Industry funding FAQs - registered liquidators
ASIC will launch a new Regulatory Portal in 2018, housing an Industry Funding Form, where registered liquidators will be required (refer to Section 11 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017) to log on and validate pre-populated business activity metric information for the financial year. (ASIC will provide further details of the new portal early next year).
ASIC will use the information provided in these returns to calculate the final levy you pay.
The levy you pay comprises two parts:
- a minimum levy component – set at $2,500; and
- a graduated levy component (based on specified business activity metrics being your share of Chapter 5 appointments and 'notifiable events').
ASIC has developed a two page fact sheet, available on the ASIC website.
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. The leviable entity’s entity metric for the subsector for the financial year is the sum of:
- the number of appointments under Chapter 5 of the Corporations Act 2001 accepted by the entity in the financial year:
- an appointment as a controller;
- an appointment as a liquidator;
- an appointment as a managing controller;
- an appointment as a receiver;
- an appointment as a receiver and manager;
- an appointment as a scheme manager;
- an appointment as a voluntary administrator;
- an appointment as an administrator of a deed of company arrangement; and
- the number of appointments of the kind mentioned in subparagraph (a)(i) to (viii) that were accepted in an earlier financial year and that the entity is still acting in at the start of the financial year for which the levy component is to be calculated; and
- 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 for the entity in the financial year:
- notice of meetings;
- notice of disclaimer of property;
- notice to submit particulars of debt or claims;
- notice to creditors to submit formal proof;
- notice of intention to declare dividend; and
- the number of the following documents lodged with ASIC by the entity in the financial year:
- 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);
- 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).
Why does the business activity metric include 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?
You will receive your Industry Funding Form log on details from ASIC from July 2018 requiring you to log on to the new Regulatory Portal (details to be provided in June 2018).
ASIC proposes, where possible, to pre-fill 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.
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 proposes to pre-fill your return where possible, it is your return and you must check the information in your return before lodging it.
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?
The cost of ASIC's work in each subsector is forecast in ASIC's annual Cost Recovery Implementation Statement – or CRIS. ASIC will publish the CRIS in October each year setting out the expected expenditure on our regulatory activities for the financial year. (For example, in October 2017 ASIC published a CRIS which set out expected expenditure on regulatory activities in the registered liquidator sector for the 2017-18 financial year).
ASIC will also publish indicative levies for each sub-sector in October each year.
You can monitor your business activity metric and budget your estimated levy using the indicative levy published by ASIC.
If ASIC proposes to pre-fill my industry funding transaction form, do I have to maintain records of my business activity metrics?
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.
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?
ASIC proposes, where possible, to 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.
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 e.g. 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.
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?
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.
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).
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 metrics will 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 2019.
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 will send to you in January 2019 will be based on activity reported by registered liquidators for the 2017-18 financial year and ASIC's actual regulatory costs allocated to the registered liquidator sector for the 2017-18 financial year.
Will the industry funding levy be pro-rated if I am a registered liquidator for only part of the financial year?
The levy you pay comprises two parts:
- a minimum levy component – set at $2,500;and
- 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:
- 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)
- 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).
Will amounts I pay for publishing notices on the Published Notices Website be deducted from the levy I have to pay?
The actual publishing costs you pay are not deducted specifically from the industry funding levy you are liable to pay.
Amounts paid for publishing notices on the Published Notices Website for notifiable events will be deducted from the costs to be recovered from the registered liquidator sector.
Can I recover the cost of the levy? How can I budget for the indsutry funding levy when I don't know what I will owe until the following year?
The industry funding levy will become an annual cost of doing business. ASIC recognises the challenges for legal entities in the first year, given that indicative levies (at the subsector level) will not be published until March 2018. However, 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 published each in October 2017) and are listed below:
- Stakeholder engagement
- Enforcement, and
- Policy advice
The CRIS helps to increase the transparency of ASIC's costs, which strengthens our accountability to industry.