Australian Transaction Reports and Analysis Centre Industry Contribution Determination 2023 (No. 1)

Leviable entity. This term is defined in the Act and is central to the Determination’s operation. The Determination does not redefine it, but uses it to identify who must pay. A leviable entity is an entity that provides designated services under the AML/CTF Act and is therefore required to enrol with AUSTRAC. Examples include banks, credit unions, remittance providers, bullion dealers, and gambling operators. The Determination’s rules apply only to such entities for the 2022-2023 financial year.

Earnings. Earnings are defined differently for different types of entities. For an ADI (authorised deposit-taking institution) 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), also not adjusted for significant items. Where the entity is part of a group, the group’s total earnings are used. For foreign companies or subsidiaries of foreign companies, only earnings derived from operations in Australia count. This definition is crucial because it forms the base for the 0.120 per cent earnings component and also determines eligibility for the $100 million threshold (below which the earnings component is nil) and the $7 billion floor for the maximum payment cap.

Leviable report. This refers to a report given under section 43(2) or 45(2) of the AML/CTF Act (suspicious matter reports and threshold transaction reports) during the 2021 calendar year. The definition extends to include reports given by a remittance affiliate of the leviable entity, and reports given by a business acquired by the leviable entity before census day. This means that if entity A acquired entity B’s business, B’s 2021 reports count as A’s reports for calculating the transaction reporting component. Importantly, a report used for one entity cannot be used for another (item 6(3) prevents double counting). The transaction reporting component is calculated as either 1.4 cents per report plus a percentage of the transaction value, with the percentage rate depending on whether the total value of the entity’s reports is below $15 billion or $15 billion or more.

Group of leviable entities. This means all leviable entities that are related bodies corporate (as defined in the Corporations Act 2001). The Determination applies group aggregation for both the earnings component and the transaction reporting component caps. For the earnings component, the 0.120 per cent rate applies to the group’s total earnings, then the resulting amount is divided equally among group members. For the transaction reporting component, the total reports and values across the group are aggregated, then the formula is applied, and the resulting amount is subject to a $7,098,999.75 cap for the group. The cap is not per entity but per group; if the group cap applies, each entity gets an equal share. This creates a strong disincentive against structuring to avoid the levy, but it also means that small subsidiaries in a large group may face a higher levy than if they were standalone, because the group’s larger earnings and report volume attract the cap and then are shared equally.

Payment threshold and maximum payment amount. Even if the formula yields a positive amount, if it is below $1,100, the levy is nil (item 4(3)). This de minimis threshold is presumably to avoid the administrative cost of collecting very small sums. At the other end, if the entity (or group) has earnings over $7 billion, the levy is capped at $11,249,558.31 (for a single entity) or that amount divided by the number of entities in the group. This cap applies irrespective of the actual calculation. It means very large entities do not pay more than a fixed ceiling, which in turn means that entities with extremely high earnings or transaction volumes effectively face a declining effective rate above the cap.

The Determination directly affects all leviable entities under the AML/CTF Act for the 2022-2023 financial year. This includes banks and building societies (ADIs), credit unions, foreign bank branches, superannuation funds, registered financial corporations (such as certain insurers and finance companies), remittance service providers, gambling operators (casinos, wagering providers), bullion dealers, and any other entity that provides designated services. According to AUSTRAC’s regulatory perimeter, this covers several thousand entities, though the levy is structured to concentrate liability on larger entities.

Smaller entities are affected indirectly through the $100 million earnings threshold for the earnings component. Entities with earnings below $100 million pay nothing on the earnings component, so their levy comes only from the transaction reporting component, if any. However, the $1,100 minimum payment threshold means that entities with very low transaction reporting component amounts also pay nothing. In practice, the smallest entities (such as remittance affiliates that are exempt entirely under item 4(5)) or entities that generate few reports may pay nil levy.

Entities with earnings above $100 million but below $7 billion face the full 0.120 per cent on earnings, plus the transaction reporting component based on their 2021 reports, subject to the $5 million earnings component cap and the $7,098,999.75 transaction reporting cap per group. Medium-sized entities that are part of large groups may be affected by the group aggregation rules, which can increase their individual levy if the group’s total earnings or reports attract the caps and are then divided equally. This may create incentives for groups to restructure, though the related bodies corporate definition is broad.

Remittance affiliates are exempt from the levy if they provided designated services only in that capacity in the previous financial year and did not provide designated services in any other capacity. This exemption reflects that the network operator (the remittance affiliate’s principal) is likely already captured and that the affiliate may be a small agent. Similarly, Market Generators under the National Electricity Rules are exempt, which covers certain large energy trading entities that may otherwise be leviable entities due to their financial services activities. Public-purpose bodies established by Commonwealth Act are also exempt, which likely covers entities like the Reserve Bank of Australia or certain statutory authorities.

