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2013-2014
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE
SUPERVISORY COST RECOVERY LEVY AMENDMENT BILL 2014
AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE
SUPERVISORY COST RECOVERY LEVY (COLLECTION) AMENDMENT BILL
2014
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Justice,
the Honourable Michael Keenan, MP)
AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE SUPERVISORY
COST RECOVERY LEVY AMENDMENT BILL 2014
AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE SUPERVISORY
COST RECOVERY LEVY (COLLECTION) AMENDMENT BILL 2014
OUTLINE
These bills amend the Australian Transaction Reports and Analysis Centre Supervisory Cost
Recovery Levy Act 2011 and the Australian Transaction Reports and Analysis Centre
Supervisory Cost Recovery Levy (Collection) Act 2011 to implement the new industry
contribution arrangements announced by Government.
The Government announced on 13 May 2014, as part of the 2014 Budget, that it would
replace the existing Supervisory Cost Recovery Levy (the levy), which funds the regulatory
activities of the Australian Transaction Reports and Analysis Centre (AUSTRAC), with a
new industry contribution which will fund both the regulatory and financial intelligence unit
(FIU) functions of AUSTRAC.
Since the 2011-12 financial year AUSTRAC has been recovering the cost of delivering its
regulatory functions from the entities it regulates, through the levy, in accordance with the
Australian Government's Cost Recovery Guidelines.
AUSTRAC's purpose is to protect the integrity of the financial system and contribute to the
administration of justice through its expertise in countering money laundering and the
financing of terrorism. This purpose is achieved through the exercise of its two
interdependent functions - as a regulator and as Australia's FIU.
As a regulator, AUSTRAC works with its regulated population (reporting entities) to enhance
the level of understanding of anti-money laundering and counter-terrorism financing
obligations and supervise compliance with the requirements of the Anti-Money Laundering
and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Reporting entities provide services that are vulnerable to exploitation for money laundering
and terrorism financing purposes, creating the need for regulation by AUSTRAC. It is
appropriate that industry meet the costs of regulatory systems that ensure the integrity of their
operating environment.
As Australia's FIU, AUSTRAC collects and analyses financial data and provides this
financial intelligence to state, territory and Australian law enforcement, security, social
justice and revenue agencies, and certain international counterparts. The information can
assist AUSTRAC's partner agencies to investigate and prosecute criminal and terrorist
enterprises in Australia and overseas. Whilst the use of the information is predominantly by
partner agencies, it serves to strengthen the integrity of Australia's financial system, creating
a secure and stable operating environment for Australian business.
Under the arrangements set out in the 2014 Budget, the industry contribution will fund
AUSTRAC's activities as Australia's anti-money laundering and counter terrorism financing
regulator and FIU. The contribution will be calculated as a percentage of AUSTRAC's
operating costs, including amortisation and annual depreciation costs of assets used by
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AUSTRAC in the above activities, for example, AUSTRAC's information systems and data
bases.
The industry contribution will not be used to recover the costs incurred under AUSTRAC's
international technical assistance and training programs, or any other expenditures related to
programs which are not funded by Government appropriation directly to AUSTRAC.
The Minister for Justice will determine the amount payable by a reporting entity through a
legislative instrument. The total contribution imposed cannot exceed the statutory limit of
twice the total of all amounts appropriated for AUSTRAC in a financial year.
The first instalment of the industry contribution will be invoiced in advance based on
AUSTRAC's budget for the upcoming financial year. AUSTRAC's annual budget for any
given financial year is determined by the Government, and is set out in the budget papers
under the line item `Revenue from Government'. For the purposes of the industry
contribution, the expenditure for depreciation and amortisation will be added to this amount
in order to determine AUSTRAC's operating costs. The inclusion of depreciation and
amortisation is necessary in order to recognise the capital costs associated with maintaining
AUSTRAC's infrastructure and asset base.
Any subsequent Government appropriation throughout the financial year will be recovered by
way of a further instalment of the industry contribution in the current financial year, or
included as part of the calculation of the industry contribution for the following financial
year.
Approximately 3,000 reporting entities will no longer be required to pay the AUSTRAC
Industry Contribution levy. The number of reporting entities required to pay the industry
contribution is approximately 900 entities because the industry contribution will only be
recovered from larger reporting entities.
Financial impact statement
The new funding arrangements for AUSTRAC implemented by these bills will result in the
industry contribution funding 70 per cent of AUSTRAC's budgeted operating expenditure
(including depreciation and amortisation) in 2014-15, increasing to 90 per cent in 2015-16
and 2016-17, and to 100 per cent from 2017-18 onwards.
