Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011

Overview

The Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011 was enacted to amend the percentage payable as the Realisations Charge on amounts received by trustees, controlling trustees and debt agreement administrators under subsection 7(2) of the Bankruptcy (Estate Charges) Act 1997. This Determination was introduced to increase the Realisations Charge from 4% to 4.4% and was made in accordance with the statutory authority provided by the Bankruptcy (Estate Charges) Act 1997. The Determination was developed in consultation with the Insolvency and Trustee Service Australia (ITSA) and in line with the Australian Government’s Cost Recovery Policy, which aims to ensure that the costs of regulatory activities are substantially recovered. The purpose of this increase is to fund improvements in information and services for debtors in financial stress, as well as to cover the costs associated with new regulatory activities introduced by the Bankruptcy Legislation Amendment Act 2010. The Determination commenced on 1 July 2011.

Scope and Application

The Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011 applies to trustees, controlling trustees, and debt agreement administrators who are involved in the management of bankruptcy estates in Australia. The legislation is a statutory instrument made under the authority of the Bankruptcy (Estate Charges) Act 1997, and its primary function is to determine the Realisations Charge payable on amounts received by these entities. The Determination impacts the personal insolvency system by ensuring that the costs of regulation and enforcement activities conducted by the Insolvency and Trustee Service Australia (ITSA) are substantially recovered. The Act has a national jurisdictional reach as it pertains to the administration of bankruptcy across Australia, though it is enacted by the Commonwealth Government. The Determination is effective from 1 July 2011, and it supersedes the previous Determination from 2010, which had set the Realisations Charge at 4%. The consultation process for this Determination involved stakeholders likely to be affected by the proposed increase, including the release of a discussion paper to the Bankruptcy Reform Consultative Forum and publication on the Attorney-General Department’s website.

Key Provisions

The main operative sections of the Bankruptcy (Estate Charges) (Amount of Charge Payable) Determination 2011 (the Determination) pertain to the Realisations Charge, which is the percentage payable on amounts received by trustees, controlling trustees, and debt agreement administrators. Under subsection 7(2) of the Bankruptcy (Estate Charges) Act 1997, the Determination specifies that the Realisations Charge has been increased from 4% to 4.4%. This change takes effect from 1 July 2011 and is intended to cover the costs associated with the regulation and enforcement activities of the Insolvency and Trustee Service Australia (ITSA). The Determination imposes obligations on trustees, controlling trustees, and debt agreement administrators to ensure they charge the appropriate Realisations Charge on any amounts they receive, reflecting the updated percentage. This charge is essential for funding ITSA's activities, which include improving information and services for debtors in financial stress, reviewing trustees' remuneration, and dealing with minor offences through a new infringement notice regime. Trustees and administrators must adhere to these new requirements to ensure compliance with the Act and the Determination. Failure to comply with the Determination may result in civil or criminal consequences, although specific offences and penalties are not detailed within the Determination itself. Generally, non-compliance with provisions of the Bankruptcy (Estate Charges) Act 1997 could lead to penalties under the Act, which may include fines or other sanctions. The Determination's aim is to ensure that the Realisations Charge sufficiently funds the necessary regulatory activities of ITSA, thereby maintaining the integrity of the personal insolvency system.