EXPLANATORY STATEMENT

Select Legislative Instrument 2010 No. 82

 

AUTOMOTIVE TRANSFORMATION SCHEME REGULATIONS 2010

 

The Automotive Transformation Scheme Regulations 2010 (the Regulations) are made under the authority of the Automotive Transformation Scheme Act 2009 (the Act). The Act established the legislative framework for the Automotive Transformation Scheme (ATS) with the administrative detail set out in these Regulations and the ATS Ministerial Order, a legislative instrument made under the authority of the Regulations.

 

The ATS, the centrepiece of the Government’s $6.2 billion New Car Plan for a Greener Future, encourages the innovation and investment necessary to place the Australian automotive industry on an economically sustainable footing.

 

The ATS is an entitlement scheme that provides cash payments to registered participants for strategic investment in research and development, plant and equipment, and the production of motor vehicles, engines and engine components.

 

Section 29 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

Section 5 of the Act requires the making of regulations that prescribe a scheme, the ATS, to further the object of the Act. Section 5 lists the matters that must be prescribed in the ATS.

 

The Regulations are divided into the following parts:

 

Part 1 contains preliminary matters including what constitutes production of goods and the provision of services and what constitutes eligible investment and eligible production.

 

Part 2 sets out the conditions for registration in the Scheme. Part 2 also contains provisions to facilitate transfers of registration and transfers of eligible investment.

 

Part 3 describes the process for each ATS participant to making a quarterly return to be entitled to assistance under the Scheme. Part 3 also contains the maximum amount of capped assistance available to ATS participants and personal limits on payments of amounts to individual participants.

 

Part 4 ensures that any overpayments made to ATS participants can be recovered. It also provides that interest may be charged on overpaid amounts.

 

Part 5 provides for internal review and administrative review of certain decisions.

 

Part 6 contains miscellaneous provisions including appointing authorised officers and information to be contained in the Department’s annual report.

 

Part 7 contains transitional provisions to ensure a smooth transition from the Automotive Competitiveness and Investment Scheme (ACIS) to the ATS.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations will commence on 1 July 2010, to coincide with the commencement of sections 3 to 29 of the Act.

 

The Regulations provide the authority for the ATS Ministerial Order to be made under regulation 3.12 and regulation 6.7. The ATS Ministerial Order will provide for the calculation of production and investment amounts; the working out of quarterly modulation rates and assistance to ATS participants; and the reporting requirements for the ATS.

 

Consultation

 

The Regulations have been developed with extensive consultation between the Government and the key industry stakeholders.

 

The Regulations were developed in close consultation with:

·        Commonwealth Government agencies including the:

o       Department of Prime Minister and Cabinet;

o       Department of Finance and Deregulation;

o       Department of Treasury;

o       Attorney General’s Department; and

o       Department of Foreign Affairs and Trade.

 

·        the Federal Chamber of Automotive Industries (FCAI) and its members

 

·        the Federation of Automotive Products Manufacturers (FAPM)

 

A consultation draft of the Regulations were published on the Department’s website for public comment from 30 November 2009. The Department also held public consultations in Melbourne, Sydney and Adelaide on 9, 10 and 11 February 2010. These public consultations included a presentation and a questions and answer session. A copy of the presentation and the questions and answers are available on the Department’s website.

 

Financial Implications

The total administered expenses for the Automotive Transformation Scheme is estimated at $3,347 million over the period 2010–11 to 2020–21.

 

This figure is made up of two kinds of assistance:

• capped assistance worth $2.5 billion administered through a special appropriation; and
• uncapped assistance, estimated at $847 million administered through annual appropriations.

Details of the Automotive Transformation Scheme Regulations 2010

This Explanatory Statement uses the following abbreviations:

• ‘ATS’ means the Automotive Transformation Scheme
• ‘Act’ means the Automotive Transformation Scheme Act 2009
• ‘Order’ means the Automotive Transformation Scheme Ministerial Order
• ‘MVP’ means a person registered as a motor vehicle producer under the ATS
• ‘ACP’ means a person registered as an automotive component producer under the ATS
• ‘AMTP’ means a person registered as an automotive machine tools producer or automotive tooling producer under the ATS
• ‘ASP’ means a person registered as an automotive service provider under the ATS.

 

 

Part 1 Preliminary

 

Division 1.1: Introduction

 

1.1              Name of Regulations

 

The title of the Regulations is the Automotive Transformation Scheme Regulations 2010.

 

1.2              Commencement

 

The Regulations commence on 1 July 2010.

 

1.3              Establishment of Automotive Transformation Scheme

 

This regulation establishes the ATS as per section 5 of the Act.

 

1.4              Overview of Scheme

 

This regulation describes the main elements of the ATS. The Regulations set out a scheme that replaces assistance provided to the automotive industry under the current Automotive Competitiveness and Investment Scheme (ACIS) from 1 January 2011. Participants that engage in production in Australia of motor vehicles, engines and engine components, automotive components, automotive machine tools, or automotive services are entitled to cash payments for eligible investment and production. Participation in the ATS is conditional on satisfying the conditions set out in the Act and the Regulations.

 

The Overview also states that the Regulations would set out the payments of assistance, the recovery of overpayments, administrative review of decisions and the transitional arrangements.

 

1.5              Definitions

 

This regulation describes the meaning of specific terms used within the Regulations.

 

1.6              Meaning of production of goods and provisions of services in Australia

 

This regulation defines production generally, and production in Australia of: engines; motor vehicles; engine components; automotive components; automotive machine tools; automotive tooling; and the provision of automotive services.

 

The purpose of these definitions is to set out the minimum requirements for an activity to be recognised as production under the ATS. The definition is used in determining eligibility for registration (Part 2 Division 2), continued registration (Part 2 Division 5) and the production amounts for an MVP.

