Major Bank Levy Act 2017

The Act operates through a small set of interrelated concepts and defined terms that determine scope and calculation. The statutory architecture comprises the following core concepts: ADI, quarter, total liabilities amount, levy threshold, applicable liabilities amount, applicable reporting standard, indexing rule reference, and Ministerial instruments for method determination (s1; s2; s3; s4; s5; s6; s7; s8).

Authorised deposit‑taking institution, ADI, is defined by reference to the Banking Act 1959; the levy thereby applies only to corporate entities that are ADIs under that Act (s3). Quarter is the conventional three month period ending on the last day of March, June, September or December; the levy applies to quarters starting on or after 1 July 2017 (s3; s4(1)). The total liabilities amount for a quarter is the ADI’s total liabilities for the quarter as reported under an applicable reporting standard (s4(2)). The concept of applicable reporting standard is itself defined in the Act as a reporting standard determined by APRA under section 13 of the Financial Sector (Collection of Data) Act 2001 that relates to reporting amounts for the purposes of this Act (s3). Thus calculation inputs are sourced through APRA’s statutory data collection power.

The levy threshold is a monetary cut-off. For the quarter starting 1 July 2017 it is $100 billion and it is indexed quarterly with the indexation method governed by Subdivision 960‑M of the Income Tax Assessment Act 1997 (s4(3)). An ADI whose total liabilities amount for the quarter does not exceed the indexed threshold is not liable for the levy for that quarter (s4(1)).

Where the total liabilities amount exceeds the threshold, the levy payable is calculated as 0.015 per cent of the applicable liabilities amount for the quarter (s5(1)). The applicable liabilities amount is the total liabilities amount less specified deductions: (i) total Additional Tier 1 Capital for the quarter; (ii) the total amount of deposits that would be protected by the ADI financial claims scheme; (iii) the lesser of derivative assets and derivative liabilities; (iv) the exchange settlement account balance with the RBA; and (v) any other amounts of a kind determined by the Minister (s5(2)-(4)). The Act allows the same applicable reporting standard to set methods for these components (s5(3)).

Temporal measurement rules are explicit. Amounts are typically worked out as at the end of the last day of the quarter (s6(1)). However, certain liability categories (debt securities, repurchase agreements, loans between ADIs, loans between an ADI and a foreign bank), the exchange settlement account balance, and any Ministerially determined kinds must be averaged across each day in the quarter by applying a daily end‑of‑day measurement, summing the daily amounts and dividing by the number of days in the quarter (s6(2)-(3)).

The Act requires use of "accounting principles" within the meaning of the Income Tax Assessment Act 1997 and any applicable instrument made under section 8 when working out affected amounts (s7). Section 8 expressly authorises the Minister, by legislative instrument, to determine methods for working out any relevant amount and to adopt external material by reference, subject to a savings clause preserving operation despite subsection 14(2) of the Legislation Act 2003 (s8).

A final structural point: the Act contains no express provisions governing the mechanics of payment, collection, enforcement, penalties, or appeal. The Act’s text focuses on liability, measurement and the delegation of method and reporting details to APRA and Ministerial instruments (entire Act; notably ss4-8).

The statutory liability falls only on entities that are ADIs for the purposes of the Banking Act 1959. The Act’s definition of ADI is by reference to that external statute (s3). Therefore the pool of entities potentially affected is limited to corporate ADIs rather than every financial or non‑financial firm. The trigger for liability in any quarter is the ADI’s reported total liabilities amount for the quarter exceeding the indexed levy threshold (s4(1)-(3)). The first threshold specified is $100 billion for the quarter starting 1 July 2017 and it is indexed quarterly (s4(3)).

Because the Act uses APRA’s applicable reporting standards to determine the reported inputs (s3), an ADI’s reporting obligations to APRA (via the Financial Sector (Collection of Data) Act 2001 mechanism) determine whether, and with what figures, the ADI will be measured for levy purposes. The Act’s reference to APRA’s section 13 power means that APRA’s determinations as to definitions, forms and reporting timing will materially shape who is captured. The Act itself does not alter the underlying definition of ADI or extend liability to non‑corporate institutions (s3).