The Determination also affects entities that have acquired another leviable entity’s business before census day, because the acquired entity’s 2021 reports are counted in the acquirer’s transaction reporting component. This means M&A activity can shift levy liability retroactively based on pre-acquisition reporting activity.

The Determination does not create new substantive duties beyond the Act itself; it quantifies the financial duty to pay the levy instalment. The primary duty is to calculate and pay the correct amount by the due date (which is set by the Act, not the Determination). The Determination provides the formula, thresholds, caps, and exemptions that define that duty.

Entities have the right to rely on the exemptions in items 4(5)-(7). A remittance affiliate that only provided designated services as a remittance affiliate during the previous financial year is entitled to a nil levy. A Market Generator under the National Electricity Rules is entitled to nil levy, as is a Commonwealth public purpose body. These exemptions are self-executing; the entity does not need to apply, but it must ensure it meets the criteria. If an entity believes it qualifies but is assessed differently, it would have the right to challenge.

Entities have the right to calculate the levy using their own earnings and report data. The Determination specifies that earnings are based on “the details of which have been recorded in accordance with the requirements for the roll maintained by the AUSTRAC CEO under section 51C of the AML/CTF Act”. This means AUSTRAC already holds some data, but entities should verify the numbers.

Entities have the right to form groups for levy calculation purposes. If multiple leviable entities are related bodies corporate, they must be treated as a group for the earnings component cap and the transaction reporting component cap. This is not optional; the Determination uses the group concept to aggregate earnings and reports and then divide equally. However, the definition of “group of leviable entities” is all related bodies corporate; it does not allow entities to elect to be grouped or ungrouped. So an entity must identify all its related bodies corporate within the leviable population.

Entities have the right to ensure that the same leviable report is not used twice. Item 6(3) states that if a report is used for one entity (e.g., via acquisition or remittance affiliate treatment), it cannot be used for any other entity. This prevents double counting, but it also means that an entity relying on acquired reports should ensure those reports are not also claimed by the acquired entity (if it still exists separately).

Entities have the duty to maintain records sufficient to calculate both components. This includes earnings figures (PBTDA or EBITDA) and the details of leviable reports given in the 2021 calendar year, including count and total value. The Determination uses 2021 reports even though the financial year is 2022-2023; this lag means entities must retain historical data.

There is no duty to pay if the calculated amount is less than $1,100. This creates a right to pay nothing for very small amounts.

The Determination itself does not prescribe penalties; those are in the Act and other legislation. The Determination is the instrument that sets the amount; failure to pay that amount on time would attract penalty provisions under the Act. The Act likely provides for late payment penalties and potential civil or criminal consequences for non-compliance. Under the AML/CTF Act, AUSTRAC has enforcement powers including infringement notices, enforceable undertakings, and civil penalty orders. The levy would be recoverable as a debt due to the Commonwealth (see section 16 of the Act, which applies the Regulatory Powers (Standard Provisions) Act 2014 to levy-related matters, though the Determination does not mention this explicitly).

The Determination’s definitions are critical for enforcement. If an entity incorrectly classifies itself as exempt (e.g., claiming remittance affiliate status when it also provided services in another capacity), it may face underpayment and penalties. Similarly, errors in computing earnings (e.g., misapplying the Australian-only earnings rule for foreign companies) or transaction reporting values could lead to underpayment. Overpayment may be recoverable but is not addressed here.

The group aggregation rules create a joint responsibility: if a group’s total levy is capped and then divided, each entity is liable for its share. If one entity fails to pay, the others may not be forced to cover it, but the shortfall would be a debt of that entity individually. The group mechanics only apply to the calculation, not to joint and several liability.

Enforcement is likely based on the data AUSTRAC holds from the roll and from reports. The earnings component uses earnings recorded in the roll under section 51C of the AML/CTF Act, which AUSTRAC can verify. The transaction reporting component uses reports that AUSTRAC already receives. So AUSTRAC has independent data to assess compliance. This reduces the compliance burden but also increases the risk of administrative error if AUSTRAC’s data differs from the entity’s.

Because the Determination is made for a single financial year, any challenge to its validity would need to occur before or during that year. As it was registered in June 2023, the financial year had already ended (30 June 2023). The levy instalment would have been payable during the year, likely in quarterly or other instalments as set by regulation. Retrospective challenge may be possible but limited.

