Australian Transaction Reports and Analysis Centre Industry Contribution Determination 2016 (No. 1)

Leviable entity. This term has the same meaning as in the Act, which in turn draws on the AML/CTF Act. In substance, leviable entities are reporting entities under the AML/CTF Act - typically banks, credit unions, remittance providers, bullion dealers, and other financial service providers. The Determination refines this group by creating subcategories based on entity type: an authorised deposit-taking institution (ADI), a registered financial corporation, a member of a group of leviable entities, a remittance affiliate, a foreign company or subsidiary, and a Market Generator. Each subcategory triggers different treatment in the calculation formula.

Earnings. The definition of earnings differs by entity type. For an ADI or a registered financial corporation, earnings means total profit before tax, depreciation and amortisation (PBTDA), not adjusted for significant items. For all other leviable entities, earnings means total earnings before tax, interest, depreciation and amortisation (EBITDA), again not adjusted for significant items. This distinction matters because interest is a significant expense for non-ADI entities, so EBITDA will be higher than PBTDA for the same underlying profit. For groups where any member is an ADI or registered financial corporation, the whole group uses PBTDA. For foreign companies and subsidiaries of foreign companies, only earnings derived from Australian operations count. The earnings figures must have been recorded in accordance with the roll maintained by the AUSTRAC CEO under section 51C of the AML/CTF Act.

Earnings component. This is 0.043% of the entity’s earnings (or for a group, 0.043% of total group earnings divided by the number of group members). However, an earnings component threshold applies: if the entity (or group) has earnings less than $100 million, the earnings component is nil. A cap also applies: if the calculated earnings component exceeds $1 million, it is reduced to $1 million (or for groups, $1 million divided by the number of members).

Transaction reporting component. This is computed using the leviable reports given to AUSTRAC during the 2015 calendar year (the year before the financial year). The formula is 1.2 cents per leviable report plus 0.00105436% of the value of each such report (the value being the transaction value). Leviable reports are reports given under subsections 43(2) or 45(2) of the AML/CTF Act (suspicious matter reports and threshold transaction reports), plus reports of the same type given by a remittance affiliate or by an entity acquired prior to the census day. Importantly, the same report cannot be used in the calculation of more than one entity’s component.

Payment threshold. If the sum of the earnings component and transaction reporting component is less than $1,000, the instalment payable is nil.

Maximum payment amount. For an entity with earnings greater than $5 billion (or a group with total earnings >$5 billion), the instalment is capped at $9,926,801.15 (for a group, divided by the number of entities in the group). This cap overrides the formula, so very large entities do not pay more than that amount.

Exemptions. Three categories are exempt from the instalment entirely: (a) an entity that in the previous financial year provided designated services only as a remittance affiliate and in no other capacity; (b) an entity that on the census day was a Market Generator under the National Electricity Rules; (c) a body corporate established for a public purpose by a Commonwealth Act. These exemptions are absolute and do not require any threshold calculation.

Group of leviable entities. All leviable entities that are related bodies corporate (within the meaning of the Corporations Act 2001) form a group. For the earnings component, the group’s total earnings are aggregated, and then the component is divided equally among the members. The same approach applies to the cap and the maximum payment amount. However, the transaction reporting component is calculated individually for each entity, using its own reports plus reports from its remittance affiliates and acquired entities (subject to the single-use rule).

The primary population affected is leviable entities as defined under the Act and the AML/CTF Act. This encompasses a wide range of businesses in the financial services sector: banks, building societies, credit unions, foreign exchange providers, remittance service providers, bullion dealers, gambling service providers (in some cases), and other entities that provide designated services under the AML/CTF Act. The Determination does not list entities by name; instead it relies on the definitions and the roll maintained by AUSTRAC. The practical effect is that every entity that lodges reports under sections 43(2) or 45(2) of the AML/CTF Act and has earnings recorded in the AUSTRAC roll is a candidate for the levy. However, the Determination creates several carve-outs that narrow the paying population.