 

1.7              Meaning of automotive component

 

Subregulation 1.7(1) describes the classes of products considered automotive components for the purposes of the ATS.

 

Subregulation 1.7(2) lists items which are not considered automotive components for the purposes of the ATS.

 

Subregulation 1.7(3) excludes hides or leather used in motor vehicles from the definition of automotive components. However, components that are made up in part of leather are not excluded (subregulation 1.7(4)).

 

This definition is used in determining eligibility for registration as an ACP, as well as clarifying the classes of products for which an ATS participant may claim eligible investment amounts.

 

1.8              Meaning of automotive machine tools

 

This regulation defines the kinds of tools considered automotive machine tools for the purposes of the ATS.

 

The definition is used in determining eligibility for registration as an AMTP, as well as clarifying the classes of products for which an ATS participant can claim eligible investment amounts.

 

1.9              Meaning of automotive services

 

This regulation defines the types of services considered automotive services for the purposes of the ATS.

 

This definition is used in determining who is eligible to apply for registration as an ASP, as well as clarifying the types of services for which an ATS participant can claim eligible investment amounts.

 

1.10          Meaning of automotive tooling

 

This regulation describes the kinds of tools considered automotive tooling for the purposes of the ATS.

 

This definition is used in determining who is eligible to apply for registration as an AMTP, as well as clarifying the classes of products for which an ATS participant can claim eligible investment amounts.

 

1.11          Where sale of goods or services is taken to occur

 

This regulation defines circumstances where a sale of goods or services is taken to have occurred for the purposes of determining the annual level of sales of each participant in order to apply the sales-based cap.

 

The sales-based cap limits annual ATS assistance to a maximum of five per cent of an ATS participant’s previous year’s sales or 15 per cent of eligible
start-up investment amounts (as defined in regulation 1.5) for a new automotive business. The sales-based cap is set out in regulation 3.11.

 

1.12          Where sale of goods or services is taken not to occur

 

This regulation defines circumstances where a sale of goods or services is taken not to have occurred. This includes if the goods are lent from one person to another and the lender retains title, or if the sale of goods and services occurs between companies registered as a group under the ATS.

 

1.13          Circumstances in which components, tools or tooling are taken to be for the MVP’s own use

 

This regulation sets out when the production of automotive components, tools or tooling is taken to be for the MVP's own use (that is, for ultimate use in the production of motor vehicles, engines or engine components produced by the MVP).

 

This provision allows an MVP to claim ATS assistance for investment relating to components, tools, tooling or services that the MVP produces and sells to another company, including the MVP's parent company. Any investment in plant and equipment or research and development relating to components, tools, tooling or services produced by the MVP and used in the production of motor vehicles, engines or engine components by that MVP cannot be claimed.

 

1.14          Circumstances in which services are taken to be for the MVP’s own use

 

This regulation sets out when the provision of automotive services is taken to be for the MVP's own use (that is, for ultimate use in the production of motor vehicles, engines or engine components produced by the MVP).

 

This provision mirrors regulation 1.13 for automotive services.

 

Division 1.2: Eligible investment and eligible production

Subdivision 1.2.1: Outline of Division

 

1.15          Outline of what eligible investment is

 

Subregulation 1.15(1) outlines what is eligible investment under the ATS. Eligible investment is investment by registered participants in allowable plant and equipment and allowable research and development.

 

Subregulation 1.15(2) provides that allowable plant and equipment and allowable research and development is claimable to a given value—the maximum claimable value.

 

Subregulation 1.15(3) clarifies that the calculation of the maximum claimable value for plant and equipment or research and development differs between MVPs and other ATS participants.

 

1.16          Outline of what eligible production is

 

This regulation outlines what is eligible production under the ATS. Eligible production is production by an ATS participant registered as a MVP in allowable production. Allowable production is production of motor vehicles, engines and engine components.

 

Subdivision 1.2.2: Eligible investment

 

1.17          Allowable plant and equipment

 

This regulation sets out the kinds of plant and equipment that an ATS participant may claim as eligible investment under the ATS. Allowable plant and equipment includes plant and equipment for, or to support, the manufacture, assembly, design, development or engineering of motor vehicles and components.

 

1.18          Maximum claimable value for allowable plant and equipment for MVP

 

This regulation sets out the method for calculating the maximum amount an MVP can claim (maximum claimable value) for investment in allowable plant and equipment. The maximum claimable value depends on the circumstances in which the plant and equipment is acquired (ie by purchase, lease, or building or making the plant and equipment).

 

1.19          Maximum claimable value for allowable plant and equipment for ACP, AMTP and ASP

 

This regulation sets out the method for calculating the maximum amount an ACP, AMTP or ASP can claim (maximum claimable value) for investment in allowable plant and equipment. The maximum claimable value depends on the circumstances in which the plant and equipment is acquired (ie by purchase, lease, or building or making the plant and equipment).

 

1.20          Allowable research and development

 

This regulation sets out the kinds of research and development that an ATS participant may claim as eligible investment under the ATS. This includes activities directly related to the design, development, engineering, or production of motor vehicles and components or activities to acquire new knowledge or create improved materials, products, processes or services.

 

1.21          Maximum claimable value for allowable research and development for MVP

 

This regulation sets out the method for calculating the maximum amount an MVP can claim (maximum claimable value) for investment in allowable research and development. The maximum claimable value depends on the circumstances in which the research and development activity is conducted (ie Australian-based, contracted or offshore research and development).

 

1.22          Maximum claimable value for allowable research and development for ACP, AMTP or ASP

 

This regulation sets out the method for determining the maximum amount an ACP, AMTP or ASP can claim (maximum claimable value) for investment in allowable research and development. The maximum claimable value depends on the circumstances in which the research and development activity is conducted
(ie Australian-based, contracted or offshore research and development).

