FAQs: Industry funding for registered liquidators

If you are registered as a liquidator at any time during the financial year – even if you do not have any Chapter 5 appointments during that year - you will have to pay an industry funding levy.

You can log on to ASIC's Regulatory Portal and select an Industry Funding Form, where registered liquidators are required (refer to Section 11 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017) to validate pre-populated business activity metric information for the financial year.

ASIC will use the information provided in these returns to calculate the final levy you pay.

The levy you pay comprises two parts:

1. a minimum levy component – set at $2,500; and
2. a graduated levy component (based on specified business activity metrics being your share of Chapter 5 appointments and 'notifiable events').

What are entity metrics?

The business activity metrics used to calculate the levy are set out in section 20(3) of ASIC Supervisory Cost Recovery Levy Regulations 2017. Your metric for the financial year is the sum of:

1. the number of appointments under Chapter 5 of the Corporations Act 2001 accepted by you in the financial year:
1. an appointment as a controller;
2. an appointment as a liquidator;
3. an appointment as a managing controller;
4. an appointment as a receiver;
5. an appointment as a receiver and manager;
6. an appointment as a scheme manager;
7. an appointment as a voluntary administrator;
8. an appointment as an administrator of a deed of company arrangement;
9. an appointment as a restructuring practitioner for a company;
10. an appointment as a restructuring practitioner for a restructuring plan; and
2. the number of appointments of the kind mentioned in subparagraph (a)(i) to (x) that were accepted in an earlier financial year and that you are still acting in at the start of the financial year for which the levy component is to be calculated; and
3. the number of the following events that are published on the publication website maintained by ASIC under regulation 5.6.75 of the Corporations Regulations 2001 by you in the financial year:
1. notice of meetings;
2. notice of disclaimer of property;
3. notice to submit particulars of debt or claims;
4. notice to creditors to submit formal proof;
5. notice of intention to declare dividend; and
4. the number of the following documents lodged with ASIC by you in the financial year:
   1. a notice of the outcome of a proposal to pass a resolution without a meeting (however, if more than one proposal to pass a resolution without a meeting in relation to the same administration is decided on the same day, count the proposals as a single lodgement);
   2. an executed deed of company arrangement (however, if the deed involves more than one company under external administration, count the deed as a single lodgement);
   3. a restructuring plan that has been made.

Why does the business activity metric include some notices of disclaimer of property?

The business activity metric does not include all notices of disclaimer.

Only notices of disclaimer required to be published on the Published Notices Website under section 568A(2) of the Corporations Act 2001 are included in the business activity metrics.

ASIC records show that less than 50 of such notices are published a year.

When will I tell ASIC my total metric?

ASIC pre-fills your Industry Funding Form based on our records about:

• the number of your Chapter 5 appointments;
• the number of prescribed notices you published on the PNW; and
• the number of documents you lodged with ASIC during the financial year.

We also provide a link in the Regulatory Portal to allow you to download a file to review how we calculated you pre filled metrics.

It is your responsibility to check the information in the pre-filled return before lodging the form.

As ASIC has the information needed to calculate the industry funding levy, will I have to track my appointments and notifiable events to complete my levy return?

Yes. Although ASIC will pre-fill your return, it is your return and you must check the information before lodging it.

You must provide ASIC details of any changes you make to your pre-filled metric count by sending details supporting the amendment to RLmetrics@asic.gov.au.

ASIC will calculate your graduated levy amount based on reported business activity metrics.

What information is available to help me budget for industry funding when I don't know what the total number of Chapter 5 appointments and notifiable events is for all registered liquidators?

ASIC will publish its regulatory costs as part of an annual Cost Recovery Implementation Statement—or CRIS.

The CRIS outlines ASIC's forecast regulatory costs and activities by subsector for the financial year and provides details on how ASIC allocated its costs in the previous year. The CRIS will also provide industry with indicative levies for the current financial year to help you plan.

For example, in March 2019 ASIC published a CRIS which set out expected expenditure on regulatory activities in the registered liquidator sector for the 2018-19 financial year.

If ASIC pre-fills metrics in my industry funding transaction form, do I have to maintain records of my business activity metrics?

Yes.

You must check the information in your industry funding transaction form before lodging it. To verify information in the return, you will need to maintain systems that record your business activity metrics so you can reconcile your information with the downloadable file that ASIC provides on the Regulatory Portal in support of the pre-filled metric count.

You must provide ASIC details of any changes you make to your pre-filled metric count by sending details supporting the amendment to RLmetrics@asic.gov.au.

If I incorrectly lodge a document or publish a notice for a 'notifiable event', will this incorrect lodgement or publication be included in my business activity metrics for levy purposes?

Yes.