Entities with earnings below $100 million pay no earnings component, but they may still owe a transaction reporting component if their reports are numerous or high value. The $1,000 payment threshold further filters out entities with very small calculated amounts. The exemptions for pure remittance affiliates, Market Generators, and public-purpose bodies remove entire categories from liability. The largest entities - those with earnings over $5 billion - face a hard cap on their total instalment, which protects them from unlimited escalation but also means the levy is not linear at high earnings levels. Groups of related entities are treated collectively for the earnings component and the maximum payment amount, which can either increase or decrease the per-entity liability depending on the group’s structure and total earnings.

Foreign companies and subsidiaries of foreign companies are included, but only on their Australian earnings. This means international banks or financial groups with Australian operations must calculate their levy based on local profit and local transaction reports. The Determination does not address entities that cease to be leviable during the year or that are wound up before the census day. The census day itself is defined in the Act but not in the Determination; presumably it is a fixed date in the financial year used to determine the set of entities liable.

The compliance burden falls disproportionately on compliance departments of financial institutions. They must gather earnings data from their Australian operations, identify all leviable reports for a prior calendar year (2015 for this determination), compute the transaction reporting component including values, allocate reports correctly among group entities, and check for exemptions. The complexity of the group rules, especially the requirement to divide the earnings component and cap by the number of group members, forces entities to map their corporate structure and track membership changes.

The central duty imposed by the Determination is the obligation to pay the instalment of the levy calculated in accordance with its formula. The duty to pay runs to each leviable entity personally, subject to the group provisions. The entity must self-assess its earnings component and transaction reporting component, apply the thresholds and caps correctly, and pay the resulting amount (or nil if below $1,000). The due date for payment is not specified in the Determination; it would be set by the Act or by a separate notice.

Entities have a right to claim any applicable exemption. The Determination provides three absolute exemptions: for pure remittance affiliates, for Market Generators, and for public-purpose bodies. To benefit from these exemptions, the entity must satisfy the conditions as at the relevant time. For the remittance affiliate exemption, the entity must have provided designated services only in that capacity in the previous financial year, and in no other capacity - a narrow condition that would exclude any entity that also acted as a principal in providing services. The Market Generator exemption depends on the entity’s status under the National Electricity Rules on the census day. The public-purpose body exemption is limited to bodies corporate established by a Commonwealth Act; it does not cover state-based entities or statutory authorities created by regulation.

Entities also have the right to have the cap applied correctly. An entity with earnings greater than $5 billion pays no more than $9,926,801.15 (or that amount divided by group size). However, the cap is expressed as the amount of the instalment, not as a cap on the earnings component alone; it overrides the entire formula. This means even if the transaction reporting component would normally push the total above the cap, the entity pays only the cap amount.

The Determination confers no right of review or objection; such rights would arise under the Act or general administrative law. The calculation relies on data that the entity itself provides to AUSTRAC under the AML/CTF Act (the roll and the reports). If an entity disputes the earnings figure recorded in the AUSTRAC roll, it would need to correct that record under the AML/CTF Act, not under this Determination.

A subtle duty arises from the definition of earnings: the entity must ensure its PBTDA or EBITDA as recorded in the AUSTRAC roll is accurate and reflects the required methodology (no adjustment for significant items). If the entity misstates its earnings, it may underpay or overpay the levy. Overpayment may be recoverable, but underpayment could attract penalties under the Act. The Determination also imposes an implicit duty to track group membership changes. If an entity becomes part of a group after the census day, the Determination does not address that; the group is defined as all leviable entities that are related bodies corporate. The precise timing of the member count for the earnings component division is not specified, but the census day is used elsewhere, so presumably the group composition is determined on that day.

The Determination itself does not set out any penalties for non-compliance. It is a standalone instrument that prescribes the calculation methodology, not the consequences of failure to pay or to calculate correctly. The enforcement mechanism resides in the Australian Transaction Reports and Analysis Centre Industry Contribution Act 2011 under which it is made. That Act would likely impose civil penalty provisions for late payment or non-payment, and may also create offences for providing false or misleading information in connection with the levy. Since the text of the Act is not before us, we can only infer that standard Commonwealth enforcement measures apply.

