Reporting Form ARF 393.0
Lease Finance
Instruction Guide
The purpose of this survey is to provide monthly statistics on the provision of lease finance to private and public enterprises and individuals. The statistics are used by the APRA for regulatory purposes, and may be provided to the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) for policy and statistical purposes. Published aggregate statistics from this collection are used for research and policy formulation by economists, State and Federal Governments, and leasing associations.
A separate form for lease finance in all eight states should be completed:
- ARF 393.0.1 Lease Finance in NSW;
- ARF 393.0.2 Lease Finance in VIC;
- ARF 393.0.3 Lease Finance in QLD;
- ARF 393.0.4 Lease Finance in SA;
- ARF 393.0.5 Lease Finance in WA;
- ARF 393.0.6 Lease Finance in TAS;
- ARF 393.0.7 Lease Finance in NT; and
- ARF 393.0.8 Lease Finance in ACT.
General directions and notes
Reporting entity
This form is to be completed by all locally incorporated banks and foreign authorised deposit-taking institutions (ADIs) on a Domestic books basis.
The Domestic books of the locally incorporated banks and foreign ADI relates to the Australian books of the Australian ADI and has the following scope:
- is an unconsolidated report of the Australian licensed ADI's operations/ transactions that are booked inside Australia;
- exclude offshore branches of the Australian licensed ADI from this reporting unit;
- exclude offshore banking units based overseas from this reporting unit;
- do not consolidate Australian and offshore controlled entities or associated entities that are not ADIs;
- include Australian based offshore banking units of the licensed ADI; and
- include transactions with non-residents recorded on Australian books.
This form should be completed by all Credit Unions, Cairns Penny Savings & Loans Limited and Building Societies on a licensed ADI basis.
Licensed ADI
This refers to the operations of the reporting ADI on a stand-alone basis.
Securitisation deconsolidation principle
Except where stated otherwise on this form, reporting entities must treat any securitisation program special purpose vehicles (SPVs) in which the ADI (or a member of its consolidated group) participates in accordance with APRA’s clean sale and separation requirements as non-consolidated independent third parties. As a result, for reporting purposes all assets, liabilities, revenues and expenses of these SPVs must be excluded from the ADI’s reported amounts. Where relevant, report on this form any exposure to or other transaction between the ADI and any such SPV as if such transaction was conducted with an independent third party, regardless of whether the SPV or its assets is consolidated for accounting purposes.
APRA's clean sale and separation requirements are set out in APS 120 Funds Management and Securitisation and related Guidance Notes AGN 120.3 Purchase and Supply of Assets (including Securities Issued by SPVs) and AGN 120.1 Disclosure and Separation. Whenever the clean sale and separation requirements are not met, all the assets, liabilities, revenues and expenses of the SPV are to be consolidated with the ADI’s reported amounts.
Reporting period
The information provided in this form should be for the calendar month up to and including the last day of the reporting month. Locally incorporated banks, Foreign ADIs, Credit Unions, Cairns Penny Savings & Loans Limited and Building Societies should submit the completed form to APRA within 10 business days after the end of the relevant reporting month.
Unit of measurement
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
The general requirements of AASB 121 for translation are:
- foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;[1]
- foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;[2]
- foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and
- translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
Translation of financial reports should otherwise follow the requirements in AASB 121.
Basis of preparation
Unless otherwise specifically stated, information reported on this form should comply with Australian accounting standards.
Definitions
A separate form for lease finance in all eight states should be completed. Where the entity has no activity in any state, check the “nil form” box. The form requests details of new commitments to provide lease finance to private and public enterprises. Only the Australian activities of the business should be included on the form. If exact figures are not available please provide careful estimates. Please note that the items listed under ‘Include’ and ‘Exclude’ are examples and should not be taken as a complete list of items to be included or excluded.
What is a “commitment”?
