
Details of the fee changes
Repeal of instrument (Clause 3)
This instrument repeals the Bankruptcy (Estate Charges) Amount of Charge Payable) Determination 2010.
Realisations charge (Clause 4)
The amount payable is increased from 4% to 4.4%.