However, the Determination does create conditions that could trigger penalties indirectly. The earnings figures used in the calculation must be those recorded in the roll maintained under section 51C of the AML/CTF Act. If an entity has not kept that roll accurately or has not reported its financial data correctly to AUSTRAC, the earnings component may be understated. The AML/CTF Act has its own penalty regime for record-keeping failures, and the levy system piggybacks on that roll. Similarly, the transaction reporting component relies on the reports given under sections 43(2) and 45(2) of the AML/CTF Act. If an entity fails to lodge those reports, or lodges them late, it may not only be liable under the AML/CTF Act but also have a lower transaction reporting component than it should - potentially an advantage. However, the levy is not designed to encourage reporting; it merely uses the existing reporting framework as a base.

The practical enforcement burden falls on AUSTRAC. The regulator would compare the levy instalments paid against the data it holds on earnings and reports. If a discrepancy appears, it could issue a notice of assessment, demand payment, and pursue recovery through the courts. The Determination does not provide for administrative penalty amounts, late payment interest, or remission. These would be covered by the Act or by general Commonwealth law such as the Public Governance, Performance and Accountability Act 2013.

Entities that believe they have overpaid have no express right of refund in the Determination. Any refund mechanism would be under the Act. Equally, there is no provision for waiving the levy on hardship grounds; the only reductions are the thresholds, caps, and exemptions. This means an entity that just misses the $100 million earnings threshold (say, with $101 million earnings) pays the full earnings component, while an entity with $99 million pays nothing. This creates a compliance cliff that may encourage aggressive accounting or group structuring to stay below the threshold.

The Determination is embedded in a network of Commonwealth legislation. Its parent Act is the Australian Transaction Reports and Analysis Centre Industry Contribution Act 2011, which grants the Minister the power to make the Determination under subsection 9(1). The Act sets the overall framework for the levy - who is liable, how it is collected, and the maximum amount - while the Determination fills in the annual formula. Without the Act, the Determination has no force.

The most significant interaction is with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The Determination borrows heavily from that Act for definitions: ADI, AUSTRAC, AUSTRAC CEO, census day, designated service, and the report types under subsections 43(2) and 45(2). The roll maintained under section 51C of the AML/CTF Act is the source of earnings data. The AML/CTF Act is also the source of the reports that feed the transaction reporting component. Any amendment to the AML/CTF Act that changes the definition of designated service or the reporting obligations could alter the levy calculation for future years if mirrored in subsequent determinations. The Determination is fixed to the 2015 calendar year for reports, so changes after 2015 do not affect this instrument, but would matter for later years.

The Corporations Act 2001 supplies the definitions of related bodies corporate, foreign company, and subsidiary. These definitions govern group aggregation. If the Corporations Act changes the meaning of related bodies corporate, that would affect which entities are grouped together for the earnings component and maximum payment cap. The Financial Sector (Collection of Data) Act 2001 contributes the concept of registered entity (used here for registered financial corporation). The National Electricity Law (South Australia) and the National Electricity Rules define Market Generator, which is used for the exemption. That cross-reference ties the levy to state-based energy regulation. A change in the National Electricity Rules could add or remove entities from the exemption.

The Determination does not interact directly with income tax law, but the earnings figures (PBTDA or EBITDA) are accounting concepts that may approximate taxable income but are not identical. There is no allowance for tax losses or carry-forwards. The levy is a cost of doing business and would presumably be tax deductible under ordinary principles, but the Determination does not address that.

For entities that are part of a group, the group aggregation rules interact with corporate law concepts of control and ownership. The requirement to divide the earnings component and the cap by the number of leviable entities in the group could encourage groups to minimise the number of separate leviable entities by consolidating reporting registration. However, the AML/CTF Act has its own rules about who must report, so consolidation may not be possible without changing operational structures.