The Determination is made under the Australian Transaction Reports and Analysis Centre Industry Contribution Act 2011 (the primary Act). That Act establishes the framework for the levy, and the Determination fills in the specific amounts, thresholds, and formulas for each financial year. The Determination must be read together with the Act, which contains definitions of key terms like “leviable entity”, “census day”, and “financial year” (though the Determination also defines some terms). The Act likely also includes provisions for paying the levy, due dates, and recovery mechanisms.

The Determination interacts with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) in several ways. “Leviable entity” is defined in the Act by reference to entities that provide designated services under the AML/CTF Act. The Determination uses AML/CTF Act concepts: “ADI” takes the same meaning as in the AML/CTF Act; “AUSTRAC” and “AUSTRAC CEO” have the same meanings; “leviable report” refers to reports given under sections 43(2) or 45(2) of the AML/CTF Act (suspicious matter reports and threshold transaction reports). The roll maintained under section 51C of the AML/CTF Act provides the earnings data. So the Determination piggybacks on the AML/CTF Act’s definitions and record-keeping requirements.

The Determination also interacts with the Corporations Act 2001 through the definitions of “foreign company”, “related bodies corporate”, and “subsidiary”. These terms are given the same meaning as in the Corporations Act. This means that the group aggregation rules and the Australian-only earnings rule for foreign companies depend on Corporations Act classifications.

The Determination interacts with the Financial Sector (Collection of Data) Act 2001 by using the term “registered financial corporation” (defined as “registered entity” in that Act). This captures entities like insurance companies and other financial institutions that are not ADIs but are regulated by APRA.

The Determination interacts with the National Electricity Rules (made under the National Electricity Law of South Australia) by exempting “Market Generators”. This is an unusual cross-jurisdictional reference, but it means that entities that are defined as Market Generators in those rules are exempt from the levy, presumably because they are already subject to other regulatory levies or because their AML/CTF exposure is minimal.

The Determination does not interact with tax law directly, but the levy is likely deductible as an expense. The earnings definitions (PBTDA and EBITDA) are accounting concepts, not tax concepts, which could create differences between levy calculations and taxable income.

There is no provision in the Determination for waivers, reductions, or refunds; any such mechanisms would be in the Act or regulations.

The Determination is the product of a single instrument made on 8 June 2023 and registered on the Federal Register of Legislation. It is titled “2023 (No. 1)”, indicating it is the first such determination for the 2023 calendar year. Under the Act, a new determination is made each financial year; the previous one would have been the Australian Transaction Reports and Analysis Centre Industry Contribution Determination 2022 (No. 1) (or similar). The text provided does not include a comparison with earlier determinations, so specific changes are not visible from this source alone.

However, we can infer from the structure that the Determination is a periodic instrument: it defines the financial year as beginning 1 July 2022, uses earnings from the previous financial year (2021-2022) and reports from the 2021 calendar year. Each new determination would update the financial year, the reference years for earnings and reports, and potentially adjust the rates, caps, and thresholds. The explanatory statement (not provided) would explain changes from the prior year. In the absence of that, the deep dive cannot detail specific amendments.

The Determination itself has not been amended; it is the original version. It may be replaced or amended by a later determination for the following financial year. Subsection 9(1) of the Act likely allows the Minister to make a determination for a particular financial year, and each year’s determination supplants the prior one for that year. The determination is legislative instrument subject to disallowance and sunsetting under the Legislation Act 2003, though the Act may exempt it from some requirements.

Therefore, the amendment history is that this Determination is a standalone instrument for 2022-2023; its only “predecessor” is the equivalent instrument for 2021-2022. The text of the predecessor would show how rates, thresholds, and caps have changed. For example, the maximum payment amount of $11,249,558.31 and the earnings component rate of 0.120% may represent increases or decreases from earlier years, but we cannot confirm from the source. Similarly, the transaction reporting component caps ($7,098,999.75) and the tiered rate structure (two tiers based on $15 billion report value) may have been introduced or modified.

The instrument is not subject to public consultation by virtue of being a ministerial determination; it is a legislative instrument that follows the standard rule-making process under the Act.

The source text does not refer to any litigation. There are no case citations, court names, or references to judicial review. This is a ministerial determination, and as a legislative instrument, it could be challenged on grounds such as invalidity (ultra vires the Act), procedural error (e.g., failure to consider relevant matters or taking into account irrelevant matters), or contravention of the Legislation Act 2003 (e.g., not being registered, though it was). However, no such litigation is recorded in the source.

