Introducing the ASIC Supervisory Cost Recovery Levy Act 2017

Peter Stewart, Victor Ling

The Australian Securities and Investments Commission (ASIC) has recently put in place a new industry funding regime based on the 'user pays' principle.  
The ASIC Supervisory Cost Recovery Levy Act 2017 ('the Act') aims to fund ASIC's operation through charging entities that both require and benefit from ASIC's regulation.  

Enforcement date

The industry funding regime was introduced on 1 July 2017, with the first invoice set to be issued in January 2019 in order for ASIC to recover the regulatory costs incurred by corporate entities in the previous financial year (i.e. the 2017-2018 period).  As per the Act, ASIC will recover these costs by way of a levy.

What type of levy has been introduced?

This new levy will be calculated based on ASIC's regulatory costs for the previous financial year, along with the regulated entities' share of relevant activities within their nominated subsectors.  Either a flat levy, or a graduated levy (or both) will apply, depending on the subsector(s) that your entity falls within.  
These levies are tax-deductible and are not subject to GST.

In addition to a variable component, your entity may be asked to pay a minimum levy, based on your entity's share of relevant activity within the subsector.  

What impact will this new ASIC levy have?

Firstly, two important things to note are that if its activities are regulated by ASIC, your entity will be categorised as a 'regulated entity', and that under these new arrangements, most of the services provided by ASIC to your entity will become leviable.  These services include licensing and registration, compliance reviews of documents, assessing applications for relief, as well as any other regulatory activities provided to your entity by ASIC.  

ASIC has categorised corporate entities into 6 sectors, and 48 subsectors, with the levy for each subsector being calculated based on its industry-specific metrics.
 
It is possible that your entity may fall under more than one subsector if it is licenced or registered for more than one industry (e.g. if the entity is both a superannuation trustee and holds an Australian Financial Services Licence).  If this is the case, you will be billed for the levies applicable to each of the subsectors.  

Under the new regime, regulated entities including both large and small proprietary limited companies, listed and unlisted public companies, credit providers, superannuation trustees, large securities exchange participants and large futures exchange participants will be required to pay more costs than before.  

What are your new obligations under the Act?

Entities set to be affected by the Act should have already received a letter from ASIC setting out their registration requirements.  With the exception of most small proprietary companies, ASIC requires either an entities company director or secretary to register via the ASIC Regulatory Portal.  After registration, whoever was responsible for registering the entity may assign access to either a trusted representative or a registered agent, who in turn may take on Portal-related responsibilities.

Between July and September of each year, regulated entities will be required to provide ASIC with their business activity metrics for the previous financial year.  It is important to note that the deadline for entities to provide their business activity metrics via the Regulatory Portal is 27 September 2018.

Calculating your levy

Depending on your subsector(s), your levies will range from either:

How can we help?

If you or your clients require assistance in navigating or complying with the ASIC Supervisory Cost Recovery Levy Act 2017, please don't hesitate to get in touch with Coleman Greig's Commercial Advice Team: