Services

How much will you be forced to pay ASIC? Industry funding model draft regulations released - 23 May 2017

Companies, corporate advisers, auditors, liquidators, and many other entities can expect to be hit with extra regulatory costs when the Australian Securities and Investment Commission (ASIC) industry funding model (Industry Funding Model) commences on 1 July 2017. 

The Industry Funding Model is designed to recover ASIC’s regulatory costs by requiring all ‘leviable entities’, from across all industry sectors regulated by ASIC, to pay an annual levy.

The amount of levy payable by a leviable entity in a financial year will be the amount worked out in accordance with the regulations.  The regulations were released by the government in exposure draft on 4 May 2017[1] (Draft Regulations).

In this alert, Partners Michael Hansel, Nino Odorisio, Senior Associate, Katherine Hammond and Solicitor, Christina Hooper  explain how the levies will be calculated according to the Draft Regulations. For more general information about the Industry Funding Model, please refer to our previous alert.


Key points

  • Entities in all sectors regulated by ASIC will pay an annual levy.  
  • The entities regulated by ASIC are categorised under 6 sectors and 48 sub-sectors.
  • The levy will either be a flat or graduated (variable) amount.
  • The type of levy (flat/variable) and the formula for calculating the levy amount for an entity will depend on the subsector(s) that the entity is in. 
  • 5.Entities may fall within multiple subsectors depending on the activities they undertake during a financial year. Such entities will be required to pay the levy applicable to it under each subsector.
  • Flat levies apply to apportion ASIC’s regulatory costs in subsectors where these costs are approximately the same for each entity.  For subsectors that have a flat levy, the amount of levy payable by an entity will be the total ASIC regulatory costs for that subsector divided by the number of entities that are part of that subsector, for the financial year. 
  • Variable levies will be used for subsectors where ASIC’s regulatory costs vary significantly across its regulated population. Some will include a fixed minimum component and a variable component to apportion ASIC’s regulatory costs. Others will be entirely variable depending on an entity’s share of total activity in an industry subsector. The levy prescribed for public listed companies also includes a maximum cap.  
  • Levies will be pro-rated on a daily basis for entities that have not been licensed or registered for the whole financial year, to the extent appropriate to ensure that entities are only charged an amount equal to their costs of regulation,
  • ASIC will make annual legislative instruments specifying the information required to calculate the levies, including ASIC’s regulatory costs for each subsector and the amount of activity for each subsector for the relevant year.
  • Certain amounts, including ASIC registry costs and the costs of ‘chargeable matters’, must not be included in ASIC’s regulatory costs.  Accordingly, such amounts will not be recovered from leviable entities but, entities will continue to pay annual fees and other fees under the existing rules. 
  • Small proprietary companies will not be subject to a levy under the Industry Funding Model. However the existing annual fee for proprietary companies will still be payable and will be increased to cover their regulatory costs.

How is the levy calculated?

The Regulations provide that the amount of the levy an entity has to pay will be equal to the sum of each levy component applicable to the entity for the financial year. An entity’s levy component for a financial year includes its share of flat levies and graduated levies for each subsector the entity is a part of in the financial year. 

Table A below summarises how the levy components will be calculated for leviable entities in each subsector.

Table A:  Levies applicable to subsector entities

Note 1:  For subsectors that have a flat levy, the amount of levy payable by an entity will be the total ASIC regulatory costs for that subsector divided by the number of entities that are part of that subsector, for the financial year. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Public Consultation

The public may make submissions on the Draft Regulations until 26 May 2017.

More information

If you would like more information or to make a submission on the Draft Regulations, please contact a member of HopgoodGanim Lawyers’ Corporate Advisory & Governance team.


[1] ASIC Supervisory Cost Recovery Levy Regulations 2017.


HopgoodGanim Lawyers is a full service commercial law firm. Our firm has 41 partners and more than 280 staff. We operate nationally and internationally with a focus on Asia from our two key locations of Brisbane and Perth. We offer highly skilled and agile legal teams across key sectors and areas of practice. In all of our areas of speciality, our lawyers are recognised by legal publications as leaders in their fields. 

 

Authors