The levy operates at the entity level and is assessed for each quarter (s4(1); s5(1)). The Act does not create group attribution rules, consolidated group measures or carve‑outs within its text. It refers to "an ADI" and to amounts "in relation to the ADI", using the reporting standard as the reporting vehicle (s4(2); s5(2)). Therefore, absent an applicable reporting standard that aggregates or allocates across a wider corporate group, the statutory language treats each ADI’s reported figures as the primary unit of assessment.

Specific balance sheet items are relevant to whether an ADI’s liabilities exceed the threshold and to the calculation of the levy. The Act allows removal from liability of some capital instruments and protected deposits (s5(2)(i)-(ii)), and treats net derivative positions and exchange settlement balances as offsets (s5(2)(iii)-(iv)). The Minister may add other categories by legislative instrument (s5(4)). Consequently, particular business models that generate large protected deposits or hold significant Additional Tier 1 Capital, derivative positions or high exchange settlement balances will affect the taxable base for those ADIs.

The Act does not directly affect non‑ADI entities, depositors, or customers in any express textual manner. It does not specify how the levy is to be reflected in pricing, distribution of costs, or contractual arrangements. It does not specify the collector or administrative body to whom payments are made. It does not alter the operation of the ADI financial claims scheme itself; it simply references that scheme in defining which deposits are excluded from the applicable liabilities amount (s5(2)(b)).

Finally, the Act gives the Minister power to determine methods and kinds of amounts by legislative instrument (ss5(4), 6(4), 8(1)), with instruments permitted to incorporate external materials as in force from time to time (ss5(5)-(6); 6(5)-(6); 8(2)-(3)). Those delegated instruments will shape the practical scope of the levy and therefore who is ultimately captured when measurement rules change.

The Act imposes calculation and reporting obligations on ADIs without specifying remote procedural details. The principal duty the Act places on affected ADIs is to have, and be capable of producing, the figures used to determine whether a quarterly liability arises and, if so, the amount of the levy. Those figures are the total liabilities amount for the quarter and the components used to work out the applicable liabilities amount (s4(2); s5(2)). The Act does not itself impose a standalone express statutory obligation to file a specific levy return; instead, it prescribes that amounts are to be "as reported under an applicable reporting standard" determined by APRA, thereby channeling reporting duties through APRA’s data collection framework (s3 definition of applicable reporting standard; s4(2)).

A further statutory duty in method is the requirement to work out most amounts as at the end of the last day of the quarter (s6(1)). For certain categories , debt securities, repurchase agreements, inter‑ADI loans, loans between the ADI and a foreign bank, exchange settlement balances, and any Ministerially determined kinds , the duty is to compute a daily end‑of‑day amount for each day in the quarter, sum the daily amounts and divide by the number of days in the quarter (s6(2)-(3)). This imposes a clear calculation duty requiring daily records and a precise averaging method for these categories.

ADIs must apply accounting principles within the meaning of the Income Tax Assessment Act 1997 and any applicable instrument made under section 8 when working out the specified amounts (s7). That places a duty to use widely accepted accounting frameworks and any Ministerial method instruments, rather than ad hoc measures.

The Act creates rights in the sense of definitional clarity. An ADI has the right to have the amounts used for levy determination be those reported under an applicable reporting standard set by APRA, rather than an alternative government accounting picture. Likewise, the Act identifies explicit categories deductible from total liabilities when computing the applicable liabilities amount (s5(2)). Those categories , Additional Tier 1 Capital, protected deposits, net derivatives to the lesser of assets and liabilities, exchange settlement balances, and Ministerially determined categories , constitute statutory entitlements to reduce the levy base.

However, the Act does not set out procedural rights such as timing for payment, review, objection, or remission. It is silent on refund mechanics, interest on overpayments, penalties for non‑payment and administrative appeal pathways. The absence of those procedural provisions means that practical rights and duties relating to payment, collection and dispute resolution will be determined outside the text of this Act, either by the applicable reporting standard administered by APRA, by other legislation or by the content of Ministerial legislative instruments made under ss5(4), 6(4) or 8(1).

