ASIC updates – annual review fees and industry funding
The Australian Securities and Investments Commission (ASIC) recently introduced a new user-pays funding structure. This means most businesses regulated by ASIC, including private companies, may need to pay an increased fee or new levy.
How will the fee or levy be calculated?
The fee or levy will be calculated differently depending on the type and size of your business.
If you’re a small proprietary company, ASIC will simply increase your annual review fee by $4 from 1 July 2018. This means that small companies don’t have to provide the same level of information to ASIC as larger companies. A small proprietary company satisfies at least two of these points below:
- The company and all of the entities in its control have a consolidated revenue of less than $25 million in the financial year.
- The company and all of the entities in its control have consolidated gross assets of less than $12.5 million at the end of the financial year.
- The company and all of the entities in its control have less than 50 employees at the end of the financial year.
Businesses that are not small proprietary companies have been put into 48 different categories based on their industry. These include large companies, anyone holding an Australian Financial Services or credit licence, insolvency practitioners and auditors.
Depending on which category your business falls into, you may need to pay a flat levy or a graduated levy. Flat levies will be the same for everyone in the category, while graduated levies will depend on the size of your business or its activities.
The amount of the levies are based on ASIC’s actual costs. This means that they can only be calculated in the financial year after the costs have been incurred. A detailed description of how each levy will be calculated can be found here.
When will I get my annual review fee?
Like every company in Australia, your company will have an annual review date. This is usually the date the company was registered. If you’d like to know when your review date is you can check on ASIC’s Organisation and Business Names search by providing your Australian Company Number (ACN).
Following your annual review date, ASIC will send your company an annual statement and invoice. This invoice must be paid to make sure your business remains registered and to avoid paying any penalties.
Under this new process, you will still receive your annual review fee invoice and the amount you must pay will just be increased by $4. Your invoice will give you options as to how you can pay your annual review fee including BPay and credit card. The only exception to this is if you have chosen to pay your annual review fee in advance. This means you have prepaid your annual review fee for 10 years at a discounted rate.
Even if you have prepaid your annual review fee, you’ll still receive an annual statement. When you receive your company’s annual statement, it’s still important that you check your company’s details and make sure they’re up to date. If anything has changed, like your company share structure or directors, then these details should be updated online.
It’s also worth remembering, that within two months of receiving your annual review date your company directors must also pass a solvency resolution. The only exception to this is if you have lodged a financial report with ASIC within the last 12 months.
The solvency resolution states whether the directors believe your company can pay back its debts when they are due. This must be based on a reasonable opinion and the resolution must be passed by a majority of your company’s directors. A positive solvency resolution says that your directors believe the company can pay its debts when they are due, while a negative solvency resolution says that the directors believe the company will not be able to pay its debts. If your company passes a negative resolution you will also need to lodge a statement in relation to company solvency.
What if I am not a small proprietary company?
If your business is not a small proprietary company, you will need to register on ASIC’s new Regulatory Portal. You should have received a letter from ASIC about how to register on the Regulatory Portal already. Only your company director or secretary can register on the Regulatory Portal. Once they have registered they can then invite other representatives to use the Regulatory Portal on the company’s behalf.
By 27 September 2018, you may also need to provide ASIC with some information about your business’ activity. This is for companies who are in one of the categories that will pay a graduated levy. This should be provided through the Regulatory Portal.
What will happen moving forward?
Small proprietary companies will pay their annual review fee when they receive their annual statement and invoice.
If you’re not a small proprietary company, you will receive an invoice through the Regulatory Portal each January, starting January 2019. If you don’t complete the information required or pay your levy, you may face penalties or other action by ASIC.
If you’re concerned about non-compliance or about having the capacity to perform your annual review obligations with ASIC, CCASA can assist you.
Why have these ASIC changes been made?
There are several reasons why these changes have been made. The Government wanted ASIC to be more transparent about the cost of regulation. As a result, ASIC now publishes its Cost Recovery Implementation Sheet (CRIS), which outlines what it expects to spend on regulatory activities for the coming year.
By allocating its costs by industry and business type, ASIC can also better focus its resources on those businesses that need the most regulation. For businesses, this funding structure gives them an incentive to self-regulate as businesses that require less regulation will pay less.
Regardless of the size or industry your company is in, we recommend you seek legal and/or accounting clarification to make the best decisions for your company. Get in touch with CCASA for more information about your ASIC fees and to look at how we can save you money.