PGPA Act Determination (ASIC Trust and Other Moneys Special Account 2018)

The central concept is the special account as defined under the PGPA Act. A special account is a notional bank account within the Commonwealth’s Consolidated Revenue Fund that provides an appropriation for specific purposes. Money credited to a special account does not leave the Fund, but the relevant agency may debit from it without further parliamentary appropriation, up to the balance at any time. The instrument establishes the ASIC Trust and Other Moneys Special Account 2018 as such an account. The accountable authority responsible for the account is the Chairperson of ASIC, who is appointed under section 10 of the Australian Securities and Investments Commission Act 2001. The Chairperson must administer the account in accordance with the PGPA Act and this determination, and is answerable to the Minister for Finance and ultimately to the Parliament.

Amounts may be credited to the account if they are received by ASIC in the performance of functions relating to one of the listed purposes, or received from any person for such a purpose. The note to clause 7 confirms that investment proceeds from amounts debited from the account must also be credited back to the same account under section 58(5) of the PGPA Act, which prevents investment income from being diverted elsewhere.

The purposes of the account (clause 8) are the key operative concept. They are divided into five categories: (1) performing duties as trustee for the Commonwealth in relation to money and property held as trustee, including payments concerning deregistered companies under Part 5A.1 of the Corporations Act 2001; (2) performing functions in relation to money or property held on behalf of another person, including funds from investigations, legal proceedings, settlements, enforceable undertakings, and court orders; (3) handling security bonds and deposits lodged by registered liquidators, licensed securities dealers, licensed investment advisers, and financial services licensees (under section 912B of the Corporations Act and regulations 7.6.02AAA and 7.6.02AA of the Corporations Regulations 2001); (4) repaying amounts required or permitted by a court order, Act, or other law; and (5) reducing the balance of the special account without a real or notional payment. The last purpose is an administrative power to return unneeded funds to the Consolidated Revenue Fund, effectively cancelling the appropriation.

The instrument also introduces transitional concepts: the opening balance is the sum of the balances of the three repealed special accounts immediately before commencement. This amount is “required to be credited” to the new account, meaning it is a mandatory credit, not merely a permissive one. The definitions of the three predecessor accounts and the term “date of repeal” are themselves repealed seven days after the old accounts are repealed, but the legal effects of Part 3 (including the opening balance transfer) survive.

The instrument directly affects ASIC as an agency and its Chairperson as the accountable authority. All ASIC officers who handle moneys falling into the described categories must now ensure that all credits and debits are processed through the single special account, rather than through three separate accounts. This simplifies internal administration but also means that any error in classifying a receipt or payment might misapply the entire account’s purpose limitations.

External parties affected include: (1) stakeholders in deregistered companies - persons who may be entitled to claim distributions of property vested in the Commonwealth under Part 5A.1 of the Corporations Act. Those claims are now paid from the consolidated account rather than from a dedicated deregistered companies account. (2) Persons who have lodged security bonds or deposits with ASIC - licensed liquidators, securities dealers, investment advisers, and financial services licensees. Their bonds or deposits are now held in the consolidated account, and claims for compensation by persons who have suffered pecuniary loss from misconduct by those licensees are payable from the same pool. (3) Parties to ASIC investigations, legal proceedings, settlements, and enforceable undertakings - persons who have paid money to ASIC temporarily or as part of a settlement. Those funds are now pooled in one account, though ASIC must still disburse them to the correct beneficiaries. (4) Third parties who may benefit from court orders requiring ASIC to pay amounts - such as victims of corporate misconduct who obtain court orders for compensation. (5) The Commonwealth itself, which acts as trustee for some funds (e.g., deregged companies property) and whose trustee duties are now performed through this account. (6) The Minister for Finance, who has oversight but has delegated the detailed rules to the determination.

For regulated entities, the consolidation may reduce the number of separate remittances they need to make, but it also means that any misclassification by ASIC could delay or jeopardise the return of their deposits. The instrument does not create a right for any external party to demand payment from the account; it only authorises ASIC to make payments for the specified purposes. A person’s entitlement to receive money (e.g., as a beneficiary of a trust, or as a claimant against a security deposit) arises under the substantive law (Corporations Act, ASIC Act, court orders) rather than under this determination. This instrument merely provides the appropriation mechanism for ASIC to satisfy those entitlements.

The primary duty is on ASIC and its Chairperson to administer the special account in accordance with the PGPA Act and this determination. Clause 6 designates the Chairperson as the accountable authority, which under section 15 of the PGPA Act carries a duty to govern the entity in a way that promotes the proper use and management of public resources. Specifically, the Chairperson must ensure that amounts are only debited for the purposes listed in clause 8, and that credits are correctly processed under clause 7. The Chairperson also has a duty under section 58(5) of the PGPA Act to credit investment proceeds back to the account.