The Minister has express statutory authority to determine by legislative instrument kinds of amounts for the purposes of the deduction list in s5(2)(b)(v) and kinds of amounts subject to daily averaging in s6(2)(c) (ss5(4), 6(4)). The Minister may also provide for any matter relating to the method of working out amounts (s8(1)). Those instruments may apply or adopt external material as in force from time to time (ss5(5)-(6); 6(5)-(6); 8(2)-(3)). The effect is that the Minister is the primary decision maker for definitional and methodological detail that the Act does not itself fix. The Act preserves this delegated instrument power and explicitly allows dynamic referencing to external documents.

The Act contains no express provisions establishing criminal penalties, civil pecuniary penalties, interest on unpaid amounts, deadlines for payment, registration requirements, enforcement mechanisms, distraint powers, or administrative sanctions for non‑compliance. The text focuses narrowly on liability and calculation (ss4-8). There is no clause that sets a due date for payment of the levy for a quarter, nor a stated revenue collection agency. The statute neither prescribes the administrative procedure for collection nor provides for infringement notices or criminal offences for non‑payment within its own terms.

Because the Act relies on APRA’s applicable reporting standards to define reported amounts, enforcement of reporting obligations in practice will be mediated through APRA’s powers under the Financial Sector (Collection of Data) Act 2001 and the Banking Act 1959, rather than through this Act. The Act’s silence means that any penalties for failing to provide the required reporting figures, or specific sanctions for failing to pay the levy, would need to be found in other instruments or statutes that govern APRA’s data collection powers or in Ministerial instruments made under this Act, provided those instruments are validly made and contain enforcement provisions consistent with enabling legislation.

The Act does confer no express power to apply penalties, nor does it create an express recovery mechanism for unpaid levies within its text. Likewise it does not set out steps for assessment, notice, objection, review or appeal with respect to the levy amount. The absence of these procedural enforcement provisions indicates that the practical enforcement architecture must be supplied by other laws, by APRA’s reporting and compliance powers, or by specific legislative instruments made under ss5(4), 6(4) or 8(1), none of which are contained in the text of the Act as provided.

For affected parties, the key practical consequence of the Act’s silence is uncertainty: an ADI can calculate its liability under the Act’s formula, but the Act gives no on‑its‑face timetable for payment or an administrative forum to challenge an assessment under the Act’s terms. Those matters will depend on how APRA’s applicable reporting standard, the Minister’s legislative instruments, and other administrative arrangements are configured and published.

The Act is explicitly designed to work in conjunction with several other legislative instruments and legal frameworks rather than operating as a fully self‑contained levy code. Three external connections are central in the text.

First, the definition of ADI is by reference to the Banking Act 1959. That external statutory definition determines which entities may be subject to the levy (s3). The Act does not alter that definition.

Second, the Act depends on APRA’s data collection powers. The term "applicable reporting standard" is defined as a reporting standard determined by APRA under section 13 of the Financial Sector (Collection of Data) Act 2001 and which relates to reporting amounts for the purposes of this Act (s3). Thus, the Financial Sector (Collection of Data) Act 2001 and APRA’s determinations under it will supply reporting formats, timing, and possibly aggregation or consolidation rules that affect how amounts in this Act are computed and allocated. The Act directs that the total liabilities amount, Additional Tier 1 Capital, deposit amounts protected by the ADI financial claims scheme, derivative positions, and exchange settlement account balance are "as reported under an applicable reporting standard" (s4(2); s5(2)).

Third, the Act requires adherence to accounting principles "within the meaning of the Income Tax Assessment Act 1997" when working out specified amounts (s7). This ties the Act’s measurement rules to the Income Tax Assessment Act 1997’s definition of accounting principles and to the indexation mechanism of Subdivision 960‑M of that Act for adjusting the levy threshold quarterly (s4(3); s7). Consequently, tax law accounting definitions and indexation practice directly influence calculation and threshold movements.

The Act also integrates with the ADI financial claims scheme established under Division 2AA of Part II of the Banking Act 1959 by excluding from the taxable base deposits that would be protected by that scheme (s3 definition of ADI financial claims scheme; s5(2)(b)). That cross‑reference affects which deposits reduce the applicable liabilities amount.

