Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
AUTHORISED NON-OPERATING HOLDING COMPANIES SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2004
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Revenue and
Assistant Treasurer,
the Hon Mal Brough, MP)
Table of Contents
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1.1 The Authorised Non-operating Holding Companies Supervisory Levy Imposition 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.
1.2 The other six Bills in the package are the Financial Institutions Supervisory Levies Collection 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.
1.3 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.
1.4 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 companies supervisory levy.
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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 the authorised non-operating holding company levy is to be allocated among regulated entities. The total amount of funding required to be raised by the levy 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 results in authorised non-operating holding companies in the general insurance sector being subject to the levies. It also changes the statutory upper limit applying to the levy set for the 2005-06 financial year in relation to authorised non-operating holding companies and the calculation of the indexation factor used to establish the statutory upper limits applying in later years.
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3
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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.
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4.1 Item 1 amends the definition in section 5 of authorised non-operating holding company by extending it to include a 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 changes to $1,500,000 the statutory upper limit in section 5 for the financial year commencing on 1 July 2005. In relation to later financial years, the statutory upper limit continues to be calculated using indexation factors related to movements in the Consumer Price Index. As noted below, the amount of levy determined as payable by an authorised non-operating holding company for a financial year must not exceed the statutory upper limit at the time of the determination.
4.3 Item 3 changes subsection 7(1) to separate the amount of levy payable by an authorised non-operating holding company into the amount payable by an authorised non-operating holding company under the Banking Act 1959 and the amount payable by an authorised non-operating holding company under the Insurance Act 1973.
4.4 In amending subsection 8(1), Item 4 sets out the key step in the method for the calculation of the indexation factor for a financial year. It specifies that 0.03 is to be added to the number derived from the simple division of specified Consumer Price Index numbers.
4.5 Item 5 is a minor technical change to ensure that a cross-reference remains correct following the re-structuring of the subsection referred to in Item 4.
4.6 Item 6 indicates that the amendments made in the Schedule to this Bill apply for the financial year commencing on 1 July 2005 and each subsequent financial year.