ASIC will pre-fill your industry funding transaction form setting out your reportable activity for the relevant financial year. The pre-filled return will include the number of relevant documents you lodge and notifiable events you publish on the Published Notices Website.

ASIC is unable to verify whether you incorrectly lodge a document or publish a notifiable event.

This is your return and you must check the information in your return before lodging it. If you consider an event has been incorrectly included in your return you can contact ASIC.

You must provide ASIC details of any changes you make to your pre-filled metric count by sending details supporting the amendment to RLmetrics@asic.gov.au.

Can I amend my return if it has been submitted and contains incorrect information?

Yes, but only if the deadline for submission of your return has not passed.

Simply go to the portal, initiate another transaction and submit your new return.

The new return will replace earlier returns lodged for that financial year.

How are business activity metrics counted if a Chapter 5 appointment transitions from one type of Chapter 5 appointment to another type of Chapter 5 appointment eg. from a voluntary administration to a creditors' voluntary winding up?

The business activity metric counts each appointment to determine the total number of Chapter 5 appointments for a registered liquidator.

For example, the business activity metric will count the transition of an external administration from a voluntary administration to a creditors' voluntary liquidation against each appointee twice; once on the appointment as voluntary administrator and again on the appointment as liquidator.

Note that the adoption of the simplified liquidation process is not counted as a separate appointment.

How are multiple proposals without a meeting for an external administration counted if the outcomes are decided on the same day?

For industry funding levy purposes, multiple proposals without a meeting for a particular external administration will be counted as a single notifiable event where the outcomes are decided on the same day and lodged with ASIC on the same day.

Will the cost of enforcement be levied directly to the registered liquidator against whom action is taken?

No.

If ASIC is awarded costs following successful enforcement action, these will be offset against the regulatory costs to be recovered from all registered liquidators through levies in the year recovered.

What happens if I do not lodge a return of my reportable activity for levy purposes?

If you do not lodge a return of your activity for the period, or ASIC is not satisfied with the information you provide, or you fail to provide ASIC with information requested to substantiate information in your return, ASIC may give you a default notice setting out the amount of the levy that, in ASIC's opinion, you are liable to pay (refer section 12 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017).

A person commits an offence if they do not provide to ASIC the required return. (refer section 11 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017).

How are the business activity metrics applied for joint appointees?

Where there is more than one appointee to a Chapter 5 appointment, the graduated levy component is determined as follows:

• for the number of Chapter 5 appointments: each appointee includes the appointment in their return; and
• for the number of 'notifiable events': only the registered liquidator publishing the notice or lodging the document with ASIC includes the notifiable event in their return.

If each joint appointee must report Chapter 5 appointments, can my firm reduce its total industry funding levy by only accepting single appointments?

Accepting single appointments will reduce the number of business activity metrics on which your industry funding levy is calculated. However, it will not reduce the total amount of ASIC's regulatory costs to be recovered. Therefore, reducing the total number of the business activity metricswill result in an increased cost per business activity metrics for all registered liquidators.

We suggest you revisit your firm's policies if you propose changing your current practice of accepting joint and several appointments to single appointments for the primary or sole reason of attempting to minimise your industry funding levy.

You may want to consider the underlying reasons your firm requires joint and several appointments and the impact changing to accepting single appointments might have on your firm's risk profile including how your firm will conduct and supervise your appointments.

When will I receive the levy invoice?

ASIC expects to issue the invoices based on your return and the calculation of the final subsector cost in January of the year following the relevant return financial year.

When is the levy paid?

Your industry funding levy invoice will specify a date you must pay the levy.

This date must be no less than 30 days after the invoice is given to you (refer section 9 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017).

What period does the levy cover?

ASIC's industry funding model is an ex-post model, meaning it is based on costs from the previous financial year.

The industry funding levy invoice you receive will be a levy calculated on activity you report in the individual return you lodge for the preceding financial year and the actual costs incurred by ASIC in regulating your subsector that financial year.

For example, the industry funding levy invoice that ASIC sent you in January 2020 was based on activity reported by registered liquidators for the 2018-19 financial year and ASIC's actual regulatory costs allocated to the registered liquidator sector for the 2018-19 financial year.

Will the industry funding levy be pro-rated if I am a registered liquidator for only part of the financial year?

No.

The levy you pay comprises two parts:

1. a minimum levy component – set at $2,500; and
2. a graduated levy component (based on your share Chapter 5 appointments and 'notifiable events')

The minimum levy component is payable in full even if you are only registered as a liquidator for part of the financial year.

This is also the case even if you do not have any Chapter 5 appointments during the financial year.

Is the levy tax deductible?

Yes – the levy is tax deductible.

What will happen if I don't pay the levy?