A commitment is a firm offer to provide finance which has been accepted by the client. A commitment generally exists once the loan application has been approved, and a loan contract or letter of offer has been issued to the borrower.
Include:
- commitments to related corporations except to those related corporations within the same Financial Sector (Collection of Data) Act 2001 category or Australian and New Zealand Standard Industrial Classification (ANZSIC) class; and
- new commitments which have also been cancelled during the month.
Exclude:
- commitments to non-residents;
- commitments for commercial hire purchase agreements (these should be reported on ARF 391.0 Commercial Finance (ARF 391.0));
- commitments for debt participation in leveraged lease agreements (these should be reported on ARF 391.0);
- commitments for leasing of land and buildings; and
- commitments for leveraged leases which are finance leases where the lessor provides a portion of the finance, with the major portion usually provided by long-term creditors and where the creditors’ recourse to the lessor is restricted to the proceeds from disposal of the leased asset and any unremitted lease payments.
How to consolidate
- For corporations registered under the Financial Sector (Collection of Data) Act 2001, report consolidated figures for all related corporations within the same Registered Financial Corporation category.
- For other corporations, report consolidated figures for all related corporations within the same ANZSIC class.
Valuation
Use one of the following valuation methods:
- the capital cost of new goods;
- the written-down value of goods re-leased;
- the purchase price of second-hand goods;
- in the case of finance leases, where the full value of the goods under lease is not financed by one corporation (e.g. partnership and syndicated leases), the value is your share of the full value, not equity participation; or
- in the case of revolving lease facilities, such as master leases, report the value of goods acquired at each drawdown against such facilities. Do not report the value of commitments to provide a leasing limit or to increase a leasing limit.
Specific instructions
Part A: Value of goods financed under new lease commitments
This section asks for details of the value and type of the goods financed, or for which commitments to finance have been made, under both operating and finance lease (excluding leveraged leases) arrangements during the month.
Definitions
- A finance lease refers to the leasing or hiring of tangible assets under an agreement (other than a hire purchase agreement) which transfers from the lessor to the lessee substantially all the risks and benefits incident to ownership of the assets, without transferring the legal ownership.
- An operating lease is a lease under which the lessor effectively retains substantially all the risks and benefits incident to ownership of the leased asset. For the purpose of this survey only include details of operating leases of terms of one year or more.
- Cars, station wagons and small passenger vehicles
The depreciation limit is the maximum amount which can be depreciated for taxation purposes. This limit is revised periodically. As at 6 June 2001, the Australian Taxation Office advised the limit was $55,134.
Include:
- cars, station wagons, 4WD and forward control passenger vehicles/vans.
Exclude:
- utilities and panel vans (include in Question 2);
- buses (include in Question 6); and
- special vehicles and motor cycles/scooters (include in Question 6).
- Light trucks
Include:
- vehicles constructed primarily for the carriage of goods and not exceeding 3.5 tonnes gross vehicles mass, such as utilities, panels vans, light trucks, station wagons, 4WD vehicles and forward control vans used to carry goods.
Exclude:
- tow trucks (include in Question 6); and
- tractors, self-propelled mowers, plant and equipment (include in Questions 8-10, as applicable).
- Heavy trucks
Include:
- all vehicles with a gross combination mass rating in excess of 3.5 tonnes (this includes prime movers registered without trailers).
Exclude:
- passenger carrying trailer combinations and non-freight carrying vehicles (include in Question 6).
- Trailers, buses/coaches and other motor vehicles
Include:
- trailers (tray and table top trailers, semi-trailers designed to connect to a prime mover, animal carriers, trailed machinery, etc.);
- buses and coaches;
- special vehicles (ambulances, hearses, tow trucks, fire engines, etc.);
- motor cycles/scooters;
- caravans (motorised and non motorised); and
- other non-freight carrying vehicles (mobile libraries, kitchens, workshops, etc.).
Exclude:
- fork lifts (include in Question 7 (iv)).