There may be historical litigation relating to earlier determinations under the Act, but the source does not mention it. The Act itself may have been the subject of judicial consideration; for example, disputes over the definition of “leviable entity” or the calculation of the levy. But again, the Determination does not discuss this.

Because the Determination is a cost-recovery instrument, it could be challenged on the basis that the amount is not reasonably related to the cost of regulation, or that it is discriminatory. However, the Act likely provides a broad discretion to the Minister, and the courts have generally deferred to such determinations if they are within power.

If a levy payer disputes the amount calculated by AUSTRAC, they could seek a review under the Administrative Decisions (Judicial Review) Act 1977 or the Tribunals (Miscellaneous) Provisions Act (depending on the Act’s review mechanisms). The source does not mention internal review, so it may be that the only recourse is judicial review of AUSTRAC’s assessment, or challenging the validity of the Determination itself.

Given that the Determination is for a single financial year (2022-2023) and was made in June 2023, any litigation would likely have been commenced within the statutory time limits (usually 28 days for judicial review of a legislative instrument, or within a reasonable time for an ADJR application). The source does not indicate that any challenge was filed.

In short, there is no litigation history recorded in the Determination. The deep dive must note this absence rather than speculate.

Group calculation equal division. If an entity is part of a group of related bodies corporate, both the earnings component cap and the transaction reporting component cap are divided equally among group members. This seems neutral, but it can produce perverse outcomes. For example, a small entity with low earnings might be grouped with a very large entity with high earnings. The group’s total earnings exceed $100 million, so the small entity loses its entitlement to a nil earnings component. The earnings component for the group is 0.120% of total earnings, capped at $5 million, then divided equally; the small entity may pay more than it would on its own, even though its own earnings are below the threshold. The only escape is if the group’s total earnings are below $100 million. So entities with related bodies corporate must be careful to identify all group members; failing to do so may mean the group cap is not applied correctly, possibly overpaying.

Acquired reports. The transaction reporting component includes reports given by a leviable entity whose business was acquired prior to census day. This means that if an entity acquired another entity’s business in 2022, it must include that entity’s 2021 reports. The acquirer may not have complete access to the acquired entity’s report data from before the acquisition, especially concerning transaction values. The determination does not provide a mechanism for estimates or approximations; the data must have been “recorded in accordance with the requirements for the roll” (item 3 definition of earnings) but that applies to earnings, not to reports. For reports, the definition simply says “a report given by another leviable entity”. The acquirer must obtain that data. If it cannot, it may understate the transaction reporting component and face a shortfall.

Foreign company earnings. For foreign companies or subsidiaries of foreign companies, earnings are only those derived from operations in Australia. This requires a careful allocation of global earnings. The Determination does not specify the method (e.g., separate accounts, apportionment). An entity that incorrectly calculates Australian-only earnings risks either overpayment (if it includes global earnings) or underpayment (if it excludes too much). Given the 0.120% rate, a small misallocation can have significant dollar impact.

Exemptions are narrow. The remittance affiliate exemption applies only if the entity provided designated services solely in the capacity of a remittance affiliate and did not provide any other designated service in any other capacity. A remittance affiliate that also acts as an agent for other services, or that holds an Australian Financial Services Licence directly, may lose the exemption. The Market Generator exemption depends on the National Electricity Rules definition; an entity that trades electricity but is not a “Market Generator” under those rules is not exempt.

Timing mismatch. The levy is for the 2022-2023 financial year, but the transaction reporting component uses reports from calendar year 2021. An entity that significantly increased its report volumes in 2022 or 2023 will face a levy based on historical data, and conversely, an entity that reduced activity may still pay based on the old volumes. This lag can distort cost recovery and make the levy unpredictable for growing or shrinking businesses.

CPI indexing absent. The Determination does not state that thresholds or caps are indexed. The $1,100 payment threshold, $100 million earnings threshold, $5 million cap, $7 billion maximum earnings cap, $11,249,558.31 maximum payment, and $7,098,999.75 transaction cap are fixed dollar amounts. Over time, inflation erodes the real value of these thresholds, potentially pulling more entities into the levy and increasing effective rates. However, for this single financial year, the amounts are as stated.

Group definition mandatory. There is no opt-out for groups. If two leviable entities are related bodies corporate, they must be treated as a group. This can be problematic if they have different financial years or different accounting standards. The definition of earnings for each group member must be consistent (PBTDA vs EBITDA) depending on whether any member is an ADI or registered financial corporation. If a group includes an ADI and a non-ADI, the earnings definition for the ADI member is PBTDA, for others EBITDA; but the group total for the earnings component cap would combine these disparate measures. The Determination does not address how to aggregate earnings from different definitions; logically one would use each entity’s own definition.