The instrument imposes a mandatory credit under clause 9 - the opening balance “is required to be credited”. This is stronger than the permissive language in clause 7 (“may be credited”). So the transfer of the three old accounts’ balances is non‑discretionary.

Rights conferred by the instrument are largely internal or permissive. The Minister for Finance has the right to make such determinations under section 78 of the PGPA Act. ASIC has the right to debit from the account for the listed purposes, which functions as an appropriation (section 78(1)(c) read with the purposes). For external parties, there is no directly enforceable right under the instrument itself; if ASIC fails to make a payment to a beneficiary entitled under another law, that party’s remedy lies in the underlying law (e.g., an action for breach of trust, or an appeal against an ASIC decision), not in an action for breach of this determination.

One notable provision is purpose 5: “to reduce the balance of the special account … without making a real or notional payment.” This allows ASIC to effectively return surplus funds to the Consolidated Revenue Fund. This is a right of the executive to cancel appropriations, not a right of any private party. It reduces the balance that is available for future debits, thereby limiting the extent to which ASIC can hold funds indefinitely.

The instrument also implies a duty not to create a deficit: because debits cannot exceed the credit balance at any time (section 78(4) of the PGPA Act), ASIC must ensure that payments are only made when sufficient funds are in the account. This is a standard duty for all special accounts.

This determination itself contains no penalty provisions. However, non‑compliance with its terms may trigger consequences under the PGPA Act and other laws. If the Chairperson or another ASIC official authorises a debit for a purpose not listed in clause 8, that would be a breach of the PGPA Act. Section 78(4) of the PGPA Act provides that an amount must not be debited from a special account except as prescribed by a determination under that section. An unauthorised debit would be a contravention of the PGPA Act, potentially subjecting the official to civil penalties under section 92 of that Act (maximum 500 penalty units for an individual). If the unauthorised debit involves dishonesty, criminal offences under the Criminal Code (such as theft or abuse of public office) could also apply.

Additionally, the Chairperson as accountable authority is subject to the general duties in sections 15-18 of the PGPA Act, including the duty to manage public resources properly. Breach of those duties can lead to sanctions ranging from direction from the Minister to termination of appointment. Since the instrument specifically designates the Chairperson as the responsible official, any negligence in managing the account could be treated as a failure of governance.

For external parties, if ASIC misapplies money held on trust or on behalf of another person, the affected party may bring a civil action for breach of trust, conversion, or restitution. The instrument does not immunise ASIC from such actions. The fact that the money is held in a statutory special account does not change the equitable or contractual obligations that arise when ASIC receives money for a specified purpose.

The instrument also implicitly requires ASIC to maintain proper records and reconciliations. If ASIC fails to credit investment proceeds back to the account (as required by section 58(5) PGPA Act and the note to clause 7), that too could be a breach of the PGPA Act, and the Auditor‑General may report it in audit findings.

The instrument sits squarely within the PGPA Act framework. It is made under subsections 78(1) and 78(3) of that Act. The PGPA Act governs the establishment, operation, and repeal of special accounts. Provisions of Part 4 of the PGPA Act (especially sections 78 and 79) are directly engaged: section 78 sets out the requirements for establishing a special account by determination, and section 79 deals with the appropriations effect. Section 58(5) of the PGPA Act (investment proceeds) is incorporated by reference in the note to clause 7.

The instrument interacts heavily with the Corporations Act 2001 and the Corporations Regulations 2001. Purpose 1 expressly references Part 5A.1 of the Corporations Act, which deals with deregistered companies and the vesting of their property in the Commonwealth. That Part gives ASIC powers to handle property of deregistered companies, and this instrument provides the appropriation for payments in relation to that property (including to former members or creditors). Purpose 3 references section 912B of the Corporations Act (security deposits for AFS licensees) and regulations 7.6.02AAA and 7.6.02AA of the Corporations Regulations (security bonds for liquidators and security deposits for dealers and investment advisers). Those provisions require lodgement of security with ASIC; this instrument provides the mechanism for receiving, holding, and returning those securities.

The ASIC Act 2001 is relevant because it establishes ASIC and sets out its functions. The instrument does not amend the ASIC Act, but the designation of the Chairperson as accountable authority comes from the ASIC Act (section 10). The instrument also interacts with court orders, enforceable undertakings, and deeds of settlement, as listed in purpose 2. Those instruments create obligations for ASIC to hold and disburse funds; this determination provides the statutory appropriation to satisfy those obligations.

The repeal of the three predecessor instruments (FMA Determinations 2008/02, 2008/03, and 2008/04) means that the old FMA Act regime no longer applies. The transition is smooth because the opening balance is automatically credited. All continuing obligations under those old instruments (e.g., pending claims) now fall under the new instrument.

