Consultation and feedback on the 2016–17 industry contribution
In May 2016, AUSTRAC released a stakeholder consultation paper and draft Ministerial Determination detailing the proposed model for the 2016–17 industry contribution and invited stakeholder feedback on the model.
The submissions page contains the four submissions AUSTRAC received from stakeholders in response to this consultation on the 2016–17 contribution.
Below is AUSTRAC’s high-level feedback to issues raised within these stakeholder submissions.
Reducing the industry contribution earnings threshold
AUSTRAC acknowledges the ongoing concerns raised in the industry submissions regarding how the industry contribution levy is distributed among leviable entities, and submissions from some entities that the contribution earnings threshold be reduced.
As noted in the Industry Contribution 2016–17 Stakeholder Consultation Paper, AUSTRAC has previously undertaken modelling to gauge how a reduction in the earnings threshold might affect the distribution of the levy across the regulated population. AUSTRAC’s modelling found that even a significant reduction in the earnings threshold (from $100 million to $10 million) would be unlikely to result in a material change to the distribution of the levy among regulated entities.
AUSTRAC’s application of a $100 million earnings threshold to the industry contribution remains consistent with the Government’s policy objective that small businesses be exempt from the levy.
Approach to calculating leviable earnings
AUSTRAC’s view is that ‘total earnings’ provides an objective and universal basis for calculating the earnings component of the industry contribution levy, particularly as information about ‘total earnings’ can be simply and independently verified.
AUSTRAC maintains that calculating the earnings component based only on earnings derived from designated services would impose an additional administrative burden on reporting entities as they would be required to calculate earnings results (i.e. EBITDA or PBDTA) by individual product line.
Potential expansion of AUSTRAC’s regulated population
The recently completed Statutory Review of the AML/CTF Act, Rules and Regulations recommends that a cost-benefit analysis be undertaken on options for expanding AML/CTF regulation to include lawyers, accountants, high-value dealers, real estate agents and trust and company service providers.
AUSTRAC acknowledges that the expansion of the scope of AML/CTF regulation to include these additional entities would lead to a significant increase in AUSTRAC’s regulated population and would ultimately have an impact on how the industry contribution levy was calculated.
The progress of this proposal will be subject to careful consideration by government and, if implemented, would proceed as part of a package of longer-term reforms which will be subject to close consultation with industry.
Oversight of the operation of the industry contribution
While the industry contribution levy remains outside the parameters of the government’s cost recovery guidelines, AUSTRAC has continued to consult extensively with stakeholders on the proposed calculation model for the industry contribution before a final determination is made.
At the request of industry stakeholders, the consultation paper for the 2016–17 industry contribution included additional information on AUSTRAC’s annual operational expenditure, similar to that required of a Cost Recovery Impact Assessment. This inclusion provides an indication of the proportion of industry’s contribution to each of AUSTRAC’s key capabilities.
AUSTRAC will continue to engage with industry stakeholders on the calculation model for the industry contribution, and remains committed to maintaining transparency about the industry contribution process and communicating how AUSTRAC’s annual budget allocation is spent
Review of the Industry contribution levy
The Australian Transaction Reports and Analysis Centre Industry Contribution (Collection) Act 2011 requires that an independent review of the operation of the industry contribution levy be undertaken as soon as possible after the fourth anniversary of the commencement of the industry contribution levy arrangements. Consequently, a report of the independent review will be completed and tabled in Parliament in 2018, following consultation with industry participants about the impact of the levy.