 

1.23          Meaning of labour costs and costs of training and development

 

This regulation sets out the method for determining the labour costs and costs of training and development in respect of an employee carrying out allowable research and development. This is used to calculate the maximum claimable value for allowable research and development.

 

Subdivision 1.2.3: Eligible production

 

1.24          Allowable production for MVP

 

This regulation provides that an MVP may claim the production of motor vehicles, engines and engine components. Motor vehicles, engines and engine components are defined in regulation 1.5.

 

1.25          Maximum claimable value for allowable production for MVP

 

This regulation sets out the method for calculating the maximum amount an MVP can claim (maximum claimable value) for production of motor vehicles, engines and engine components.

 

Division 1.3: Determining eligible investments and value of arm’s length transactions

 

Subdivision 1.3.1: Determining when investment is eligible investment

 

1.26          When investment is taken to have occurred

 

This regulation sets out a clear time when investment in plant and equipment and research and development is taken to have occurred.

 

Subregulation 1.26(1) and (2) sets out the time when investment in plant and equipment is taken to have occurred depending on the circumstances in which the plant and equipment was acquired (ie plant and equipment acquired under a purchase or finance lease, or by building or making the plant and equipment).

 

Subregulation 1.26(3) sets out the time when investment in research and development is taken to have occurred depending on the circumstances in which the research and development was undertaken.

 

Only investment that meets the requirements of this provision can be claimed as eligible investment in a quarterly return.

 

1.27          Sale of eligible investment by ATS participant

 

This regulation provides that once sold, allowable plant and equipment or allowable research and development ceases to be an eligible investment under the ATS.

 

This means that where allowable plant and equipment or research and development is bought and sold within a three year period, the investment will no longer be included in the quarterly rolling average calculation for assistance from the time in which it is sold.

 

Subdivision 1.3.2: Arm’s length transactions

 

1.28          Production value, sales value or investment determined as if transaction at arm’s length

 

Subregulation 1.28(1) provides that the production and sales values used by a person for claiming eligibility or assistance are determined on the basis that the parties are at arm’s length, that is, that the parties are not related entities. This ensures that production and sales values are not artificially distorted through transactions between related companies to increase access to ATS assistance.

 

Subregulation 1.28(2) mirrors subregulation 1.28(1) in relation to investment in plant and equipment and research and development.

 

1.29          Determining the circumstances when parties treated as not being at arm’s length

 

This regulation requires the Secretary to decide that parties are not at arm’s length when they are related or associated entities. Parties are not at arm’s length if they are a group; or if one party controls another (within the meaning of the Corporations Act 2001); or if parties are involved in a cartel or other price-fixing arrangement.

 

1.30          Production value or sales value when parties treated as not being at arm’s length

 

This regulation sets out the process for determining the production value or sales value if the parties had been at arm’s length. These production and sales values are used to calculate ATS assistance.

 

1.31          Value of investment in research and development when parties treated as not being at arm’s length

 

This regulation sets out the process for determining the value of investment in research and development if the parties had been at arm’s length. This process includes considering whether to accept or reject a value of an investment provided by an ATS participant in respect of research and development if parties are related or associated entities.

 

1.32          Value of investment in plant and equipment when parties treated as not being at arm’s length

 

This regulation sets out the process for determining the value of investment in plant and equipment if the parties had been at arm’s length. This process includes considering whether to accept or reject a value of an investment provided by an ATS participant in respect of plant and equipment if parties are related or associated entities.

 

1.33          Methods for determining value of transactions when parties treated as not being at arm’s length

 

This regulation sets out the method for determining the value of transactions when parties are deemed not to be at arm’s length, that is, related or associated entities. This method involves comparing the value of the transactions to a similar transaction between parties that are not related.

 

Part 2 Registration under Scheme

 

Division 2.1: Rules about registration

 

2.1              Rules about number of registrations a person may have under Scheme

 

This regulation clarifies that a person, whether an individual or a group of related bodies corporate, may only hold one registration under the ATS at a time.

 

2.2              Rule about registrations under Scheme needing to further object of Act

 

This regulation provides that the Secretary must not register an applicant unless the Secretary is satisfied that the applicant would further the object of the Act. This regulation does not apply to applicants who have been given permission by the Minister to apply for registration under regulation 2.8.

 

2.3              Rule about effect of further applications for registration on existing registrations

 

This regulation provides that if a person transfers investment under regulation 2.34 and applies for a second registration under the ATS, and the application is granted, this will have the effect of cancelling the existing registration the day before the later application for registration is granted.

 

Division 2.2 Applications for registration

 

2.4              Application for MVP registration

 

Subregulation 2.4(1) sets the minimum requirements for a person producing motor vehicles to be eligible for registration as an MVP under the ATS.

 

To apply for registration as an MVP, a person must meet the minimum production levels for motor vehicles or engines produced in Australia in the year preceding their application or the year following their application.

 

A person may also apply for registration as an MVP if they have been given permission to apply on the basis that their registration would be in the national interest (regulation 2.8 refers).

 

The application for registration must be made in accordance with the requirements in Part 2, Division 4, subregulation 2.4(2).

 

2.5              Application for ACP registration

 

Subregulation 2.5(1) sets the minimum requirements for a producer of automotive components to be eligible for registration as an ACP under the ATS.

 

To apply for registration as an ACP, a person must meet the minimum production levels and values of automotive components produced in Australia for use in motor vehicles and engines in the year preceding their application or the year following their application.

 

A person may also apply for registration as an ACP if they have been given permission to apply on the basis that registration would be in the national interest (regulation 2.8 refers).

 

The application for registration must be made in accordance with the requirements in Division 4, subregulation 2.5(2).