- Construction and earth moving equipment
Include:
- crawler tractors, dumpers, road rollers, earth packers, scarifiers, rippers, concrete mixers, dozers, graders, mobile cranes, concrete pumpers, etc.
- Manufacturing equipment
Include:
- all plant and equipment used in the manufacture of goods.
Exclude:
- all motor vehicles (include in Questions 1 to 6); and
- fork lifts (include in Question 7 (iv)).
- Agricultural machinery and equipment
Include:
- tractors, tillage implements, seeding, planting and fertilising equipment, agricultural mowers, harvesters, and other agricultural machinery and equipment.
Exclude:
- crawler tractors (include in Question 8).
- Electronic data processing equipment
Include:
- computers, computer peripherals, data entry systems and printers.
- Office machines
Include:
- telephone systems (including computerised PABX equipment);
- accounting and adding machines, calculators and cash registers (programmable and multifunctional); and
- duplicating and photocopying machines and dictaphones.
- Other
Include:
- gambling machines; and
- medical equipment.
Part B: Value of goods by industry of lessee
Industry is the business the client is mainly engaged in. The industry groupings are according to the ANZSIC.
Include:
- businesses that provide related or supporting services.
- Agriculture, forestry and fishing
Include:
- lessees engaged in providing related services such as sheep shearing, aerial agricultural services, harvesting or forest protection.
- Mining
Include:
- lessees engaged in mineral exploration, in the provision of services to mining or mineral exploration, and mining enterprises under development.
- Manufacturing
Include:
- lessees engaged in manufacturing products, where ‘manufacturing is related to the physical or chemical transformation of materials or components into new products’.
- Construction
Include:
- lessees engaged in special trade construction such as plumbing, earthmoving and dredging, painting, etc.
- Wholesale trade
Include:
- lessees engaged in the resale of new or used goods to businesses or to institutional (including Government) users.
- Retail trade
Include:
- lessees engaged in the resale of goods to final consumers for personal or household consumption; and
- lessees engaged in reselling their own goods by auction.
- Transport and storage
Include:
- lessees engaged in providing terminal and storage facilities; and
- lessees engaged in services related to transport, booking, travel, forwarding, materials handling, etc.
- Finance and insurance
Include:
- lessees engaged in the provision of finance, investments in financial assets and in providing services to lenders, borrowers and investors; and
- lessees engaged in the provision of insurance and superannuation, and in providing services to insurances.
- Property and business services
Include:
- lessees engaged in valuing, purchasing, selling, renting, leasing or managing real estate;
- lessees engaged in developing or subdividing land;
- lessees engaged in scientific research and meteorological service;
- lessees engaged in providing technical, legal, accounting and other business services; and
- lessees engaged in renting and hiring equipment (except cars, trucks and other transport equipment).
- Cultural, recreational, personal and other services
Include:
- lessees engaged in providing entertainment, recreational, library, museum, accommodation and catering services;
- lessees engaged in providing personal services such as laundries, hairdressing, photography and funerals;
- private households employing staff; and
- lessees engaged in public order and safety services (such as police, prison and fire-brigade).
- Government administration and defence
Include:
- lessees engaged in Federal, State and Local government enterprises that undertake public administration and regulatory activities;
- judicial authorities and commissions; and
- Army, Navy and Air Force defence establishments.
- Health and community services
Include:
- lessees engaged in providing health, welfare and employment services; and
- certain non-profit organisations such as religious organisations, and business, professional and labour organisations, political parties and associations formed to promote community or sectional aims.
- Other industries
Include:
- lessees not elsewhere classified, such as those involved in the production or distribution of gas or electricity, the storage or supply of water, and the provision of education and communication services.
- Total
The Total equals the sum of questions 17 to 29. The total of Question 30 should equal Question 15.
Part C: Comments
- Please provide comments
- on any of the information you have supplied on this form;
- on any questions which caused problems; and
- if you would like to suggest improvements to this form.