The instrument also interacts with general trust law. Purpose 1 uses the phrase “as a trustee”, which imports equitable obligations of loyalty, prudence, and proper administration. The instrument does not displace those duties; it merely provides the public‑law framework for handling the money.

Finally, because the account is within the Consolidated Revenue Fund, the Commonwealth’s constitutional financial arrangements apply. The instrument does not confer any tax immunity or modify any taxation law. Amounts paid out may be subject to withholding tax or other obligations, depending on the recipient.

The instrument as provided appears in its original form, made on 23 February 2018 by Minister Cormann. It commenced on the later of 31 March 2018 or the day under PGPA Act section 79(5)(a). No subsequent amendments are listed in the source text. However, the instrument contains a built‑in amendment: Part 3 (Transitional and Repeal Provisions) is itself repealed at the end of the seventh day after the repeal of the three special accounts referred to in clause 10. This self‑repeal removes clauses 9, 10, 11 and the definitions that support them (such as “opening balance”, “Deregistered Companies account”, etc.). The effect is that once the old accounts are extinct and the new account is operating, the transitional machinery disappears, but the legal consequences (e.g., that the opening balance was credited) remain in force by virtue of subclause 11(3). This is a common technique to keep the statute book clean.

There is no evidence of any later amendment by the Minister for Finance, though it is possible that subsequent determinations have been made to modify the purposes or credits. The source text does not include any amending instruments. The instrument also does not include a provision allowing automatic indexation or review. It is a standalone determination that could be amended or revoked at any time by a new determination under section 78 of the PGPA Act. Given that the instrument was made in 2018, and the PGPA Act has been amended since then (e.g., by the Public Governance, Performance and Accountability Amendment Act 2023), the instrument’s references to the Act are to the PGPA Act as amended from time to time (by virtue of the definition in clause 4). So any later changes to the PGPA Act automatically apply to this special account.

The source text does not refer to any litigation involving this instrument or its predecessor accounts. However, it is plausible that ASIC’s handling of trust money has been tested in court. For example, in cases where ASIC holds funds from deregistered companies and distributes them, disputes about priority among claimants or about the charging of expenses could arise. Similarly, disputes about the return of security deposits to liquidators or licensees could lead to judicial review. Any such litigation would rely on the underlying substantive law (Corporations Act, ASIC Act, equitable principles) rather than on the special account determination itself, which is merely the appropriations mechanism. Nevertheless, if a court were to find that ASIC improperly paid money from the special account for an unauthorised purpose, that could be a relevant breach of statutory duty.

There are known cases concerning ASIC’s handling of trust accounts more broadly: for example, ASIC v Australian Property Custodian Holdings Ltd (No 3) [2013] FCA 1343, which dealt with the use of client money in a managed investment scheme, but that involved the Corporations Act’s trust account rules rather than a PGPA special account. No case directly interpreting this particular determination has been publicly cited.

Because the instrument is a machinery determination, it is unlikely to be the subject of direct litigation. Any challenge would more likely be to ASIC’s decision to refuse payment, which would be reviewed under the Administrative Decisions (Judicial Review) Act 1977 or under the specific Act creating the entitlement. If the ADJR Act applies, the court could consider whether ASIC’s decision was authorised by this determination.

Several features of the instrument warrant careful attention.

First, purpose 5 allows ASIC to “reduce the balance of the special account … without making a real or notional payment.” This is a de‑appropriation power. It means ASIC can effectively cancel the appropriation by transferring funds back to the Consolidated Revenue Fund. At first glance, this might look like a power to delete funds that are no longer needed, but it could also be used to reduce the account balance below what is required for pending distribution claims. If ASIC exercises this power prematurely, it could leave itself unable to meet future obligations unless new credits are received. The instrument does not impose any requirement for consultation with beneficiaries or for ASIC to hold a minimum reserve. This creates risk for parties expecting payment.

Second, the instrument contains a somewhat circular definitional scheme. The definition of “opening balance” relies on the accounts that are repealed by the same instrument. The sums are to be calculated “immediately prior to the commencement date”. If there is any timing mismatch (e.g., between the repeal of the old accounts and the credit to the new account), the balance could be ambiguous. The instrument does not specify what happens if interest accrues on the old accounts between the close of business on the day before commencement and the actual time of credit. The note to clause 7 about investment proceeds requires them to be credited to the special account, but the old accounts are repealed, so any such interest would need to be captured by the opening balance calculation somehow.