 

Subregulation 2.5(3) and (4) set out the calculation of the production value of automotive components for the purposes of subregulation 2.5(1).

 

2.6              Application for AMTP registration

 

Subregulation 2.6(1) sets the minimum requirements for a producer of automotive machine tools or automotive machine tooling to be eligible for registration as an AMTP under the ATS.

 

To apply for registration as an AMTP, a person must meet the minimum production values of automotive machine tools or automotive tooling produced in Australia in the year preceding their application or the year following their application.

 

A person may also apply for registration as an AMTP if they have been given permission to apply on the basis that their registration would be in the national interest (regulation 2.8 refers).

 

The application for registration must be made in accordance with the requirements in Division 4, subregulation 2.6(2).

 

Subregulation 2.6(3) and (4) set out the calculation of the production value of automotive machine tools or automotive tooling for the purposes of subregulation 2.6(1).

 

2.7              Application for ASP registration

 

Subregulation 2.7(1) sets the minimum requirements for a provider of automotive services to be eligible for registration as an ASP under the ATS.

 

To apply for registration as an ASP, a person must meet the minimum production values for automotive services provided in Australia in the year preceding their application or the year following their application.

 

A person may also apply for registration as an ASP if they have been given permission to apply on the basis that their registration would be in the national interest.

 

The application must be made in accordance with Division 4, subregulation 2.7(2).

 

Subregulation 2.7(3) and (4) set out the calculation of the production value of automotive services for the purposes of subregulation 2.7(1).

 

2.8              Ministerial permission to apply for registration in national interest

 

Subregulation 2.8(1) allows a person to seek the Minister's permission to apply for registration under the ATS, on the basis that the registration would be in the national interest.

 

Subregulation 2.8(2) provides that the Minister may give permission under subregulation 2.8(1) provided the person meets all other registration requirements, other than the production levels, values or dependency thresholds (subregulation 2.8(3)).

 

The Minister must consider the matters listed in subregulation 2.8(4) when determining whether to grant permission under this regulation. The matters the Minister must consider include whether the registration of the person would significantly enhance the competitiveness of the Australian automotive industry or would generate significant employment or investment opportunities in the Australian automotive industry.

 

An applicant must produce information and documents relevant to the Minister's consideration of the application (subregulation 2.8(5)).

 

Subregulation 2.8(6) provides that if the Minister grants approval under this regulation, the Minister must specify ongoing conditions that need to be satisfied by the person. These ongoing conditions are in addition to the conditions of registration (Part 2, Div 5, subregulation 2.8(7)).

 

Division 2.3: Participation in Scheme by groups of companies

 

2.9              Certain groups of companies may seek permission to apply for registration as single entity

 

Subregulation 2.9(1) provides that a group of related bodies corporate may apply to the Secretary for permission to register as a single person. The application must be in the manner prescribed by subregulation 2.9(2).

 

2.10          Dealing with application for permission by group of related bodies corporate

 

Subregulation 2.10(1) provides that the Secretary may consider an application for permission to register as a group at the same time as the Secretary considers other aspects of the application for registration. The Secretary will consider the application within 60 days, unless more information is required.

 

Subregulation 2.10(2) sets the circumstances when the Secretary must grant permission for a group of related bodies to apply for registration. However, if the Secretary is not satisfied with any of the matters listed in subregulation 2.10(2), the Secretary must refuse the application, subregulation 2.10(3).

 

Subregulation 2.10(4) provides that a decision to grant permission may specify any conditions to which the application is subject.

 

Subregulation 2.10(5) clarifies when a decision to grant permission takes effect.

 

2.11          Legal status of a group permitted to make application for registration

 

This regulation allows a group that is granted permission to apply for registration, to be treated as a single entity for the purposes of eligibility, review of decisions, and rights and liabilities under the ATS. This regulation also sets out the test for whether a group is a fit and proper person for the purposes of registration and deregistration.

 

Division 2.4: Formal requirements for, and consideration of, applications for registration

 

2.12          Content of application for registration

 

Subregulation 2.12(1) sets out the requirements for an application for registration.

 

Subregulation 2.12(2) requires applicants to include in their application information on their capability to comply with the document retention obligations under regulation 2.26.

 

Subregulation 2.12(3) lists the matters that must be included in an applicant’s business plan. Applicants must provide a strategic business plan as part of their application for registration.

 

The information contained in the business plan should commence from the start of the ATS year for which registration is sought (subregulation 2.12(4)).

 

2.13          Lodgement of applications

 

This regulation sets out the manner for lodgement of applications for registration.

 

2.14          When to apply

 

This regulation requires a person to apply for registration before 1 January of the ATS year (as set out in regulation 1.5) for which registration is sought. Applications for registration for a particular ATS year will not be accepted after 1 January for that particular ATS year.

 

2.15          Consideration of registration applications

 

Subregulation 2.15(1) requires the Secretary to examine each application for registration, and determine whether to grant the application, within the consideration period.

 

If satisfied that the applicant meets the requirements of subregulation 2.15(2), the Secretary must register the applicant. However, if the Secretary is not satisfied by the matters subregulation 2.15(2), the Secretary must refuse the application (subregulation 2.15(3)).

 

Subregulation 2.15(4) sets the consideration period for application for registration is 60 days from the day of lodgement of the application, unless further substantiating information is required.

 

2.16          Fit and proper person

 

This regulation lists the matters that the Secretary must consider when deciding whether a person is a fit and proper person for the purposes of registration and deregistration. The Secretary must consider matters including whether an applicant has been convicted of a serious offence, is under administration (within the meaning of the Corporations Act 2001), or is being wound up.

 

2.17          Secretary may seek further information

 

Subregulation 2.17(1) allows the Secretary to request further information within a specified period for the purposes of deciding whether to grant registration to the applicant.

