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Australian Financial Services (AFS) licensees should by now have received their invoice from the Australian Securities & Investments Commission (ASIC) for the 2017-18 financial year regulatory levy.

The following is a series of frequently asked questions we have been receiving:

I didn’t get an invoice – where did ASIC send it to?

On 31 January 2019, ASIC sent an email to those who hold an ASIC Regulatory Portal account advising them to log in to view their entity’s invoice. For those who do not have an account, the invoice will be sent via mail to the address you have registered with ASIC. 

I think there is an error in my invoice, what can I do?

If you believe that there has been an error on your invoice, you should speak with ASIC’s industry funding team on 1300 300 630. We would also suggest reviewing your ASIC Regulatory Questionnaire to ensure that you have completed this correctly.

What if I have been invoiced for an authorisation I did not use?

Invoices are prepared on the basis of the authorisations contained on your Australian Financial Services Licence (AFSL). If you have been invoiced for an authorisation that your entity has not used, you may like to consider applying to ASIC to remove the authorisation to avoid that aspect of the levy in the future. You can always apply to reinclude the authorisation at a later date if you need it.

Importantly, if your entity does not use an authorisation on your AFSL, or does not use the AFSL itself, ASIC have reasonable grounds to remove the authorisation and/or cancel the AFSL as a result of no activity.

What if my entity falls into more than one Subsector?

If an entity falls into more than one subsector, the fee relevant to each subsector is payable. For example, if your entity operates as a wholesale trustee and as a licensee that provides general advice to wholesale clients only, your invoice will total $6,596. A breakdown of the levies can be found here.

Is my entity subject to additional obligations?

In order to ensure that your entity receives the correct invoice, your entity must complete the mandatory business activity metrics. These are submitted annually, between July and September. ASIC will rely on the information provided in the business activity metrics to calculate your regulatory levy. Credit representatives, financial advisers and authorised representatives are not subject to this requirement.

What about my tax and GST obligations?

The levies are tax deductible and they are not subject to the Goods and Services Tax (GST). If you have further questions regarding your tax obligations, you should contact a professional taxation adviser.

In addition to this, you must ensure that you maintain the correct contact details on ASIC’s Regulatory Portal.

There are two different types of levies:

Flat Levies

Flat levies are the total cost of the regulatory levy divided amongst the total number of entities operating within the relevant subsector.

Some of the subsectors subject to flat levies include:

  • Custodians;
  • Insurance product distributors;
  • Large proprietary companies;
  • Licensees that provide general advice only;
  • Licensees that provide personal advice (to wholesale clients only);
  • Margin lenders; and
  • Wholesale trustees.

Source: ASIC Industry Funding Factsheet

Graduated Levies

Some subsectors are subject to a graduated levy, where the levy is calculated on the basis of the entity’s size or business activity. ASIC considers these factors drive the level of risk and regulatory effort required by ASIC. The graduated levy is calculated by dividing the regulatory cost between entities based on either:

  • A minimum levy, which is an estimate of ASIC’s direct and indirect costs (such as policy advice, guidance and education); and
  • A variable component, which covers the enforcement and surveillance activities required by ASIC.

Some of the subsectors subject to graduated levies include:

  • Corporate advisers;
  • Credit intermediaries;
  • Investor Directed Portfolio Services (IDPS) operators; and
  • Wholesale trustees.

Source: ASIC Industry Funding Factsheet

Further Reading

Reminder

Invoices are due for payment by 15 March 2019. To avoid accruing interest, you must ensure your invoice is paid by this date.

Sophie Grace can assist you with completing your annual business activity metrics, as well as helping you understand your invoice. If you have any further questions on ASIC’s regulatory levies, please contact us.