Australia ASIC Levy - Other Considerations.

Legal News & Analysis - Asia Pacific - Australia - Regulatory & Compliance - Banking & Finance

24 October, 2018


The ASIC Supervisory Cost Recovery Levy Bill 2017 and the ASIC Supervisory Cost Recovery (Collection) Act 2017 came into effect 1 July 2017, changing the method in which ASIC will be funded.


Regulated entities have to provide ASIC with their business activity metrics for the previous financial year via the new ASIC Regulatory Portal. Note, a shortfall penalty applies if a person makes a false or misleading statement (including through omission) which results in a smaller levy being paid than should be the case.


Further, non-lodgement of the IFM Metrics Form by 27 September 2018 is a serious offence.


For more information on the ASIC Levy, please see our previous Client Alert here.


Considerations for Foreign Entities


Upon completing the IFM Metrics Form, foreign entities need to be cognisant of other considerations that may impact on their cross border analysis resulting in unforeseen financial and regulatory implications.


Relative to factors such as ASIC licensing and taxation, consideration of the information to be submitted via the IFM Metrics Form may seem immaterial, however, foreign entities who deal partly in or out of Australia should be wary of whether their answers in the IFM Metric Form are also consistent in the context of their cross border analyses.


Most cross-border foreign entities have finely tuned analyses prepared in relation to the below, which may be altered depending on the information provided by the relevant entity in its IFM Metrics Form: 


Section 66 of the Banking Act: Section 66 prohibits a person from using the word "bank", "banker" or "banking" in its name or offer documentation, unless certain conditions are complied with such as:


  • the foreign bank does not maintain an office or permanent staff in Australia;
  • the foreign bank does not solicit business from retail customers in Australia;
  • all contracts are transacted and booked offshore;
  • the foreign bank does not engage in advertising or allow its staff to physically solicit business in Australia; and
  • where offshore staff of the foreign bank meet with clients/potential clients in Australia, such meetings are to only arrange/execute documentation in relation to the client's business.


Section 21 of the Corporations Act and "carrying on business": The ordinary meaning of “carrying on business” usually involves a series or repetition of acts, commonly involving activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis. In determining if a person is carrying on business, there is consideration of whether the entity earns a "significant" amount of revenue and if they are earning it on an "ongoing" basis.
Whether an entity is carrying on business is a question of fact and consideration would be given to all factors and may include consideration of the answers provided in one's IFM Metrics Form. If your IFM Metrics Form evidences any kind of revenue for your entity, this may indicate that the entity is in fact carrying on business in Australia and therefore, for example, may not be entitled to rely on the Limited Connection Exemption [ASIC CO 03/824]. 
Section 911D of the Corporations Act: Section 911D is a provision which deems that if an entity engages in conduct which induces or is intended to induce people in Australia to use financial services provided by the entity (or likely to have that effect) then such conduct is ‘taken to be’ carrying on a financial services business in Australia, thus requiring an Australian Financial Services Licence (AFSL), unless an exemption applies.  
Ultimately, if an entity is considered to be carrying on business in Australia this could also impact on the outcome of whether one is carrying on a financial services business and therefore bring the entity in the realm of AFSL territory. 


Given the above considerations, and noting that if an entity is "carrying on a business" in Australia, this may also impact on an entity's cross-border analyses on the application of the National Credit Code and Anti-Money Laundering legislation. Therefore, we recommend entities in this cross-border situation be mindful of their answers submitted in their IFM Metrics Form on the ASIC Regulatory Portal and ensure consistency between the IFM Metrics Form and their cross border positions on other regulatory matters.


Baker McKenzie


For further information, please contact: 


Bill Fuggle, Partner, Baker & McKenzie

[email protected]