These arrangements are expected to recover the following amounts over the period 2014-18:
2014-15 $42.845 million
2015-16 $54.838 million
2016-17 $53.362 million
2017-18 $58.856 million.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
This Bill 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.
These Bills have no human rights implications.
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AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE SUPERVISORY
COST RECOVERY LEVY AMENDMENT BILL 2014
NOTES ON CLAUSES
List of Abbreviations
AUSTRAC Australian Transaction Reports and Analysis Centre
FIU Financial Intelligence Unit
Levy Act Australian Transaction Reports and Analysis Centre Supervisory Cost
Recovery Levy Act 2011
Clause 1: Short Title
1. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2: Commencement
2. The Act will commence on the day after it receives the Royal Assent.
Clause 3: Schedules
3. This clause provides for each Act specified in a Schedule to the Bill to be amended in
accordance with the items set out in the relevant Schedule.
Schedule 1 - Amendments
4. This schedule amends the Australian Transaction Reports and Analysis Centre
Supervisory Cost Recovery Levy Act 2011 (Levy Act).
Item 1 Section 1
5. Item 1 replaces the term supervisory cost recovery levy with industry contribution in the
short title of the Levy Act. The new short title of the Levy Act is the Australian
Transaction Reports and Analysis Centre Industry Contribution Act. This reflects the fact
that the arrangements are no longer considered to be `cost recovery' within the meaning
of the Australian Government Cost Recovery Guidelines, but instead constitute industry
contributing the funding for AUSTRAC's dual regulatory and FIU functions.
Item 2 Subsection 7(1)(a) (definition of census day)
6. This item removes a reference to the year 2011-2012 and replaces it with a reference to
`the financial year beginning on 1 July 2014' to reflect that the new Act will begin
operating in the 2014-2015 year. The provision expressly limits the operation of section
12(2) of the Legislative Instruments Act 2003 to reflect that the Act will not come into
force until after 1 July 2014. The census day for subsequent financial years will be 1 July
or a day determined by the AUSTRAC CEO by legislative instrument.
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Item 3 Subsection 7(1) (definitions of indexation factor and index number).
7. This item repeals the definitions of indexation factor and index number that were relevant
to the existing cost recovery regime but are no longer relevant to the calculation of the
industry contribution. Section 10 of the Levy Act, which provides for the calculation of
the indexation factor is repealed by item 13. The indexation factor was only relevant to
the calculation of the statutory limit and statutory minimum.
Item 4 Subsection 7(1) (definition of statutory limit)
8. This item repeals the existing definition of statutory limit and replaces it with a new
definition. The new definition sets the statutory limit as an amount that is two times the
sum of all amounts appropriated by the Parliament for AUSTRAC for a given financial
year. A statutory limit above the budgeted appropriation is necessary to allow for
depreciation and amortisation and for any budget appropriations carried over from a
previous financial year. For example, where AUSTRAC does not collect amounts relating
to an appropriation provided to it in one financial year (because, for example, money is
appropriated to AUSTRAC late in the financial year and there is insufficient time for a
levy to be raised in respect of this amount), this amount is capable of being raised through
a levy in a subsequent financial year. The new definition provides a buffer in the form of
a multiplier of two to ensure that additional amounts levied for this purpose do not exceed
the statutory limit.
9. The statutory limit provides a safeguard to ensure that the collection of funds from the
industry contribution is limited and that it maintains a link with the budgeted
appropriation.
Item 5 Subsection 7(1) (definition of statutory minimum)
10. Item 5 repeals the definition of statutory minimum as this will no longer be set in
legislation, but can be included in the Ministerial determination under section 9.
Item 6 Section 8 (heading)
11. This item replaces the heading Imposition of AUSTRAC cost recovery levy and substitutes
the heading Imposition of a levy.
Item 7 Section 8
12. This item replaces the term Supervisory Cost Recovery Levy with Industry Contribution,
to correctly refer to the new short title of the Australian Transaction Reports and Analysis
Centre Supervisory Cost Recovery Levy (Collection) Act 2011, which is given the new
short title Australian Transaction Reports and Analysis Centre Industry Contribution
(Collection) Act by the second amending bill (see notes on clauses for that bill below).
13. This reflects the fact that the arrangements are no longer considered to be `cost recovery'
within the meaning of the Australian Government Cost Recovery Guidelines, but instead
constitute industry contributing the funding for AUSTRAC's dual regulatory and FIU
functions.