The source text of this Determination does not include any amendment history. It appears to be the original version as made by the Minister for Justice on 15 September 2016 and registered on the Federal Register of Legislative Instruments. There are no footnotes or annotations indicating that any subsequent amending instruments have been applied. The Determination is titled “Australian Transaction Reports and Analysis Centre Industry Contribution Determination 2016 (No. 1)”, which suggests that it may be the first instrument made for the 2016-2017 financial year. The “No. 1” suffix implies that later instruments could be made for the same period if needed (for example, to correct errors or update calculations mid-year), but the text does not refer to any such instruments. In practice, the Minister makes a new determination each financial year to set the relevant financial year, reference year for reports, and adjusted figures (such as the $9,926,801.15 cap, which is likely indexed). The 2016-2017 determination would have been replaced by a later determination for 2017-2018, rendering this instrument effectively spent after 30 June 2017. However, it remains relevant for historical compliance audits or disputes that may arise after that year.

Without access to the Federal Register of Legislation, we cannot confirm whether this instrument has been amended. The text provided shows no amendment history clause. This is consistent with many legislative instruments that are made for a single period and then replaced rather than amended. A reader should verify the current version if relying on it for ongoing obligations, but the 2016-2017 year is long past. The absence of amendment history in the source means there are no known corrections or modifications to the formula, definitions, or thresholds within the lifetime of this instrument. Entities that file for that year should retain this original version as the authoritative calculation rule.

The Determination itself does not cite any litigation history, and none can be inferred from the text. Appellate or first-instance decisions concerning the validity or interpretation of this specific instrument are not referenced. However, given that the levy is a tax-like charge on regulated entities, it is possible that judicial review or merits review has been sought under the Act or the Administrative Decisions (Judicial Review) Act 1977. Without external sources, we can only speculate about potential grounds for challenge. The Determination’s formula could be contested on the basis of jurisdictional error - for example, if the Minister exceeded the power granted by section 9(1) of the Act. The earnings definition, especially the distinction between PBTDA and EBITDA, might be attacked for arbitrary classification. The exemption for Market Generators could be challenged as an impermissible special treatment that discriminates between types of entities in a way not authorised by the Act. The cap of $9,926,801.15 is a specific dollar amount that may need annual indexation; if the Act requires indexing, the fixed number could be invalid.

Another potential litigation area is the definition of “leviable report” when it includes reports given by a remittance affiliate or an acquired entity. The single-use rule (same report cannot be used for two entities) might cause disputes if two entities claim the same report. Uncertainty around the timing of the “census day” (defined in the Act but not restated) could lead to conflicting interpretations about which entities are liable and what reports count.

Because the Determination is a legislative instrument, it is subject to disallowance by either house of Parliament. There may have been political or procedural challenges during the disallowance period, but the text gives no hint of this. For a deep dive grounded only in the source, we must note that no litigation is mentioned, and the instrument appears to have operated without public judicial scrutiny, at least in the text provided.

The earnings component threshold is absolute. An entity with earnings of $99,999,999 pays a nil earnings component, while one with $100,000,001 pays the full 0.043% on the entire amount (up to the cap). This cliff can be a significant trap for entities near the boundary. They may inadvertently cross the threshold due to accounting adjustments, and the Determination offers no transitional relief or averaging.

Group membership count is critical. For both the earnings component cap and the maximum payment amount, the cap is divided by the number of leviable entities in the group. If a group has many small leviable entities (e.g., a large bank with dozens of subsidiary trustees), each entity’s cap is reduced dramatically, but the group’s total liability remains the same. However, if a group incorrectly counts members or omits an entity, the per-entity liability could be miscalculated. The definition of group is all leviable entities that are related bodies corporate, but leviable entities may include entities that provide designated services only occasionally. A dormant entity that still holds an AML/CTF registration counts as a leviable entity and therefore increases the denominator.

The remittance affiliate exemption is very narrow. To qualify, the entity must have provided designated services only in the capacity of a remittance affiliate in the previous financial year, and not in any other capacity. If the entity also provided a designated service as a principal - even once - the exemption is lost. Many remittance affiliates also handle their own transactions, so this exemption likely applies to a tiny subset.

Foreign companies and subsidiaries must use Australian earnings only. The Determination says “total profit or total earnings of the leviable entity which are derived from operations in Australia”. This requires a geographic allocation of earnings, which may involve transfer pricing or apportionment. The AUSTRAC roll may not contain this split, so the entity must maintain separate records.