 

Subregulation 2.17(2) provides that the applicant is taken to have withdrawn the application if the further information requested is not provided, or if no reasonable explanation is given as to why the information cannot be provided, within the specified period.

 

2.18          Period of effect of registration

 

Subregulation 2.18(1) provides that if registration is granted it will take effect from 1 January of the ATS year for which the application was made.

 

Subregulation 2.18(2) clarifies when an ATS participant’s registration, other than registration in the national interest, will end. Registration will end on 31 March 2021, or the date of deregistration, whichever is earlier.

 

Subregulation 2.18(3) provides that an ATS participant’s registration in the national interest will end on 31 December of the second ATS year following registration, if the participant has not already met the ongoing registration requirements.

 

Subregulation 2.18(4) sets out the timing for when the registration ends for an ATS participant registered under regulation 2.8 and who is able to comply with the conditions of registration.

 

2.19          Registration does not confer entitlement

 

This regulation makes it clear that registering for the ATS does not in itself confer an entitlement to assistance. This is because an entitlement will only arise when an ATS participant meets all the conditions of the ATS, including undertaking eligible investment and production and making quarterly returns in the required form.

 

Division 2.5: Conditions of registration

 

2.20          General compliance

 

This regulation provides that registration is conditional upon an ATS participant complying with the requirements of the Act and the Regulations.

 

2.21          Condition of MVP registration

 

Subregulation 2.21(1) sets the requirements that an MVP must satisfy to maintain its registration under the ATS. To satisfy ongoing registration requirements, an MVP must continue to meet the minimum production levels of motor vehicles or engines produced in Australia.

 

Subregulation 2.21(2) provides that if the Minister grants permission to register under regulation 2.8 or to continue registration under regulation 2.25, an MVP must comply with the ongoing conditions specified by the Minister in granting the permission.

 

2.22          Condition of ACP registration

 

Subregulation 2.22(1) sets the requirements that an ACP must satisfy to maintain its registration under the ATS. To satisfy the ongoing registration requirements, an ACP must continue to meet the minimum production levels and values of automotive components produced in Australia for use in motor vehicles and engines for each ATS year.

 

The requirements set out in subregulation 2.22(1) must be met each ATS year following the ATS year in which the participant is registered, subregulation 2.22(2).

 

Subregulation 2.22(3) provides that if the Minister grants permission to register under regulation 2.8 or to continue registration under regulation 2.25, an ACP must comply with the ongoing conditions specified by the Minister in granting the permission.

 

2.23          Condition of AMTP registration

 

Subregulation 2.23(1) sets out the requirements which an AMTP must satisfy to maintain its registration under the ATS. To satisfy the ongoing registration requirements, an AMTP must continue to meet the minimum production values of automotive machine tools and automotive tooling produced in Australia for use in motor vehicles and engines for each ATS year.

 

The requirements set out in subregulation 2.23(1) must be met each ATS year following the ATS year in which the participant is registered, subregulation 2.23(2).

 

Subregulation 2.23(3) provides that if the Minister grants permission to register under regulation 2.8 or to continue registration under regulation 2.25, an AMTP must comply with the ongoing conditions specified by the Minister in granting the permission.

 

2.24          Condition of ASP registration

 

Subregulation 2.24(1) sets the requirements that an ASP must satisfy to maintain its registration under the ATS. To satisfy the ongoing registration requirements, an ASP must continue to meet the minimum production values of automotive services provided in Australia for each ATS year.

 

The requirements set out in Subregulation 2.24(1) must be met each ATS year following the ATS year in which the participant is registered (subregulation 2.24(2)).

 

Subregulation 2.24(3) provides that if the Minister grants permission to register under regulation 2.8 or to continue registration under regulation 2.25, an ASP must comply with the ongoing conditions specified by the Minister in granting the permission.

 

2.25          Ministerial permission to continue registration in national interest

 

Subregulation 2.25(1) allows an ATS participant to seek the Minister’s permission to continue registration in the national interest.

 

Subregulation 2.25(2) requires an ATS participant seeking the Minister’s permission under subregulation 2.25(1) to satisfy all conditions other than the production levels, values and dependency thresholds. The requirements that the Minister does not have to be satisfied about for giving permission under this regulation are listed in subregulation 2.25(3).

 

Subregulation 2.25(4) lists the issues that the Minister must consider when determining whether to grant permission under this regulation. The matters include whether continued registration would significantly enhance the competitiveness of the Australian automotive industry or would generate significant employment or investment opportunities in the Australian automotive industry.

 

Subregulation 2.25(5) requires an ATS participant to produce information and documents relevant to the Minister's consideration of whether to grant a permission under this regulation.

 

Subregulation 2.25(6) provides that the Minister may give approval to a person to apply for registration subject to ongoing conditions. The conditions specified in subregulation 2.25(6) do not affect other conditions specified in these Regulations, subregulation 2.25(7).

 

Subregulation 2.25(8) restricts the permission under subregulation 2.25(1) to no more than two successive ATS years.

 

2.26 Document retention obligations

 

This regulation requires ATS participants to maintain documents that substantiate information provided in each of their quarterly returns. This evidence is required for post-payment compliance and auditing.

 

2.27 Update of business plan

 

Subregulation 2.27(1) requires ATS participants to provide annual updates to the business plans provided in the initial application for registration. This is required for all participants under the ATS. The update must be in accordance with the ATS Order, subregulation 2.27(2).

 

Subregulation 2.27(3) sets out the timing for when the updates are to be provided and subregulation 2.27(4) prescribes the period each update must cover.

 

Division 2.6 Deregistration

 

2.28 Deregistration

 

This regulation lists the circumstances in which the Secretary must deregister an ATS participant. An ATS participant must be deregistered when they fail or are likely to fail to satisfy the conditions of registration, if an ATS participant is deemed not to be a fit and proper person or an ATS participant asks to be deregistered.