Compliance starts with identifying whether the entity is a leviable entity under the Act. If it provides a designated service under the AML/CTF Act and is enrolled with AUSTRAC, it is likely within scope. Entities that are uncertain should check AUSTRAC’s categorisation.

Step one: Determine if any exemption applies. Check if the entity is a remittance affiliate that provided designated services only in that capacity in the previous financial year (2021-2022). Even if an exemption applies, the entity should still ensure it is correctly categorised, because if it also provided services in another capacity, the exemption is lost. Similarly, check if the entity is a Market Generator under the National Electricity Rules; obtain a written confirmation from an electricity market body if needed. Public purpose bodies established by Commonwealth Act should confirm their status with legal advice.

Step two: If not exempt, calculate the earnings component. Obtain the audited or management accounts for the financial year ending in 2021-2022 (the previous financial year). For ADIs and registered financial corporations, use profit before tax, depreciation and amortisation (PBTDA), ignoring significant items. For all others, use earnings before tax, interest, depreciation and amortisation (EBITDA), ignoring significant items. For foreign entities, calculate only the portion derived from Australian operations. If the entity is part of a group of related bodies corporate, sum the earnings of all group members (using each member’s applicable definition). If the total group earnings are below $100 million, the earnings component is nil for all group members. If above, apply 0.120% to the total, then cap the result at $5 million for the group. Divide that capped amount equally among the group members (including the entity itself). That is the entity’s earnings component.

Step three: Calculate the transaction reporting component. Compile all leviable reports given in calendar year 2021. These include the entity’s own reports under AML/CTF Act sections 43(2) and 45(2), reports given by a remittance affiliate (if applicable), and reports given by a business acquired before census day. Count the number of reports and sum the transaction values. Determine whether total value is below or above $15 billion. Use the applicable formula: for below $15B: 1.4 cents per report plus 0.00042645% of value; for $15B or more: 1.4 cents per report plus 0.0000075276% of value. Apply the formula to each report individually or cumulatively? The determination says “calculated in accordance with the following formula: (a) if total value less than $15B: 1.4 cents for each leviable report plus 0.00042645% of the value of the leviable report”. It appears to apply the same rate to each report based on the entity’s (or group’s) total value bracket, not per report separately. So calculate the total by summing (1.4 cents * number of reports) + (applicable percentage * total value). Then check the group cap: if the result exceeds $7,098,999.75, cap at that amount. If the entity is in a group, first ensure that no report is counted twice (item 6(3)), then calculate the total for the group, cap if necessary, and divide equally among group members. That is the entity’s transaction reporting component.

Step four: Add the earnings component and the transaction reporting component to get the preliminary levy amount.

Step five: Apply the payment threshold and maximum payment amount. If the preliminary amount is less than $1,100, the levy is nil. If the entity (or group) has earnings over $7 billion, apply the maximum payment cap: for single entity, $11,249,558.31; for group, that amount divided equally. The maximum payment cap substitutes for the calculated amount, not the payment threshold. So if calculated amount is above the max but less than $1,100? That is improbable, but in practice, the threshold is applied first? The text: “if the amount calculated under subitem (2) is less than $1,100, then the amount is nil”. Then “if the amount calculated under subitem (2) is greater than the maximum payment amount, then the amount is the maximum payment amount”. Logically, one would check threshold first because nil overrides everything. But if the entity is below threshold, it’s nil regardless of earnings. For consistency, apply threshold first.

Step six: Pay the resulting amount by the due date set by the Act or regulations. The Determination does not specify payment dates; they are in the Act (likely quarterly or annual). Ensure the records support the calculation, especially the source of earnings data and report counts. AUSTRAC will have its own data, so reconciliation is prudent.

Step seven: For groups, ensure all related bodies corporate are identified. This requires mapping corporate structures. If the group changes during the financial year (e.g., acquisitions, disposals), the Determination uses the census day for the financial year for the earnings definition (year ending in previous financial year) but does not say when the group is determined. The definition of “group of leviable entities” is ongoing (all leviable entities that are related bodies corporate). The census day is defined in the Act but not used in the group calculation directly; it is used for the definition of leviable report (acquired before census day). So to be safe, group determination should be as at the time of calculation (likely at the end of the financial year or at time of payment). If in doubt, seek advice.

Step eight: Document the calculation steps and retain records for at least the statutory period (usually 5 years under the AML/CTF Act). If the entity is later audited, the documentation will be critical.