Explanatory Memorandum
(Circulated by authority of the Minister for Revenue and Assistant Treasurer, the Hon Mal Brough, MP)Outline and financial impact statement
Outline
The Financial Institutions Supervisory Levies Collection Amendment Bill 2004 (the Bill) is part of a package of seven Bills that introduce a number of changes to the arrangements for the determination of the levies paid by regulated financial entities. These levies fund the vast majority of the costs of the Australian Prudential Regulation Authority (APRA) in pursuing its role of prudential supervision and regulation, and certain related activities undertaken by the Australian Securities and Investments Commission and the Australian Taxation Office.
The other six Bills in the package are the Authorised Non operating Holding Companies Supervisory Levy Imposition Amendment Bill 2004, the Authorised Deposit-taking Institutions Supervisory Levy Imposition Amendment Bill 2004, the Life Insurance Supervisory Levy Imposition Amendment Bill 2004, the General Insurance Supervisory Levy Imposition Amendment Bill 2004, the Retirement Savings Account Providers Supervisory Levy Imposition Amendment Bill 2004 and Superannuation Supervisory Levy Imposition Amendment Bill 2004.
The reforms contained in this Bill and its companion Bills give effect to the Government's response to the Review of Financial Sector Levies. The Report of the Review of Financial Sector Levies, together with the Government's response, was released on 7 May 2004.
The Bill helps enable levies to be collected from authorised non-operating holding companies in the general insurance sector, as well as from authorised non-operating holding companies in the authorised deposit-taking institutions sector. In the absence of this measure, authorised non-operating holding companies in the authorised deposit-taking sector would continue to be the only type of non-operating holding companies subject to the authorised non-operating holding company supervisory levy.
Financial Impact Statement
2.1 It is not envisaged that the Bill will have a financial impact on the operations of government. The Bill only determines the framework for how financial sector levies are to be allocated among regulated entities. The total amount of funding required to be raised by the levies is determined in a separate process upon which this Bill does not have a direct impact. Regulated financial sector entities will continue to pay financial sector levies, which, in turn, will be used essentially to fund the operations of the Australian Prudential Regulation Authority, as well as certain related activities undertaken by the Australian Securities and Investments Commission and the Australian Taxation Office.
2.2 This Bill will result in authorised non-operating holding companies in the general insurance sector contributing to the levies.
Notes on individual clauses
3.1 Clause 1 is a formal provision specifying the Short Title of the Bill.
3.2 Clause 2 indicates that the Bill will commence on Royal Assent.
3.3 Clause 3 makes clear that any Act specified in the Schedule is amended or repealed as set out in the Schedule and that the Schedule may also contain other provisions.
Schedule 1 - Amendment of the Financial Institutions Supervisory Levies Collection Act 1998
4.1 Item 1 amends the definition of authorised non-operating holding company by extending it to include an authorised non-operating holding company operating under the Insurance Act 1973 as well as one operating under the Banking Act 1959. This is necessary to enable authorised non-operating holding companies in the general insurance sector to be subject to the levy.
4.2 Item 2 indicates that the extended definition mentioned of authorised non-operating holding companies applies in relation to the financial year commencing on 1 July 2005 and each subsequent financial year.