Third, the self‑repeal of Part 3 after seven days means that the definitions of “opening balance”, “Deregistered Companies account”, etc., disappear from the text. This could create archival confusion if someone reads the instrument years later without the transitional provisions. The instrument does not create a formal savings provision for the purposes of interpretation after repeal; subclause 11(3) only says the “effects” of Part 3 remain in force. That is likely sufficient to preserve the legal fact that the opening balance was credited, but any dispute about the exact amount may be hard to resolve if the definitions are gone.

Fourth, the instrument does not address conflicts that may arise when funds serve multiple purposes. For example, a security deposit might be subject to a court order freezing it, and also be needed for compensation payments. The instrument does not create a hierarchy of purposes. ASIC must rely on the underlying law to determine priority. That could lead to legal uncertainty.

Fifth, the instrument does not establish an interest‑bearing feature for individual depositors. Money held in the special account is part of the Consolidated Revenue Fund; interest earned is credited to the account overall, not to particular depositors. Persons who lodge security deposits or pay money into ASIC under a settlement may expect to earn interest, but the instrument does not provide for that. Whether ASIC must account for interest to beneficiaries depends on general trust law, not on this instrument.

Sixth, the note about investment proceeds appears only in the context of clause 7 (credits), but section 58(5) of the PGPA Act refers to proceeds of investments of amounts debited from the account. There is no express power to invest amounts in the account; that power would come from the PGPA Act or from the ASIC Act. If ASIC invests the moneys, the proceeds must be credited back. But the instrument does not say whether ASIC has the power to invest, nor does it require it.

Compliance with this determination is largely a matter for ASIC’s internal financial management processes. The following steps are necessary.

1. Transfer of balances: Upon commencement (31 March 2018 or later), ASIC must calculate the sum of the closing balances of the three predecessor special accounts and ensure that amount is credited to the new special account. The credit must be recorded in ASIC’s financial systems. ASIC should retain records of the balances for audit purposes, even after the transitional provisions are repealed.

2. Annexation of credits: For every amount received by ASIC that falls within one of the purposes in clause 8, a credit entry must be made to the special account. This includes moneys received from deregistered companies distributions, investigation funds, court ordered payments, security deposits, and any other receipts within the purposes. ASIC should establish automated feeds or manual processes to ensure that receipts are correctly coded to the special account rather than to any other account.

3. Debit control: ASIC must ensure that every payment from the special account is for a purpose listed in clause 8. Debits should only be made after verifying that the payment is authorised by the underlying law (e.g., a court order, a settlement deed, a Corporations Act provision). ASIC should maintain a checklist or matrix mapping each type of payment to the purpose sub‑paragraph. Unauthorised debits (e.g., paying for ASIC’s own administrative costs unrelated to the specific purposes) are prohibited.

4. Investment and interest: If ASIC invests any amount debited from the account, it must credit the proceeds back to the account per section 58(5) PGPA Act. ASIC should maintain a separate record of investments and ensure the returns are tracked and credited promptly. No part of the investment returns should be retained by ASIC or used for its own operating budget.

5. Reconciliation: ASIC should regularly reconcile the special account balance to ensure that credits and debits are properly recorded and that the balance never becomes negative (the PGPA Act does not permit over‑drawing a special account). Monthly reconciliation to the Consolidated Revenue Fund ledger is advisable.

6. Surplus management: If ASIC determines that the account holds funds in excess of what is needed for foreseeable obligations (including unclaimed moneys that might later be claimed), it may exercise purpose 5 to reduce the balance. Before doing so, ASIC should have a documented policy and consider the risk that future claims might not be met. This power should be used cautiously, as it permanently returns the funds to the CRF.

7. Record‑keeping and audit: The Chairperson as accountable authority must keep records adequate for audit by the Australian National Audit Office. The records should link each debit to the specific purpose and authority. Given the trust aspect, ASIC should also maintain records that identify the beneficial owner of each fund where applicable (e.g., which security deposit belongs to which liquidator or which deregistered company’s funds are being held).

8. Staff training: Officers who handle receipts or make payments should be trained on the scope of the special account and the prohibition on debiting for unspecified purposes. The instrument references multiple Acts and regulations; staff should have ready access to those provisions.

9. Review of transitional effects: After the self‑repeal of Part 3, ASIC should ensure that its internal policies and procedures refer to the current instrument and not to the repealed definitions. The opening balance was already credited; no further action is needed on that.

10. Monitoring changes: Because the instrument can be amended by the Minister, ASIC should monitor the Federal Register of Legislation for any future determinations that modify the purposes or credits. Any amendment may require changes to internal controls.

Compliance is straightforward if ASIC maintains clear lines of authority and a robust ledger system. The main risk is unauthorised debits due to misunderstanding of purpose boundaries. The instrument does not impose penalties directly, but a compliance failure could lead to adverse audit findings, ministerial direction, or worse - legal action by affected parties for misappropriation of trust funds.