Ministerial legislative instruments under ss5(4), 6(4) and 8(1) are permitted to apply, adopt or incorporate any matter contained in any other instrument or writing as in force from time to time, and the Act expressly states that those provisions operate despite subsection 14(2) of the Legislation Act 2003 (ss5(5)-(6); 6(5)-(6); 8(2)-(3)). This mechanism creates an ongoing textual linkage between the Act and external instruments, regulations or standards, allowing the calculation methods to evolve without formal amendment to the Act itself.

Finally, the Act is silent on collection, enforcement and dispute resolution procedures. Those necessary operational details will therefore interact with other statutes, regulations, or administrative arrangements not contained in this Act. For example, enforcement of APRA reporting obligations is more likely to involve powers and penalties located in the Financial Sector (Collection of Data) Act 2001, the Banking Act 1959, or other revenue administration laws, rather than this Act. The Act itself contains no cross‑reference that creates or modifies those enforcement mechanisms.

The text supplied is the Act as enacted in 2017 and contains an internal commencement table and a note that the table relates only to provisions as originally enacted and will not be amended to deal with later amendments (s2, commencement table and note). The commencement provision indicates that the whole Act commenced the day after Royal Assent, 24 June 2017 (s2 commencement table). There are no subsequent amendment provisions contained in the supplied text. The Act does not record any later amendments, repeals, or variations within the body of the text provided.

The Act contemplates an ongoing role for delegated instruments to specify measurement methods and kinds of amounts (ss5(4), 6(4), 8(1)). Those instruments, once made under the Act, will modify the operational application of the levy without the need to amend the primary Act. The Act expressly permits those instruments to apply, adopt or incorporate external materials as in force from time to time and provides that this effect operates despite subsection 14(2) of the Legislation Act 2003 (ss5(5)-(6); 6(5)-(6); 8(2)-(3)). Therefore, while the Act itself may remain unchanged, the operational detail that gives effect to the levy can evolve through legislative instruments.

The Act also references external indexing mechanics contained in Subdivision 960‑M of the Income Tax Assessment Act 1997 for the quarterly indexation of the threshold (s4(3)). Any changes to that external indexation mechanism would affect how the threshold moves without altering this Act.

Within the supplied document, the final page records the dates of the Minister’s second reading speech in each House: the House of Representatives on 30 May 2017 and the Senate on 19 June 2017. That record is part of the parliamentary history contained in the Act’s text as provided. The supplied Act text contains no schedule of amendments, no transitional provisions beyond the commencement date, and no sunset or review clause.

Because the Act delegates significant method setting to APRA and to Ministerial instruments, the substantive operational details of the levy are likely to be fleshed out by subordinate instruments and APRA reporting standards rather than primary legislation amendments. Any subsequent modification to the mechanics or the levy base may therefore appear in delegated instruments rather than in amendments to the Act’s text.

The Act as provided contains no litigation history, no recorded judicial decisions, and no references to proceedings or case law. The body of the Act does not name, cite or incorporate any judicial authority. The supplied Act text includes only the primary statutory provisions (ss1-8), the commencement table, and a record of the Minister’s second reading speech dates in both Houses. There are no schedules, transitional provisions referring to litigation, or notes of judicial interpretation contained in the material supplied.

Because the Act’s text is narrowly focused on defining liability, measurement and delegated powers, potential future litigation would most likely centre on the construction of the Act’s definitions and of the subordinate instruments made under it. However, the supplied Act text contains no examples of such litigation. The Act’s reliance on APRA’s applicable reporting standard and the Minister’s legislative instruments means that disputes about the levy in practice could arise from the content, timing or application of those external determinations; none of those instruments or any related decisions are included in the provided text.

For the purposes of legal research limited to the supplied material, there is no case law to cite, no judgments to summarise, and no judicial interpretations recorded. Any enquiry into litigation history would therefore need to move beyond the Act text provided and examine court records, administrative law decisions, and disputes arising from APRA reporting standards or Ministerial instruments made under the Act, which are not part of the supplied document.

The Act’s design contains a number of consequential omissions and delegation features that create practical issues which those operating under the Act should note. These are matters expressly apparent in the text rather than external inference.

