The Australian Prudential Regulation Authority (APRA) will be fully funded by revenue from levies on those industries which it supervises. Revenue from these levies will also cover the costs incurred by the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) incurred in undertaking consumer protection functions associated with prudentially regulated institutions.
The Treasurer has, consistent with the relevant provisions of the various supervisory levy Acts, determined the levy rates and the minimum and maximum amounts to apply to each industry sector.
Insurance and Superannuation industries and NOHC's
The determinations for these institutions are set out in the table below.
Percentage of assets
1998/99 levy based on assets as at
Non-excluded superannuation funds
30 June 1998
Retirement Savings Account providers
31 March 1998
31 March 1998
31 March 1998
Non-operating Holding Companies
Flat rate charge of $10,000
Determination of revenue to cover consumer functions
The Treasurer has also determined that the amount of levy revenue to be set aside to cover the costs of ASIC's consumer functions should be $6.6m. ASIC will take on overall responsibility for consumer protection and market integrity associated with prudentially regulated industries.
Under the determination, the ATO will also receive $2.3m to cover expenditure associated with the unclaimed monies and lost members functions. This is a continuation of present responsibilities of the ATO.
These determinations will change the amount of levies that some of these institutions have paid in the past - some will pay more, while others pay less. For example, over half of the general insurance industry will pay less, while around 40 percent of life insurers will pay less (many quite significantly). Likewise, the levy on 85 percent of non-excluded superannuation funds will be the same as the levy on these entities in 1997/98.
It is important to note that:
- The cost of prudential supervision has not increased. There has, however, been an increase in resources devoted to consumer protection - a function now to be performed by ASIC.
- Levies imposed in the past have not been based on full cost recovery, nor have they reflected the total costs associated with supervising each industry sector.
- Recovery of establishment costs will be spread over four years for all of the above sectors.
- All revenue raised by the levies, other than that set aside by the Treasurer under the determination, will be made available to APRA under a standing appropriation. Accordingly, any funds raised through the levies that are in excess of requirements in that financial year will be carried forward to the next year.
- The efficiencies expected to be derived from these new regulatory arrangements should be reflected in levy payments when the adjustments to full cost recovery have been made.
- The levy amounts and arrangements for excluded funds are not covered by these determinations and remain the same as previously ($200 per $500,000 of assets and due six weeks after lodgement of annual returns).
Payment of levies
Under the levy legislation insurers and RSA providers were due to pay their 1998/99 levies on 1 July 1998. However, given the late passage of the legislation and the time necessary to finalise the levy determinations, APRA has decided that it will waive late payment fees if insurers and RSA providers pay their 1998/99 levy by:
- 1 October 1998: for institutions which paid their previous levy prior to 1 April 1998;
- 1 December 1998: for institutions which paid their previous levy on or after 1 April 1998.
Non-excluded superannuation funds are due to pay their levies six weeks after the lodgement of their annual returns.
Authorised Deposit-taking Institutions
In 1998/99 banks will be subject to an implicit levy through the Non-Callable Deposit (NCD) arrangements with the Reserve Bank. Banks will, however, be subject to an explicit levy based on assets from 1 July 1999. A levy will also be payable by those entities transferring from state regulation from the time they transfer to APRA supervision.
Mr Tim Bate
02 6213 5387
Mr Ray Jones
02 6263 3849
Administrative and payment enquiries:
Mr David Holmesby
02 6213 5048