 

Division 2.7: Transfer of registration and investment

 

Subdivision 2.7.1: Transfer of registration

 

2.29 Meaning of business

 

This regulation defines business for the purpose of transfers of registration.

The definition is used to ensure transfers of registration only apply to transfers of the whole of the business for which eligible investment is undertaken to produce goods and provide services.

 

2.30 Transfer of registration on transfer of business

 

Subregulation 2.30(1) only permits transfers of registration in accordance with this regulation.

 

Subregulation 2.30(2) allows a non-ATS participant (the transferee) to apply to the Secretary to have the registration of an ATS participant (the transferor) transferred in circumstances such as when a transferee buys the automotive business of an ATS participant.

 

The requirements for the application for transfer of registration are prescribed in subregulation 2.30(3).

 

The Secretary may approve an application for transfer of registration, with or without conditions, or refuse the application, subregulation 2.30(4).

 

Subregulation 2.30(5) sets the conditions under which the Secretary must refuse the transfer of registration, and subregulation 2.30(6) requires the Secretary to inform the transferee in writing of the reasons for the refusal.

 

If the Secretary approves the application for transfer, the Secretary must notify the transferee entity, subregulation 2.30(7).

 

Note: A decision by the Secretary in respect of an application for a transfer of registration is not a reviewable decision for the purposes of Part 5 of the Regulations. This is because transfers of registration are an exception to the general policy that assistance under the ATS is provided to the participant who actually undertook the relevant investment or production.

 

2.31 Secretary may seek further information

 

Subregulation 2.31(1) allows the Secretary to seek further information from the transferee for the purposes of deciding whether to approve the transfer of registration.

 

Subregulation 2.31(2) provides that the transferee is taken to have withdrawn the application if the further information requested under subregulation 2.31(1) is not provided, or if no reasonable explanation is given as to why the information cannot be provided, within the specified period.

 

2.32 Effect of transfer of registration

 

Subregulation 2.32(1) provides that after the approval of a transfer of registration, the transferor ceases to be able to claim eligible investment under the ATS.

 

Any eligible investment undertaken or anything else done by the transferor under the ATS before the transfer of the business is deemed to have been carried on by the transferee entity, subregulation 2.32(2).

 

Subregulation 2.32(3) makes it clear that the transfer of registration does not make previous investment that was not eligible, eligible investment because of the transfer. This subregulation also ensures that consideration for the transfer is not eligible investment and that a transferee is not in an eligible start-up period because of the transfer of registration.

 

2.33 Effect of transfer on sales-based cap

 

Subregulation 2.33(1) sets the method for calculating the five per cent of sales-based cap for a transferee for the year preceding the ATS year in which the transfer was approved.

 

Subregulation 2.33(2) sets out the method for calculating how the 15 per cent of eligible start-up investment amount for a transferee for the year preceding the ATS year in which the transfer was approved.

 

Subdivision 2.7.2: Transfer of investment

 

2.34 When investment undertaken by a person may be treated as investment undertaken by another person who is an ATS participant

 

This regulation sets out the circumstances where the Secretary can treat investment by a person (who may or may not be an ATS participant) as investment by an ATS participant. An application for the transfer of investment must include a business case setting out why investment should be transferred and an updated business plan.

 

Note: Any decision by the Secretary in respect of an application for a transfer of investment is not a reviewable decision for the purposes of Part 5 of the Regulations. This is because transfers of investment are an exception to the general policy that assistance under the ATS is provided to the participant who actually undertook the relevant investment or production.

 

2.35 When deemed investment is taken to have occurred

 

This regulation clarifies the timing of when investment is taken to have occurred for the purposes of a transfer of investment.

 

2.36 Effect of determination on the sales-based cap

 

Subregulation 2.36(1) sets the method for calculating 5% of sales-based cap when a transfer of investment has been approved by the Secretary.

 

Subregulation 2.36(2) sets the method for calculating the 15% of eligible start-up investment amount when a transfer of investment has been approved by the Secretary.

 

Part 3 Payments under the Scheme

 

Division 3.1 Making of quarterly returns

 

3.1 ATS participants to make quarterly returns

 

This regulation requires participants to submit a return, in the manner prescribed, 45 days after the end of each quarter of an ATS year.

 

3.2 Making quarterly return does not confer entitlement

 

This regulation makes it clear that making a quarterly return does not, by itself confer an entitlement on an ATS participant. This includes particulars of eligible investment and production, sales values and other Commonwealth assistance received.

 

3.3 Contents of MVPs’ returns

 

This regulation lists what information an MVP must include in each quarterly return. This includes particulars of eligible investment, sales values and other Commonwealth assistance received.

 

3.4 Contents of ACPs’ returns

 

This regulation lists what information an ACP must include in each quarterly return. This includes particulars of eligible investment, sales values and other Commonwealth assistance received.

 

3.5 Contents of AMTPs’ returns

 

This regulation lists what information an AMTP must include in each quarterly return. This includes particulars of eligible investment, sales values and other Commonwealth assistance received.

 

3.6 Contents of ASPs’ returns

 

This regulation lists what information an ASP must include in each quarterly return. This includes particulars of eligible investment, sales values and other Commonwealth assistance received.

 

3.7 Rules concerning returns

 

Subregulation 3.7(1) provides that where an ATS participant fails to cover any particular production or any investment in a quarterly return (other than a return for the final quarter of an ATS year), the production or investment may be covered in the remaining quarters in the ATS year.

 

For calculation purposes, any production or investment covered in a later return is taken to have occurred in the quarter it was reported and not in the quarter it was achieved or undertaken, subregulation 3.7(2).

