What is industry funding?

The Government’s industry funding arrangements for ASIC became law in 2017.  

This is the first year of the new regime where ASIC will recover its regulatory costs from the industries we regulate.

Industry funding was a key recommendation in the 2014 Murray Financial System Inquiry.

Developing the model was a substantial undertaking with a high level of robust engagement from industry sectors throughout the Government’s consultation process.

Industry funding legislation passed on 15 June 2017. The regulations were finalised on 27 June 2017, and the new regime took effect on 1 July 2017.

What regulatory activities will industry fund?

Most of ASIC's regulatory costs will be recovered from industry. These activities are outlined in our Cost recovery implementation statement (CRIS) published in October 2017, and include stakeholder engagement, education, guidance, surveillance, enforcement, and policy advice.

Why has the Government decided on an 'industry pays' approach?

An 'industry pays' model means that the funding of regulatory activities undertaken by ASIC is met by those creating the need for regulation, rather than the Australian taxpayer.

How much will regulated entities pay and when?

The levies payable by industry sectors to recover ASIC’s FY 2017-18 regulatory costs have been summarised.
 

Key points

• The amounts shown are the levies payable by each industry subsector.
• Individual entities can calculate their specific invoice amount from the information found in the summary.
• Invoices will be issued in early 2019.
• Detailed information about how ASIC calculates levies is available in the ASIC cost recovery regulations.  

Detailed information about how ASIC calculates levies is available in the ASIC cost recovery regulations.

What is a flat levy?

A flat levy shares the total cost of regulating a subsector equally among the entities operating in that subsector. A flat levy will be calculated by dividing ASIC's regulatory costs for a subsector between the number of entities in that subsector.

What is a graduated levy?

In some subsectors, an entity's size or level of business activity will drive the level of risk and regulatory effort required from ASIC and therefore the levy charged. A graduated levy will be calculated by dividing ASIC's regulatory costs for a subsector between entities based on the relevant metric and can be made up of (i) a minimum levy and (ii) a variable levy component.

• The minimum levy is an estimate of our direct and indirect costs of undertaking stakeholder engagement, policy advice, guidance, education and a portion of our capital expenditure allowance. Our remaining regulatory costs for the subsector will be recovered through the variable component of the levy.
• The variable component of the graduated levy is driven by our enforcement and surveillance activities for each subsector. The cost to undertake these regulatory activities varies significantly—the conduct and behaviour of industry participants influences our resulting risk assessment of the subsector and the level of regulatory oversight required.

Under the graduated levy component formula, all entities in the subsector must pay (i) the minimum levy, and (ii) the additional variable component, based on each entity's share of relevant activity within the subsector.

What if my entity falls into more than one subsector?

If an entity holds more than one licence or registration, the levy relevant for each subsector is payable. For example, if an entity is both a super trustee and a listed company, both levies will be payable and their invoices will reflect this.

What new obligations do regulated entities have?

If your organisation is regulated by ASIC, you must register and maintain contact details on the ASIC Regulatory Portal. You may also be required to submit business activity metrics via the portal between July and September each year. 

ASIC will use this information each year to calculate each entity’s share of the regulatory costs for the sectors in which they operate. The first collection occurred in 2018.

For more information on your obligations each year, see ‘Your business activity metrics and the ASIC Regulatory Portal’

Note: If the entity is a small proprietary limited company and does not fall into one of the other subsectors then they will only pay a small increase in their Annual Review Fee. However, if they are a small proprietary company that is also part of one of our other regulated populations, the company will also be required to submit contact details and business activity metrics in the portal.

The ASIC website contains a definition of a small proprietary company.

Will the levies be tax deductible?

Yes. The levies will be tax deductible. This is consistent with the approach for other Government cost recovery models, such as APRA’s Financial Institution Supervisory Levy.

Are levies subject to GST?

No. The levies are not subject to GST.

How does ASIC allocate its funding?

Our Corporate Plan has information on ASIC’s strategic priorities and focus for the next four years. The latest plan was published in August 2018.

The Cost Recovery Implementation Statement (CRIS) outlines our budgeted costs and activities in the sectors we regulate.

The ASIC Annual Report outlines what we have achieved each year.

Will ASIC funding change because of industry funding?

ASIC's budget will continue to be determined by the Government as part of its Federal Budget process.

How are ASIC’s costs shared among the regulated population?

Regulated entities have been categorised into 48 subsectors across corporations, auditors, insolvency practitioners, credit licensees, AFS licensees and other regulated entities and individuals.