1. Delegation of measurement detail to APRA and the Minister. The Act channels reporting inputs to "applicable reporting standards" determined by APRA under section 13 of the Financial Sector (Collection of Data) Act 2001 and vests the Minister with power to determine additional kinds of amounts and methods by legislative instrument (s3; ss5(3)-(4); s8(1)). As a result, the precise content of the taxable base and the calculation methodology are not fully contained in the primary Act. Users cannot calculate final liabilities solely from the Act; they must consult APRA’s applicable reporting standard and any Ministerial instruments, which may change over time.

2. Dynamic incorporation of external material. Instruments made under ss5(4), 6(4) or 8(1) may apply, adopt or incorporate any matter contained in any other instrument or writing "as in force or existing from time to time" and the Act preserves this despite subsection 14(2) of the Legislation Act 2003 (ss5(5)-(6); 6(5)-(6); 8(2)-(3)). That mechanism allows the operational rules to shift automatically as external documents are updated. Practitioners should therefore monitor subordinate instruments and the external materials they reference.

3. No payment, collection or enforcement mechanics. The Act contains no provision specifying when the levy is payable, who collects it, penalties for non‑payment, interest on overdue amounts, or administrative objection and review procedures. The absence of procedural norms means that ADIs must look to APRA reporting standards, Ministerial instruments or other statutes for procedural detail. The Act’s silence can create uncertainty until those instruments are published.

4. Possible negative applicable liabilities. The applicable liabilities amount is defined as the difference between total liabilities and a specified sum of deductions (s5(2)). The Act does not state a minimum floor for the applicable liabilities amount or how to treat a negative result. The text simply defines the applicable liabilities amount as the stated difference. Parties should be attentive to whether subordinate instruments or APRA reporting rules provide a floor or treatment for negative values.

5. Quarterly threshold indexing tied to Income Tax rules. The levy threshold is indexed quarterly using the mechanism in Subdivision 960‑M of the Income Tax Assessment Act 1997 (s4(3)). Any practitioner relying on a fixed dollar threshold must note that indexation will change the capture point each quarter; the Act itself does not set later fixed thresholds.

6. Different temporal measurement rules. Some categories must be measured as at quarter‑end, while others must be averaged daily across the quarter (s6(1)-(3)). The averaging method for specified categories requires daily end‑of‑day measurements and calculation of the arithmetic mean. This imposes a record‑keeping and systems burden to capture daily end‑of‑day positions for specified instruments.

7. Dependence on external accounting principles. Section 7 requires the use of "accounting principles" within the meaning of the Income Tax Assessment Act 1997 together with any applicable instrument under section 8. The Act does not define the accounting principles itself; it defers to the tax legislation’s meaning. This linkage can produce complexity where tax accounting definitions diverge from other reporting bases.

8. Entity versus group measurement. The Act measures liabilities "in relation to the ADI" using APRA reporting standards (s4(2)). The Act contains no explicit group consolidation or allocation rules. Whether the levy operates on an individual ADI, a consolidated banking group, or in some other way depends on how APRA’s reporting standards define reporting units and consolidation.

9. Ministerial power to add further deductions or averaging categories. The Minister’s statutory power to determine additional kinds of amounts (ss5(4), 6(4)) gives scope for future changes to what reduces the taxable base or is subject to daily averaging. Those changes can materially alter levy outcomes without amendment to the Act.

10. Lack of transitional or sunset provisions. The Act contains no transitional rules for pre‑existing quarters and no sunset or automatic review clause. It applies to quarters starting on or after 1 July 2017 and otherwise remains in effect until repealed or amended.

These are textual features and omissions in the Act that directly affect implementation, compliance planning and systems choices. They point to the necessity of monitoring APRA reporting standards and Ministerial instruments and of building processes capable of producing daily end‑of‑day measurements for specified categories, while recognising the Act itself is not an exhaustive operational manual.

Compliance under the Act requires aligning internal reporting, accounting, and record‑keeping with the reporting standards and Ministerial instruments that the Act incorporates. The Act itself supplies the calculation formula and the categories that matter, but not the procedural mechanics for payment and enforcement. The steps below extract duties and actions grounded in the statutory text.

1. Confirm ADI status. Verify that the entity is an ADI within the meaning of the Banking Act 1959, because the statutory liability applies only to bodies corporate that are ADIs (s3). If an entity is not an ADI, the Act as drafted does not apply.

