EXPLANATORY STATEMENT
Issued by the Authority of the Attorney-General
Bankruptcy (Fees and Remuneration) Determination 2007
Background
The Bankruptcy Legislation Amendment (Debt Agreements) Act 2007 introduced a requirement that a debt agreement administrator who is administering more than 5 active debt agreements entered into on or after 1 July 2007 must be a registered debt agreement administrator.
As part of this new scheme, paragraphs 186B(2)(c) and 186D(1)(b) of the Bankruptcy Act 1966 (the Act) provide that fees are payable in respect of an application to become registered as a debt agreement administrator and, if such an application is successful, upon registration as a debt agreement administrator. The registration fee will also apply in respect of renewals of registration. The power to set these fees by legislative instrument is contained in paragraph 316(1)(a).
The Bankruptcy (Fees and Remuneration) Determination 2007 facilitates cost recovery arrangements for the provision of personal insolvency services by the Insolvency and Trustee Service Australia (ITSA), consistent with the Government’s cost recovery policy.
Under ITSA’s cost recovery arrangements, the application and registration fees are set at a level designed to recover the costs of the processing of applications for registration as a debt agreement administrator and the maintenance of the registration of the administrator.
The level of the fees will be reviewed on a biennial basis so that it reflects the costs of providing the registration services to administrators.
Purpose
The determination reproduces the Bankruptcy (Fees and Remuneration)
Determination 2006, the only changes being:
- the insertion of a new section 1.03 which repeals the former determination;
- the insertion of new items 10 and 11 in the table contained in section 2.01, which prescribe the fees for the purposes of paragraphs 186B(2)(c) and 186D(1)(b) of the Act;
- the recasting of subsections 2.01(1), 2.01(2) and 3.01(1) into simpler and clearer language, without effecting any change to the operation of these subsections;
- the insertion of a missing comma in subsection 3.01(3); and
- consequential renumbering and cross-referencing.
The fee payable in respect of the making of an application for registration as a debt agreement administrator pursuant to paragraph 186B(2)(c) is set at $2000.
The fee payable in respect of the registration of a person as a debt agreement administrator pursuant to paragraph 186D(1)(b) is set at $1200.
The costs associated with the processing of applications and registrations for debt agreement administrators are similar to that for registered trustees. The fees pursuant to paragraphs 186B(2)(c) and 186D(1)(b) have therefore been set at rates equivalent to the fees payable in respect of applications and registrations of registered trustee pursuant to Part VIII Division 1 of the Act.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Operation
The Determination commences on the first moment of the day following the day when the instrument is registered.
Nature of Consultation
ITSA and the Attorney-General's Department conducted a comprehensive review of the operation of Debt Agreements in late 2005. A report on that review was released by the Attorney-General in March 2005. A key outcome of that review is the introduction of a formal registration scheme for debt agreement administrators.
ITSA’s fees and charges have been based on cost recovery principles since 1 July 2006. Those fees and charges were developed following extensive consultation. ITSA has established a Cost Recovery Reference Group which includes representatives of all key stakeholders. Prior to introducing the new system, ITSA announced that it would conduct a biennial review of all fees and charges unless intervening events had a significant impact on costs warranting an earlier review. The introduction of a registration system for debt agreement administrators required an additional review to ensure the costs associated with that system were recovered appropriately. There was specific consultation with the industry (including two Discussion Papers and a further meeting of the Cost Recovery Reference Group) between October and December 2006.
Overview
The Bankruptcy (Fees and Remuneration) Determination 2007, enacted to facilitate cost recovery arrangements for the provision of personal insolvency services by the Insolvency and Trustee Service Australia (ITSA), was introduced in response to the Bankruptcy Legislation Amendment (Debt Agreements) Act 2007. This amendment required that a debt agreement administrator managing more than five active debt agreements from 1 July 2007 must be registered. The Determination sets fees for applications and registrations of these administrators, aligning them with the costs of processing and maintaining such registrations, and is designed to be reviewed biennially to reflect current service costs. The policy objective of the Determination is to ensure that the fees charged recover the costs associated with the administration of debt agreements, consistent with the government's cost recovery policy.
Scope and Application
The Bankruptcy (Fees and Remuneration) Determination 2007 applies to individuals and entities seeking to become registered debt agreement administrators under the Bankruptcy Act 1966. Specifically, it governs the fees payable for applications and registrations of those administrators who are managing more than five active debt agreements entered into on or after 1 July 2007. The fees are set at $2000 for application and $1200 for registration, designed to cover the costs associated with processing and maintaining these registrations. This Determination is a legislative instrument that extends across the Commonwealth of Australia, reflecting the national scope of the Bankruptcy Act. There are no stated exclusions or exemptions within this Determination, though it should be noted that the fees are set to be reviewed biennially to ensure they accurately reflect the costs involved. The Determination also incorporates minor amendments and clarifications to the previous Bankruptcy (Fees and Remuneration) Determination 2006, including the insertion of new fee items and rephrasing of certain sections for clarity, without altering their operational effect.
Key Provisions
The Bankruptcy (Fees and Remuneration) Determination 2007 sets out the fees payable for the registration of debt agreement administrators, as required under the Bankruptcy Act 1966 (the Act). Section 1.03 of the Determination repeals the previous Bankruptcy (Fees and Remuneration) Determination 2006 and introduces new provisions. The most significant changes include the addition of new items 10 and 11 in section 2.01 of the table, which prescribe the fees for the application and registration processes. The fee for making an application for registration as a debt agreement administrator is set at $2000 (section 2.01(1)), and the fee for the registration itself is set at $1200 (section 2.01(2)). The costs of processing these applications and registrations are designed to match those for registered trustees under the Act. The language of certain subsections has been simplified and clarified, but these changes do not affect the operation of the provisions.
Under the Determination, entities and individuals who wish to become registered debt agreement administrators must comply with the fee structures outlined. This includes submitting an application for registration and paying the prescribed fee of $2000 (section 2.01(1)). Upon successful application, the administrator must pay a further fee of $1200 for the actual registration (section 2.01(2)). These fees are intended to cover the costs incurred by the Insolvency and Trustee Service Australia (ITSA) in processing applications and maintaining the register of debt agreement administrators. The biennial review mechanism ensures that these fees remain aligned with the actual costs of providing these services.
The Determination also outlines the consequences for non-compliance with the fee provisions. While the Determination itself does not specify detailed penalties for non-payment or incorrect payment of fees, non-compliance could lead to administrative actions under the Bankruptcy Act 1966. For instance, failure to pay the required fees or providing false information in an application could result in the application being refused, and could also potentially lead to legal actions for misrepresentation or fraud. Although specific penalties are not detailed in the Determination, they would be consistent with the penalties applicable under the Bankruptcy Act, which can include fines and imprisonment for serious breaches.
In summary, the Bankruptcy (Fees and Remuneration) Determination 2007 establishes the fees for registering as a debt agreement administrator under the Bankruptcy Act 1966, ensuring that these fees are set at a level to cover the costs incurred by ITSA. Compliance with these fee provisions is mandatory for anyone seeking to become a registered debt agreement administrator, and failure to comply could lead to refusal of the application and potential legal consequences under the Act.