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Item 8 After section 8
14. Item 8 inserts a new provision, Section 8A, which provides that the amount of levy
payable for a financial year is equal to the sum of all instalments of levy payable for that
financial year. This is to allow for multiple levy amounts to be invoiced if necessitated by
multiple budget appropriations to AUSTRAC in a given financial year.
Item 9 Section 9 (heading)
15. Item 9 replaces the existing heading Amount of levy with the heading Amount of
instalment of levy to reflect that one or more determinations for levy payment may be
made in a single financial year.
Item 10 Subsections 9(1) and (2)
16. Section 9 of the Levy Act provides for the Minister to determine, by legislative
instrument, the levy amount payable by a leviable entity for a financial year. Item 10
replaces subsections 9(1) and (2) with three new subsections to allow for multiple
determinations to be made by the Minister in a given financial year. This is to allow for
multiple levy amounts, referred to as `instalments', to be invoiced if necessitated by
additional budget appropriations to AUSTRAC in a given financial year.
17. New subsection (2)(a) inserted by item 10 provides that at least one determination must
be made for each financial year in order to determine the levy amount payable by a
leviable entity for that year. New subsection 2(b) inserted by item 8 ensures that the sum
of all levy amounts payable, as determined by a Ministerial determination or multiple
determinations, must not exceed the statutory limit defined in subsection 7(1) of the Levy
Act, as amended by item 5.
Item 11 Subsection 9(4)
18. Subsection 9(4) of the Levy Act limits the operation of section 12(2) of the Legislative
Instruments Act 2003 by enabling the Minister to make a determination after the
commencement of the 2011-12 financial year. The purpose of this provision at the time
the Levy Act was introduced was to ensure that leviable entities would be liable for the
entire financial year irrespective of the date of the commencement of section 8 of the
Levy Act and subsequent determination. This was necessary when the scheme was first
introduced after the commencement of the 2011-12 financial year.
19. As the new arrangements are to be introduced after the commencement of the current
financial year, it is necessary for this mechanism to apply for the current financial year.
Item 9 removes the reference to the 2011-12 financial year from subsection 9(4) and
replaces it with a general reference to `a' financial year, to extend the applicability of this
subsection to the current financial year and future financial years. This is to allow for a
ministerial determination made under section 9 to be made after the beginning of any
given financial year. This is particularly important for the 2014-15 financial year, as the
determination cannot be made until the amendments provided for in these bills are passed
by the Parliament, which will be a date after the beginning of the current financial year.
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Item 12 Subsection 9(5)
20. This item repeals subsection 9(5) of the Levy Act, which provided that a leviable entity
would not be required to pay the levy when the levy amount for the financial year is less
than the statutory minimum. This mechanism will instead be provided for in the
Ministerial Determination, as necessary, in order to provide flexibility in the
administration of the levy.
Item 13 Section 10
21. This item repeals section 10 of the Levy Act, which set out the formula for calculating the
indexation factor for determining the minimum and maximum limits for the levy payable
in a financial year. The formula is now redundant as the indexation factor is only relevant
to the calculation of the statutory limit and statutory minimum. The definition of statutory
limit is amended by item 4 and no longer relies on the indexation factor. The statutory
minimum will no longer apply to the industry contribution, and the concept is repealed by
item 5.
Item 14 Application of amendments
22. Item 14 provides for the amendments made by this schedule to apply in relation to the
levy payable for the 2014-15 financial year and later financial years.
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AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE SUPERVISORY
COST RECOVERY LEVY (COLLECTION) AMENDMENT BILL 2014
NOTES ON CLAUSES
List of Abbreviations
AUSTRAC Australian Transaction Reports and Analysis Centre
Collection Act Australian Transaction Reports and Analysis Centre Supervisory Cost
Recovery Levy (Collection) Act 2011
FIU Financial Intelligence Unit
Levy Act Australian Transaction Reports and Analysis Centre Supervisory Cost
Recovery Levy Act 2011
Clause 1: Short Title
23. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2: Commencement
24. The Bill will commence on the day after it receives the Royal Assent.
Clause 3: Schedules
25. This clause provides for each Act specified in a Schedule to the Bill to be amended in
accordance with the items set out in the relevant Schedule.
Schedule 1 - Amendments
26. This schedule amends the Australian Transaction Reports and Analysis Centre
Supervisory Cost Recovery Levy (Collection) Act 2011 (Collection Act).
