Financial Management and Accountability Determination 2006/25 - Lloyd’s Deposit Trust Account Variation and Abolition 2006

Administered by Department of Finance

Legislation au F2006L02562 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Finance and Administration

Financial Management and Accountability Act 1997

Determination 2006/25 to vary and abolish a Special Account

Purposes of Determination 2006/25

The attached instrument makes a determination under section 20 of the Financial Management and Accountability Act 1997 (FMA Act) to vary and subsequently abolish the Lloyd’s Deposit Trust Account.

Special Accounts generally

In accordance with the Constitution, all revenues or moneys raised or received by the Government of the Commonwealth form one Consolidated Revenue Fund (CRF) and may not be spent unless under an appropriation by the Parliament for the purposes of the Commonwealth.  A Special Account is established by a determination that sets out the amounts that may be credited and the purposes for which it may be debited. Special Accounts established by determination are supported by an appropriation under section 20 of the FMA Act.  In effect, Special Accounts allow amounts from the CRF to be spent on a purpose specified in the Special Account.

Determinations that establish Special Accounts, or vary determinations that establish Special Accounts, are subject to section 22 of the FMA Act. Section 22 of the FMA Act requires the Finance Minister to table a copy of the establishing or varying determination in each House of Parliament. Either House may disallow a determination within five sitting days of tabling.  If the determination is not disallowed, it comes into effect on the calendar day after the last day on which it could have been disallowed.

Regulation 10 of the Legislative Instruments Regulations 2004 preserves the disallowance provisions under section 22 of the FMA Act by exempting Special Account determinations from subsections 57(2) and 57(5) of the Legislative Instruments Act 2003.

Special Accounts can be abolished by a determination of the Finance Minister.  However, there is no requirement to table such a determination.

Operation of the Determination 2006/25

Purpose of the Lloyd’s Deposit Trust Account

A new Special Account, entitled Lloyd’s Deposit Trust Special Account (‘the new Account’), is required in order to give effect to changes that are required to the Lloyd’s Deposit Trust Account, but which are not practical to make by variation to the Lloyd’s Deposit Trust Account due to the way in which the Initial Determination was structured.

The current purpose of the Lloyd’s Deposit Trust Account is:

Recording deposits made in accordance with the provisions of the Insurance Act 1973.

Changes required

A clause has been inserted to allow amounts to be debited from the Lloyd’s Deposit Trust Account and credited to the new Account.

Limitations in the structure of the Initial Determination

It is not practical to vary the Initial Determination signed by the delegate of the Minister for Finance and Administration on 31 December 1997 (establishing a Lloyd’s Deposit Trust Fund as a component of the Reserved Money Fund). This is because the format of the determination constrains the amount of information that can be included. Accordingly, a new Account is being established (Determination 2006/26) to provide for the continuation of the activities of the Lloyd’s Deposit Trust Account, the incorporation of the necessary changes, and to ensure that the determination is as clear and informative as possible.

Effect of this determination

The Lloyd’s Deposit Trust Account is being varied by this determination (Determination 2006/25) to enable its balance to be credited to the new Account.  Once the balance of the Lloyd’s Deposit Trust Account reaches zero, clause 4 of the determination will abolish the Lloyd’s Deposit Trust Account.

Consultation

The Department of the Treasury is the agency affected by this instrument. The agency was provided with drafts of the instrument and agrees with the form of the instrument. As the instrument is for internal machinery of government purposes only, no consultation was considered necessary with other persons (see sections 17 and 18 of the Legislative Instruments Act 2003).

Estimates of transactions on the Lloyd’s Deposit Trust Account

 

Opening Balance

2005-06

$’000

Credits

 

2005-06

$’000

Debits

 

2005-06 (1)

$’000

Closing Balance

2005-06

$’000

Lloyd’s Deposit Trust Account

2,000

150

2,150

0

1. Balance debited from the Lloyd’s Deposit Trust Account and credited to the new Account.

 

Overview

The Financial Management and Accountability Act 1997, enacted by the Parliament of Australia, establishes the framework for the Commonwealth's financial management and accountability. This Act seeks to address issues related to the appropriate allocation and utilisation of public funds, ensuring that all government revenues are appropriately managed and accounted for. Determination 2006/25, issued under section 20 of the FMA Act, aims to vary and subsequently abolish the Lloyd’s Deposit Trust Account. This determination was necessary because the existing structure of the Initial Determination signed on 31 December 1997 did not allow for practical modifications due to its constrained format. Consequently, the new Lloyd’s Deposit Trust Special Account was established to ensure the continuation of its activities while incorporating the required changes. The Minister for Finance and Administration issued this determination to facilitate the transfer of the account balance and ultimately its abolition, thereby providing clarity and ensuring that the account operates effectively within the parameters of the FMA Act.

Scope and Application

The Financial Management and Accountability Act 1997 (FMA Act) applies to the administration and regulation of financial resources within the Commonwealth Government of Australia. Specifically, the Act governs the establishment, variation, and abolition of Special Accounts, which are financial mechanisms that allow for the allocation of funds from the Consolidated Revenue Fund for specific purposes, subject to parliamentary appropriation. Determination 2006/25 under the FMA Act pertains to the variation and abolition of the Lloyd’s Deposit Trust Account, which is a Special Account established to manage deposits made under the Insurance Act 1973. This determination is limited to the Commonwealth's internal financial management machinery, with the Finance Minister having the authority to establish or vary Special Accounts, subject to parliamentary disallowance. The process of establishing or varying Special Accounts, including the Lloyd’s Deposit Trust Account, involves tabling the determination in both Houses of Parliament, with a disallowance period of five sitting days. Once the balance of the Lloyd’s Deposit Trust Account is transferred to the newly established Account, the original Account will be abolished. This change is intended to address structural limitations in the original determination, ensuring clarity and effectiveness in the account's operation.

Key Provisions

The Determination 2006/25 (section 1) amends the Financial Management and Accountability Act 1997 (FMA Act) by varying and subsequently abolishing the Lloyd’s Deposit Trust Account. The purpose of this determination is to create a new Special Account, the Lloyd’s Deposit Trust Special Account, to record deposits made in accordance with the Insurance Act 1973 and to address the structural limitations of the original account. This new account will allow for the necessary changes that are not feasible under the initial determination. The obligations imposed by this determination include the requirement for the Finance Minister to establish or vary Special Accounts as stipulated under section 20 of the FMA Act. These determinations must be tabled in each House of Parliament and may be disallowed within five sitting days. If not disallowed, the determination comes into effect after this period. The Finance Minister must also ensure that any Special Account can be abolished by a determination, although there is no requirement to table this determination (section 22 of the FMA Act). Failure to comply with the provisions of this Determination 2006/25 could result in legal consequences. While the determination itself does not specify particular offences or penalties, breaches of the FMA Act generally could lead to criminal or civil penalties. For instance, misuse of public funds contrary to the Act could result in significant fines or imprisonment, depending on the severity of the breach. The maximum penalties for such offences could be substantial, reflecting the seriousness of financial mismanagement and breach of public trust.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.