Attributing the expected costs across each subsector is done by assessing the regulatory effort required to support ASIC's vision and address the key risks set out in the Corporate Plan.

The budgeted cost of ASIC's work in each subsector is outlined in our annual Cost Recovery Implementation Statement (CRIS) to be published to ASIC's website each year.

How will existing cost recovery arrangements be affected?

The Market Supervision Cost Recovery regime ceased on 30 June 2017 and has been incorporated into the broader ASIC industry funding model from 2017-18 onwards.

What are fees for service?

While around 90% of ASIC's regulatory activities will be recovered through industry funding arrangements, the remaining 10% will be recovered via fees for service.

Fees for service recover the regulatory costs attributable to a single, identifiable entity. They will apply to:

• licensing and professional registration services
• processing of relief applications, and
• ASIC's formal compliance review of documents lodged by entities under the Corporations Act 2001.

New fees for service pricing take effect from 4 July 2018. Additional detail can be found in the Cost Recovery Implementation Statement (CRIS) - Fees for service.

Will ASIC publish indicative levies?

Yes. ASIC publishes indicative levies to give those we regulate an indication of what actual levy costs to expect. The indicative levies each year will be our best estimate based on information available to us.

ASIC strives to proactively identify and mitigate harms to consumers, investors and markets and respond to challenges as they arise. Differences in actual allocations of costs will result from ASIC responses to regulated activity over any given year.

We cannot predict with certainty our enforcement activities in advance. Our budgeted costs represent our best estimate of enforcement costs during the year.

We cannot easily anticipate changes in enforcement activity throughout the year neither can we predict what costs will be awarded to ASIC by courts, or investigation costs we will be able to recover – both of which offset our enforcement costs.

In summary, levies will fluctuate each year based on:

• the actual cost of ASIC's regulation of each subsector - which will vary as ASIC focusses its resources where they are needed most and will only be known at the end of each year
• the number of regulated entities in each subsector, and
• business activity metrics submitted by regulated entities between July and September

The cost of ASIC's regulatory work each year is forecast in ASIC's annual Cost Recovery Implementation Statement – or CRIS. It will outline ASIC's forecast regulatory costs and activities by subsector for each financial year.

Can I calculate my levy?

The levies payable by industry sectors to recover ASIC’s FY 2017-18 regulatory costs have been summarised.
 

Key points

• The amounts shown are the levies payable by each industry subsector.
• Individual entities can calculate their specific invoice amount from the information found in the summary.
• Invoices will be issued in early 2019.
• Detailed information about how ASIC calculates levies is available in the ASIC cost recovery regulations.

What is the Cost Implementation Recovery Statement (CRIS)?

The cost of ASIC's regulatory work each year is forecast in ASIC's annual Cost Recovery Implementation Statement – or CRIS. It will outline ASIC's forecast regulatory costs and activities by subsector for each financial year. For FY 2017-18, the CRIS also included an overview of indicative levies.

The CRIS will be updated each year and is a key part of ASIC’s accountability to government and industry around the transparency of our costs.

Are the figures in the CRIS likely to change?

Indicative levies are published by ASIC to give those we regulate an indication of what actual levy costs to expect. The indicative levies each year will be our best estimate based on information available to us.

Differences in actual allocations of costs will result from ASIC responses to regulated activity over any given year.

If your organisation is regulated by ASIC, you must register and maintain contact details on the ASIC Regulatory Portal. You may also be required to submit business activity metrics via the portal between July and September each year.

ASIC will use this information each year to calculate each entity’s share of the regulatory costs for the sectors in which they operate. The first collection occurred in 2018.

• Business activity metric checklist (PDF 272 KB)
• What subsector is my entity in? (PDF 470 KB)
• Video: How to submit industry funding business activity metrics in the portal

The business activity metrics used to calculate levies are readily available measures of business activity such as:

• revenue generated
• total assets
• credit provided
• deposits held
• number of new and ongoing appointments (registered liquidators).

If you miss the deadline and do not submit your business activity metrics, you are still encouraged to register an ASIC Regulatory Portal account for future correspondence with ASIC.

For those required to pay a flat levy only, the information you provide will confirm which subsector you have been operating in. This will allow us to divide our costs with the final number of entities operating in your subsector.

For those paying a graduated levy, the information you provide will confirm your entity's 'share' of the leviable activities in your subsector and will determine your final invoice amount.

What do I do if I have missed the deadline and did not submit business activity metrics?

If you have missed the deadline and have not submitted your business activity metrics, you are still encouraged to register an ASIC Regulatory Portal account for future correspondence with ASIC.