 

If an ATS participant fails to cover particular investment or production in the manner allowed in subregulation 3.7(1), that investment or production will be treated as if it had never occurred, subregulation 3.7(3).

 

Subregulation 3.7(4) provides that where an ATS participant fails to cover any particular production or any investment in its return for the final quarter of an ATS year, the investment or production will be treated as if it had never occurred.

 

Subregulation 3.7(5) deems an ATS participant to have been in existence for a certain number of quarters prior to the quarter reported, whether or not it actually was in existence, but the ATS participant is treated as having not undertaken certain investment in each of those previous quarters unless the ATS participant in fact undertook such investment. This provision facilitates the quarterly moving average method of calculating investment assistance.

 

3.8 Further information about quarterly return

 

This regulation allows the Secretary to request an ATS participant to provide further information in relation to a quarterly return. The Secretary is not required to assess the return until the participant provides the additional information.

 

Division 3.2 Caps on Scheme and ATS participants

 

3.9 Capped assistance for ATS years

 

This regulation sets the maximum amount of capped assistance for eligible production and eligible investment in an ATS year.

 

3.10 Capped assistance divided between MVPs and others

 

This regulation divides capped assistance under the ATS in the ratio of 55 per cent of the ATS year cap for MVPs and 45 per cent of the ATS year cap to ACPs, AMTPs and ASPs.

 

3.11 Sales-based cap for payment of assistance

 

Subregulation 3.11(1) required that assistance paid to an ATS participant (other than an ATS participant carrying on business for the first time in the automotive industry) must not exceed five per cent of the annual sales values of an ATS participant’s goods and services for the previous year.

 

Subregulation 3.11(2) also requires participants who are carrying on business as an MVP, ACP, AMTP or ASP for the first time must not exceed 15 per cent of the participant’s eligible start-up investment amount. Eligible start-up investment amounts include expenditure on land, buildings, structure, plant, equipment, materials or other assets.

 

This regulation ensures that assistance available under the ATS is consistent with Australia’s international trade obligations.

 

Division 3.3 Making payments of assistance

 

3.12 Ministerial Order for working out payments of assistance for ATS participants

 

This regulation requires the Minister to make an Order, the ATS Order, containing the working out of production and investment amounts, the modulation process and the treatment of other Commonwealth assistance. The Order is a legislative instrument within the meaning of the Legislative Instruments Act 2003.

 

3.13 Quarterly payments

 

Subregulation 3.13(1) provides that an ATS participant is entitled to a quarterly payment if it satisfies the requirements of this regulation. This includes undertaking eligible investment or eligible production, submitting a quarterly return within the specified timeframe, and complying with the ongoing conditions of registration in Division 2.5.

 

Quarterly assistance will be worked out in accordance with the Order, subregulation 3.13(2).

 

Subregulation 3.13(3) requires payments to be made to ATS participants before the following quarter. Final quarter payments, both capped and uncapped, must be paid by the 31 March of the following year, subregulation 3.13(4).

 

Subregulation 3.13(5) requires the Secretary to give the participant written notice with reasons if the participant is not entitled to assistance.

 

3.14 Inalienability of payments

 

Subregulation 3.14(1) restricts payment of assistance to ATS participants.

 

Subregulation 3.14(2) and (3) ensure that assistance provided is inalienable except with the written approval of the Secretary.

 

3.15 Condition of payment of assistance

 

Subregulation 3.15(1) provides that payments to participants are conditional upon the payment being offset or recovered by the Commonwealth.

 

Subregulation 3.15(2) provides that the Secretary may refuse to make a payment if an ATS participant has failed, or is likely to fail to comply with the conditions of registration.

 

Division 3.4 Entitlement to assistance

 

3.16 Persons not entitled to certain assistance

 

This regulation sets out the circumstances in which a person who has or had been paid assistance under the ATS is not entitled to the assistance.

Part 4 Recovery of overpayments

 

4.1 Scheme debt

 

This regulation provides that all or part of a quarterly payment that exceeds the amount an ATS participant is entitled to, is recoverable by the Commonwealth. Any such amount is a Scheme debt. . A scheme debt would not apply to an amount of quarterly payment that was made more than twelve quarters (three years) before the current payment.

 

4.2 Recovery by offsetting

 

This regulation allows a Scheme debt to be offset from one or more quarterly payments.

 

4.3 Secretary to issue notice

 

Subregulation 4.3(1) requires the Secretary to give notice in writing of a Scheme debt to an ATS participant. The notice must include the amount of the Scheme debt, the interest payable, and that the Scheme debt must be paid within 30 days upon receipt of the notice or offset from future quarterly payments.

 

Subregulation 4.3(2) sets out when the Scheme debt may be offset if an ATS participant does not comply with a notice or does not apply for review of the decision under subregulation 4.3(1).

 

4.4 Interest payable on Scheme debt

 

Subregulation 4.4(1) requires the Secretary to charge interest on Scheme debts. Interest is charged on Scheme debts to deter ATS participants from over-claiming assistance.

 

Subregulation 4.4(2) sets the rate of interest payable depending on when a Scheme debt and interest is repaid. If a Scheme debt is paid within 30 days of an ATS participant receiving a notice of the debt or is offset from future quarterly returns, then interest is calculated at the 90 day bank bill rate less 10 basis points. If a Scheme debt is not paid within 30 days or offset, interest is calculated at 20 per cent per annum plus the 90 day bank bill rate less 10 basis points.

 

Subregulation 4.4(3) lists circumstances when the Secretary must not charge interest including if charging interest would cause financial hardship or if there was an error made by the Department.

 

Subregulation 4.4(4) provides that interest is recoverable by the Commonwealth as a debt due to the Commonwealth.

 

Subregulation 4.4(5) allows interest to be offset from future quarterly payments of uncapped production amounts.