2. Monitor the levy threshold and indexation. Note that the threshold for the first quarter starting 1 July 2017 is $100 billion and that it is indexed quarterly under Subdivision 960‑M of the Income Tax Assessment Act 1997 (s4(3)). Adjust capture‑tests each quarter using the indexation formula referenced.

3. Determine reporting standards and sources. Obtain and review the applicable reporting standard determined by APRA under section 13 of the Financial Sector (Collection of Data) Act 2001 that relates to reporting for this Act (s3). That standard will specify the precise definitions, reporting units (entity or consolidated group), timing and forms for the total liabilities amount and the other components used in s5(2).

4. Prepare required accounting practices. Ensure the accounting methods used to compute the total liabilities amount and the components in s5(2) are consistent with "accounting principles" within the meaning of the Income Tax Assessment Act 1997 and any applicable instruments under section 8 (s7). This will likely require coordination between taxation, accounting and prudential reporting teams.

5. Implement daily end‑of‑day capture for specified categories. For liabilities that must be averaged daily (debt securities, repurchase agreements, loans between ADIs, loans between the ADI and a foreign bank), exchange settlement account balances, and any Ministerially determined categories (s6(2)-(3)), implement systems to capture end‑of‑day positions for each day of the quarter, sum the daily figures and compute the arithmetic daily average as required by the Act.

6. Calculate the applicable liabilities amount and levy. For each quarter, compute total liabilities as reported under the applicable reporting standard (s4(2)). Compute the deductions required by s5(2): total Additional Tier 1 Capital; deposits that would be protected by the ADI financial claims scheme; the lesser of derivative assets and derivative liabilities; the exchange settlement account balance; and any Ministerially determined kinds of amounts. Subtract the sum of those deductions from total liabilities to obtain the applicable liabilities amount, and apply the 0.015 per cent rate to that amount to obtain the levy payable for the quarter (s5(1)-(2)).

7. Watch for Ministerial instruments. Monitor legislative instruments made under ss5(4), 6(4) and 8(1). These may add kinds of deductible amounts or require different measurement methods. Because the Act permits those instruments to incorporate external materials as in force from time to time (ss5(5)-(6); 6(5)-(6); 8(2)-(3)), maintain an ongoing compliance watch to capture changes.

8. Reconcile APRA reporting and levy inputs. Ensure that the figures used for levy calculation are those reported under the applicable reporting standard. Since the Act ties levy inputs to APRA reporting, reconciliations between prudential returns and levy calculations will be central.

9. Identify gaps in procedural rules. Recognise that the Act does not specify payment timing, collection point, penalties, or appeal process. Therefore, enquire with APRA and the responsible Ministerial office about the administrative process for levy notices, payment instructions and dispute procedures. Until such administrative arrangements are published, build internal records to support eventual assessments and potential inquiries.

10. Maintain documentation and traceability. Because the Act delegates much of the method detail externally, keep contemporaneous documentation of how figures were calculated, which reporting standards and accounting principles were applied, and any Ministerial instruments relied upon. This will assist in demonstrating compliance and in responding to any external queries, audits or disputes.

11. Scenario testing. Model liability outcomes under different assumptions about protected deposits, Additional Tier 1 Capital, net derivative positions, and exchange settlement balances. While the Act does not require such modelling, it materially affects the applicable liabilities amount and therefore potential levy exposure.

12. Legal and tax coordination. Coordinate with tax and legal advisers to interpret accounting principles as defined in the Income Tax Assessment Act 1997 and to determine the appropriate treatment of items that could be captured by the Minister’s power to add other kinds of amounts (s7; s5(4)). Clarify whether APRA reporting standards require consolidation across related entities.

13. Keep an eye on external law changes. Because the Act cross‑references the Banking Act 1959, the Financial Sector (Collection of Data) Act 2001, and the Income Tax Assessment Act 1997, stay alert for legislative or regulatory changes in those instruments that could affect levy measurement or capture.

In short, compliance is a process that combines prudent monitoring of APRA’s applicable reporting standard, implementation of daily measurement systems for specified instruments, correct application of accounting principles, and ongoing surveillance of Ministerial legislative instruments that refine the levy’s operational rules. The Act supplies the high‑level formula and categories; the subordinate instruments and APRA reporting standards will determine the day‑to‑day compliance tasks.