The penalties in the legislation can apply if someone has not submitted metrics without a “reasonable excuse”. For those who believe they have a reasonable excuse they need to provide evidence by contacting us online. Ensure you select "Company" and then "Industry Funding" so the inquiry is sent to the correct team quickly. Please attach any documentary evidence.

How will you calculate my invoice if I did not submit business activity metrics?

There are a range of steps that ASIC will take to calculate invoices for entities that did not submit business activity metrics.

The first industry funding invoices will be issued in early 2019.

How will small proprietary companies be impacted?

In most cases, small proprietary companies do not have specific obligations relating to industry funding. ASIC will collect the associated regulatory costs for small proprietary companies through a small increase to their Annual Review Fee.

Note: Industry funding levies apply if the entity is a small proprietary limited company that falls into an industry funding subsector. The company may also be required to submit business activity metrics in the portal.

How will large proprietary companies be impacted?

Large proprietary companies will also pay a small increase in their Annual Review Fee. This will be offset against the levy they are required to pay when their invoice is calculated.

• Definition of a small proprietary company.
• Definition of a large proprietary company.

Registered charities

Charities registered with the Australian Charities and Not-for-profits Commission (ACNC) at 30 June each year are excluded from industry funding obligations and will not receive an invoice from ASIC.

Individuals acting on behalf of the entity in the portal

Only company directors or secretaries can perform initial entity registration in the ASIC Regulatory Portal. Once the director or secretary have registered they can then invite a trusted representative such as a company employee, a compliance officer, or a registered agent to the portal to connect to their entity and assign the them required user access to view confidential information and perform regulatory tasks on behalf of the entity

The director/secretary will only ever have to register and assign access to the trusted representative or registered agent, once for their entity.

The trusted representative or registered agent, will then receive an invitation to the portal for the relevant entity and will be able to perform the required duties on behalf of the entity which they represent, including for example, the submission of industry funding business activity metrics

I am a securities dealer, how is my business activity metric calculated?

The ASIC Market Integrity Rules (Securities Markets) 2017 require market participants to provide regulatory data to a market operator in an order transmitted to an order book of that market operator. Market participants must also provide this data on a trade report made to a market operator.

Regulatory data includes, amongst other things, the “intermediary ID”. The Australian Financial Services Licence (AFSL) number of an AFSL holder is provided as the intermediary ID for each side (buy and/or sell) of the order or transaction where:

• The AFSL holder is an automated order processing (AOP) client of the market participant; and
• The market participant has an arrangement with the AFSL holder under which the AFSL holder submits trading messages into the market participant’s system as intermediary for its own clients.

Regulatory data provided by market participants to market operators is subsequently provided to ASIC for the purpose of market supervision.

ASIC also determines the volume of trading by each AFSL holder by using intermediary ID data.

You should contact the market participant(s) of which you are an AOP client if you require confirmation of the volume of trading reported to ASIC.

Are credit representatives, financial advisers and authorised representatives required to register and submit industry funding metrics?

Only licensees (not their representatives) are required to submit metrics in respect of credit and financial services related activities.  Some representatives may be required to submit information in their capacity as a public company, a large proprietary company, a registered company auditor, registered liquidator or as a market intermediary. 'Regulated entities' are defined under the ASIC Supervisory Cost Recovery Levy Act 2017.

Industry funding timeline

2015-2017	Industry consultation
July 2017	Industry funding legislation took effect
October 2017	Budget FY17-18 leviable costs by subsector published in the Cost Recovery Implementation Statement (CRIS) for consultation with industry
March 2018	ASIC published indicative industry funding levies for FY17-18 (for approximately 80% of regulated entities based on FY17-18 budget cost data)
July 2018	Annual Review Fees increased by $4 for all proprietary companies
July–September 2018	Regulated entities required to submit information about their key business activity metrics via a new ASIC Regulatory portal (FY17-18 operations)
January 2019	ASIC will send levy invoices to regulated entities for FY17-18 regulatory costs, based on the submitted business activity metrics by regulated entities ASIC to publish indicative levies for FY18-19 (based on FY18-19 budget data)
2019	Entities to pay their levy invoice or face interest penalties

Where can I find the industry funding legislation?

The ASIC Supervisory Cost Recovery Levy Bill 2017 and the ASIC Supervisory Cost Recovery (Collection) Act 2017 came into effect from 1 July 2017.

Where can I find industry funding regulations?

The regulations contain detail about the model, including definitions and levy metrics for each sector. The regulations commenced on 1 July 2017.