 

Subregulation 4.4(6) prevents interest being offset from future quarterly payments of capped amounts.

4.5 Extension of time for payment of Scheme debt

 

Subregulation 4.5(1) allows the Secretary to extend the time for payment of a Scheme debt.

 

The process for an ATS participant to seek an extension of time for the payment of a Scheme debt is set out in subregulation 4.5(2).

 

4.6 Recovery from person who owes money to ATS participant

 

Subregulation 4.6(1) allows the Commonwealth to recover Scheme debts from a third party that owes money to an ATS participant.

 

Subregulation 4.6(2) allows the Secretary to direct a third person to pay the Scheme debt owed by an ATS participant to the Commonwealth. The Secretary must give a copy of any such direction to the ATS participant, subregulation 4.6(3).

 

Subregulation 4.6(4) prevents the Commonwealth recovering from third parties before a third party owes the money to a ATS participant.

 

Payments of Scheme debts from third parties are taken to be authorised by the ATS participant, subregulation 4.6(5).

 

Subregulation 4.6(6) requires the Secretary to give notice to a third party if the Scheme debt is discharged before any payment by the third party.

 

Subregulation 4.6(7) provides for when a third party is taken to owe money to an ATS participant.

 

Part 5 Administrative review of decisions

 

5.1 Request for reconsideration of decision by Secretary

 

This regulation requires the Secretary to give reasons when making certain decisions under the ATS. The notice must include a statement that if the person was dissatisfied with the decision, the person may request a reconsideration of the decision and if dissatisfied with this decision, may apply to the Administrative Appeals Tribunal (AAT) for a review of the decision. An ATS participant must apply for a reconsideration of the decision within 30 days of receiving the decision (or a further period at the Secretary’s discretion).

 

5.2              Reconsideration by the Secretary

 

This regulation requires the Secretary to reconsider the decision on receiving a request from a person under regulation 5.1. The Secretary may confirm, vary or revoke the decision. If the Secretary does not take this decision within 30 days of receiving the request, the Secretary would have been taken to have confirmed the decision.

 

If the Secretary confirms, revokes or varies the decision within 30 days, a notice setting out the reasons for these actions must be provided to the person. In addition, the notice must include a statement that if the person is dissatisfied with the decision, they may apply to the AAT for a review of the decision. An ATS participant must apply to the AAT for a review of the decision within 28 days of receiving the decision or confirmation of the decision.

 

5.3 Review of decisions affecting payment of assistance

 

This regulation sets out the decisions under the ATS that may be reviewed by the Administrative Appeals Tribunal (AAT). These decisions include decisions on whether the parties are at arm’s length, a decision to refuse payment of assistance or that an ATS participant is liable to pay an amount of a Scheme debt.

 

5.3 Limitations on implementation of court decisions concerning payment of assistance

 

This regulation limits the implementation of court decisions in respect of the decisions listed in regulation 5.2. These limitations ensure the annual sales-based cap for an individual participant is not exceeded as a result of giving effect to a court decision.

 

5.4 Limitations on implementation of AAT decisions concerning payments of assistance

 

This regulation limits the implementation of AAT decisions in respect of decisions listed in regulation 5.2. These limitations are necessary to ensure the sales-based cap for an individual participant is not exceeded as a result of giving effect to an AAT decision.

 

5.5 Review of other decisions

 

This regulation lists other decisions made by the Secretary which may be reviewed by the AAT. These include decisions that: registration does not further the purpose of the Act; a refusal to grant permission for a group of companies to seek registration; a decision to refuse registration; a decision that charging interest would not cause financial hardship; or a decision not to extend the time for payment of a Scheme debt.

 

Part 6 Miscellaneous

 

6.1 Approved forms

 

This regulation allows the Secretary to approve a form by instrument in writing.

 

6.2 Appointment of authorised officers

 

This regulation allows the Secretary to appoint a person as an authorised officer to carry out audit-related functions such as those in Division 3 of the Act.

 

Note: It is necessary for the Secretary to be able to appoint any other person as an authorised officer to ensure the relevant expertise is available to perform audit-related functions.

 

6.3 Identity cards for authorised officers

 

This regulation requires that authorised officers be issued with and carry an identity card containing the prescribed details when performing the functions of an authorised officer under Division 3 of the Act.

 

6.4 Ongoing obligation to maintain records

 

This regulation requires persons who were ATS participants to maintain records in relation to quarterly returns under the ATS in accordance with regulation 2.25.

 

6.5 Publication of information relating to ATS participants

 

Subregulation 6.5(1) allows the Minister to publish information about the identity of an ATS participant, and the amount of ATS assistance they received.

 

Subregulation 6.5(2) requires the Minister to publish a notice when the Minister has given permission for a person to apply for registration or continue registration on the basis the registration would be in the national interest.

 

6.6 Annual Report

 

This regulation provides, for the purposes of paragraph 27A(a) of the Act, that the Department’s annual report must include details of the total amounts of capped and uncapped assistance to each of the four classes of ATS participant.

 

6.7 Ministerial Order for reporting progress on meeting object of Act

 

This regulation provides that the Minister may make an Order specifying the reporting criteria for ATS participants. The Order is a legislative instrument within the meaning of the Legislative Instruments Act 2003.

 

Part 7 Transitional arrangements

 

7.1 Application

 

This regulation makes it clear that the transitional arrangements are only available to participants registered in ACIS on or after 1 July 2010.

 

7.2 Registration as ATS participant

 

This regulation sets out the registration requirements for ACIS participants applying for registration for the ATS.

 

This regulation provides a smooth transition for ACIS participants registering in the ATS.

 

7.3 Recognition of eligible investments

 

This regulation provides that investment by an ATS participant made under ACIS may be treated as eligible investment under the ATS subject to certain conditions.