Item 1 Section 1
27. Item 1 replaces the term supervisory cost recovery levy with industry contribution in the
short title of the Collection Act. The new short title of the Levy Act is the Australian
Transaction Reports and Analysis Centre Industry Contribution (Collection) Act. This
reflects the fact that the arrangements are no longer considered to be `cost recovery'
within the meaning of the Australian Government Cost Recovery Guidelines, but instead
constitute industry contributing the funding for AUSTRAC's dual regulatory and FIU
functions.
Item 2 Subsection 6(1) (definitions of leviable entity and levy)
28. Item 2 replaces the term supervisory cost recovery levy with industry contribution in
order to refer to the new Short Title of the Levy Act in the definitions of leviable entity
and levy.
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Item 3 Section 7
29. This item repeals section 7 of the Collection Act and inserts a new section 7 which creates
the liability for a person who is a leviable entity for a given financial year to pay the
industry contribution levy in that financial year. Item 3 refers to instalments of the levy to
ensure that a leviable entity is liable for all payments which make up the levy in the event
of multiple budget appropriations to AUSTRAC in a given financial year.
Item 4 Section 8
30. This item replaces the heading When levy due for payment and substitutes the heading
When instalment of levy due for payment to reflect that one or more instalments of the
levy payment may fall due in a single financial year.
Item 5 Subsection 8(1)
31. Subsection 8(1) of the Collection Act allows for the AUSTRAC CEO to specify the day
on which the levy is due for payment. Item 5 amends subsection 8(1) to allow for the day
for payment to be specified for `an instalment of levy payable by a person for a financial
year' to allow for multiple levy instalments in the event of multiple budget appropriations
to AUSTRAC in a given financial year.
Item 6 Paragraph 8(1)(a)
32. Item 6 replaces the term `financial year' with `instalment', in order to clarify that the
notice relates to an instalment (and not the whole of the financial year) and triggers the
payment period for that instalment.
Item 7 Subsection 9(1)
33. Item 7 repeals subsection 9(1) of the Collection Act and replaces it with a new subsection
9(1) which allows for a late payment penalty to be applied and calculated for instalments
of the levy, if multiple instalments are necessary for a given financial year due to multiple
budget appropriations for AUSTRAC in that financial year. The calculation of the late
payment penalty remains the same as is currently stated in the Collection Act. It is
calculated per levy month and is payable at the end of the month under subsection 9(2).
The purpose of the late payment penalty is to encourage compliance with the obligation to
pay the industry contribution levy and to discourage late payment.
Item 8 Section 10
34. Section 10 of the Collection Act provides that the levy is payable to the AUSTRAC CEO
on behalf of the Commonwealth. Item 8 amends references to `levy' to become references
to `instalment of a levy' to provide that an instalment of levy and not just a single levy is
payable. This is to allow for the collection of multiple instalments of levy if necessitated
by multiple budget appropriations to AUSTRAC in a given financial year.
Item 9 Paragraph 12(1)(a)
35. Subsection 12(1)(a) of the Collection Act provides that the levy is debt due to the
Commonwealth and can be recovered by the AUSTRAC CEO. This empowers the
AUSTRAC CEO to take court proceedings to recover the levy as agent for the
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Commonwealth. Item 9 amends subsection 12(1)(a) to provide that an instalment of levy
and not just a single levy is due and payable. This is to allow for the collection of multiple
instalments of the levy if necessitated by multiple budget appropriations to AUSTRAC in
a given financial year.
Item 10 Subsection 13(3)
36. Item 10 amends subsection 13(3) by replacing the words Supervisory Cost Recovery Levy
with Industry Contribution in order to refer to the correct new Short Title of the Levy
Act.
Item 11 At the end of the Act
37. Item 11 inserts a new section at the end of the Collection Act which provides for a review
of the levy to be conducted. The Minister must order an independent review of the
operation of the levy as soon as possible after the fourth anniversary of the
commencement of the Collection Act, and a report must be provided to the Minister
within 6 months of this time. The person undertaking the review must consult with
industry participants about the impact of the levy and the costs of compliance. The report
must be tabled in each House of Parliament within 15 sitting days of the Minister
receiving the Report. The new section sets out a number of mandatory issues to be
considered in the Report, but does not limit the contents of the report to these issues.
38. This provision will ensure that the operation of the new industry contribution, including
the methodology used to calculate instalments of the levy and the impact of the levy on
industry, is appropriately reviewed, and provide the opportunity for improvements to the
arrangements, if warranted.
Item 12 Application of amendments
39. Item 12 provides for the amendments made by this schedule to apply in relation to the
levy payable for the 2014-15 financial year and later financial years.
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