If you do not pay your levy in full by the due date, the legislation provides that:

1. if the levy is not paid in full by the due date: a late payment penalty is payable on the amount outstanding for each month; calculated on the outstanding balance of the levy at the start of each month (refer section 10 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017).
2. if the levy remains outstanding for more than 12 months after the due date for payment: ASIC may suspend or cancel your registration as a liquidator (refer amendments to sections 40-25(1) and 40-30(1) of Schedule 2 to the Corporations Act 2001 enacted by sections 18 and 19 of the ASIC Supervisory Cost Recovery Levy (Consequential Amendments) Act 2017).

Can I get a waiver from paying the levy?

ASIC may waive all or part of any levy, late payment penalty or shortfall levy if satisfied there are exceptional circumstances justifying the waiver (refer section 15 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017).

Can I recover the cost of the levy? How can I budget for the industry funding levy when I don't know what I will owe until the following year?

The industry funding levy is an annual cost of doing business.

ASIC will make best efforts to provide registered liquidators with estimates where possible, to facilitate both the on-passing of costs in the financial year that they are incurred and to facilitate business planning.

What ASIC costs are recovered by the industry funding levy?

Most of ASIC’s regulatory activities will be recovered from industry. These activities are outlined in our Cost Recovery Implementation Statement (CRIS) and include:

• Stakeholder engagement
• Education
• Guidance
• Surveillance
• Enforcement, and
• Policy advice

The CRIS helps to increase the transparency of ASIC's costs, which strengthens our accountability to industry.

Note: These FAQs give guidance about how ASIC administers the industry funding model legislation in effect at June 2021

Will I be personally liable to pay a levy imposed on the company I am appointed to?

No. The IFM legislation does not impose personal liability on an external administrator for the levy imposed on a company for a financial year.

Am I required by law to lodge the levy return on behalf of a company that is a leviable entity?

A company, as a leviable entity, must lodge a return by the due date. An entity that fails to lodge a return commits an offence of strict liability unless it has a reasonable excuse for non-lodgement.

As an officer of a leviable entity, you have duties (of care and diligence among other duties) which would ordinarily require you to lodge a return on behalf of the company.

What is the quantum of the levy?

The quantum of the levy for a company depends on a number of factors, including the activities undertaken by it while you are appointed, the specific facts and circumstances of the administration and the way the levy is determined for the particular sub-sector(s) in which the company operates.

What order of priority does of the levy have?

Once you are appointed external administrator or controller, then, in respect of the financial year of your appointment, the levy will be a pre-appointment/provable debt to the following extent:

1. If the company is in a sub-sector where the basic levy component is a fixed amount: the whole of the basic levy
2. If the company is in a sub-sector with a basic levy cumulating over the year: a proportion (based on the number of days in the financial year up to the date of your appointment) of the basic levy component for that sector
3. If the company is in a sub-sector where there is a graduated levy component: the minimum levy component for the sub-sector plus a proportion of the graduated levy component (based on the number of days in the financial year up to the date of your appointment).

Where applicable, the balance of the levy for the financial year in which the appointment occurs, and the levy for any subsequent financial year, will be an expense of the administration, and, where the section applies, with priority under either paragraph 556(1)(a) or 556(1)(dd) depending on the circumstances of the administration.

If a leviable entity is in external administration is without funds, ASIC expects that the invoice will remain unpaid at the time the affairs of the company have been fully wound up (including lodgement of an End of Administration Return – ASIC Form 5603).

If you are unsure how payment priorities apply to your particular circumstances, ASIC recommends you seek your own legal advice.

Must I remain appointed until the levy is paid or set aside funds to pay the levy?

There is no obligation under the legislation to remain appointed for the purpose of the company receiving an invoice from ASIC for a levy.

See the above answer to Question 4 on payment of the levy if the company is without funds, and the answer to Question 6 below on the possibility that payment of the levy may be waived.

The company’s liability to pay the levy, whether as a pre-appointment/provable debt or an expense of the administration, is no different to other debts, claims and expenses. If the company has no funds, the levy may remain unpaid.

Nevertheless, as an external administrator or controller, you have a general duty to apply funds under your control in accordance with payment priorities under the law.

Can I apply for payment of the levy to be waived by ASIC?

Yes – there is a power for ASIC, on application by the company, to waive levies in exceptional circumstances.

ASIC will consider applications for waiver on the merits, on a case-by-case basis.

Generally, the mere appointment of an external administrator or controller, or the fact that the company is currently without funds, may not constitute exceptional circumstances.

However, it is not necessary for a liquidator to make an application for waiver for a company where:

• the affairs are fully wound up
• the End of Administration Return has been lodged with ASIC, and
• available funds have been paid according to priorities under law.