The transaction reporting component uses 2015 calendar year reports for the 2016-2017 levy. This one-year lag means entities need to retain historical report data. If an entity’s reporting volume changed significantly after 2015, the levy does not reflect that. Also, reports given by a remittance affiliate or by an acquired entity are included, but the same report cannot be used twice. Entities must carefully track which reports have already been attributed to another entity.

The $1,000 payment threshold applies only to the final amount, not to each component. If the sum of earnings component and transaction reporting component is $999.99, the instalment is nil. But if it is $1,000.01, the full amount is payable, not just the excess. This is another cliff.

Market Generators are exempt, but not other participants in the electricity market. A generator that is not a “Market Generator” under the National Electricity Rules (for example, a small embedded generator or a generator in Western Australia) is not exempt. Likewise, retailers or distributors are not exempt unless they also fit another category.

The Determination is for one year only. Any reliance on this instrument for other tax years would be erroneous. Entities must use the correct determination for each financial year, which may have different thresholds, caps, and reference periods. The formula may change significantly.

Compliance with the Determination for the 2016-2017 financial year requires a methodical, documented process. The first step is to confirm that the entity is a leviable entity under the Act. This typically means it is a reporting entity under the AML/CTF Act and not one of the excluded categories. Check the roll maintained under section 51C of the AML/CTF Act to see if earnings are recorded for the entity.

Next, determine if any exemption applies. If the entity provided designated services only as a remittance affiliate in the 2015-2016 financial year and in no other capacity, it is exempt. If it was a Market Generator under the National Electricity Rules on the census day, it is exempt. If it is a body corporate established for a public purpose by a Commonwealth Act, it is exempt. If any exemption applies, the instalment is nil and no further calculation is needed, though the entity should retain evidence of the exemption.

If no exemption applies, calculate the earnings component. Determine the entity type: if it is an ADI or registered financial corporation, use PBTDA; otherwise use EBITDA. For groups where any member is an ADI or registered financial corporation, use PBTDA for all. Use the earnings figures recorded in the AUSTRAC roll for a year ending in the previous financial year (presumably the year ended 30 June 2015 or 31 December 2015, depending on the entity’s accounting period). For foreign companies or subsidiaries, use only Australian-derived earnings. If the entity is part of a group of leviable entities (related bodies corporate), aggregate total group earnings and then apply 0.043% to the group total. Divide that result by the number of leviable entities in the group to get each entity’s earnings component. However, if the group’s total earnings are less than $100 million, the earnings component is nil for all group members. If the calculated earnings component per entity exceeds $1 million, cap it at $1 million (or for groups, $1 million divided by the number of entities).

Next, calculate the transaction reporting component. Identify all leviable reports given to AUSTRAC during the calendar year 2015. These are reports under subsections 43(2) or 45(2) of the AML/CTF Act (suspicious matter reports and threshold transaction reports). Include reports given by the entity itself, plus reports given by a remittance affiliate of the entity (if the affiliate gave such reports as part of the entity’s network), plus reports given by an entity that was acquired by the entity before the census day. However, if any such report has already been used in the calculation of another entity’s transaction reporting component, it cannot be used again. For each leviable report, add 1.2 cents per report plus 0.00105436% of the transaction value. Sum these amounts to get the transaction reporting component.

Add the earnings component and transaction reporting component. If the total is less than $1,000, the instalment payable is nil. If the total is $1,000 or more, that is the preliminary instalment.

Check the maximum payment amount. If the entity (or the group, if the entity is in a group) has earnings greater than $5 billion, the instalment cannot exceed $9,926,801.15 (or that amount divided by the number of group members). Cap the preliminary instalment at this maximum if it exceeds it.

The result is the amount of the instalment of levy payable for the financial year. The entity must pay that amount by the due date set out in the Act. Retain all records supporting the calculation, including earnings figures, details of leviable reports, evidence of group membership, and documentation of any exemptions. Engage qualified compliance professionals to verify the calculation, particularly for groups and foreign entities. Monitor any amendments to the Determination or the Act that may affect liability for subsequent years.