ASIC Supervisory Cost Recovery Levy Act 2017

The ASIC Supervisory Cost Recovery Levy Act 2017 is the Commonwealth law that imposes a levy on persons regulated by ASIC. It commenced on 1 July 2017 and remains in force in the compiled version dated 20 October 2023.

The Act is a framework law. It tells you who can be charged, how the levy system is meant to work at a high level, and how ASIC's regulatory costs are to be determined and attributed. It does not itself set a single flat annual fee, and it does not itself provide the full collection timetable. The amount payable for a financial year is worked out under regulations, and some annual figures can be set by ASIC legislative instrument. Payment is tied to the separate ASIC Supervisory Cost Recovery Levy (Collection) Act 2017.

For business owners, the first practical question is not "what is the fee?" but "am I a regulated entity under this Act for any part of the financial year?" If the answer is yes, the next questions are whether an exemption class applies for that year, which sector or sub-sector you fall into, and whether your business structure changes who carries the obligation.

The Act uses the term regulated entity. That definition is broad. It includes a company registered under the Corporations Act 2001, a financial services entity, a credit services entity, a market infrastructure entity, an audit entity, a liquidator entity, a company-like entity, and any other class of person regulated by ASIC that is prescribed by regulations.

That means the Act is not limited to financial services licensees. It can also apply to ordinary registered companies, certain auditors and liquidators, market infrastructure participants, some superannuation-related licensees, and some company-like bodies that are not companies.

The Act then defines a leviable entity for a financial year as a person who is a regulated entity at any time in that financial year and is not an exempt entity for that financial year. This wording matters. It means the Act can apply even if your regulated status only existed for part of the year.

One of the most important practical points in this Act is that coverage is not limited to people who hold the relevant licence.

For financial services entities, the definition includes some people who are exempt from the requirement to hold an Australian financial services licence under specified Corporations Act provisions, but only if they are required to notify ASIC that they are so exempt. It also includes a person who contravenes subsection 911A(1) of the Corporations Act 2001.

For credit services entities, the definition includes some people exempt from the requirement to hold a credit licence under specified National Consumer Credit Protection Act provisions, again only if they are required to notify ASIC that they are so exempt. It also includes a person who contravenes section 29 of that Act.

For market infrastructure entities, the definition also reaches some exempt operators, some participants in licensed markets, and some people who contravene the relevant market, CS facility, derivative trade repository or benchmark administrator licensing requirements.

So if your business relies on an exemption, do not assume that exemption takes you outside the levy framework. In some cases, the opposite is true: the exemption, combined with a notification requirement, is what brings you within the definition.

The Act recognises that some regulated entities may be exempt for a financial year. An exempt entity is a regulated entity that is in a class of persons prescribed by the regulations for that financial year.

The Act itself does not list those exempt classes in its text. That means you cannot work out exemptions from the Act alone. You must check the current regulations for the relevant financial year.

In practice, if you are trying to decide whether your business is outside the levy, you need to answer two separate questions. First, are you a regulated entity under the Act? Second, even if you are, are you in an exempt class prescribed by regulations for that year? A business can be inside the Act's scope at the first step but still not be a leviable entity because of the second step.

Many businesses think of ASIC levy exposure as something that only affects large financial institutions. The Act is broader than that. Common trigger points include registering a company, obtaining an AFS or credit licence, becoming a registered liquidator or auditor, entering a market infrastructure role, or relying on an exemption that still requires ASIC notification.

The part-year rule is especially important. Because a leviable entity is someone who is a regulated entity at any time in the financial year, a status change during the year can still matter. For example, if a business becomes licensed mid-year, restructures into a regulated entity, or starts operating through a trustee arrangement that falls within the Act, it should not assume that levy exposure only starts from the next full year.

Another trigger point is mixed activity. The Act says an entity may form part of more than one sector and more than one sub-sector. Businesses with multiple regulated activities should therefore check whether they sit across more than one category for cost attribution purposes.

Section 8 of the Act imposes levy that is payable in accordance with section 8 of the ASIC Supervisory Cost Recovery Levy (Collection) Act 2017. This is an important drafting point. The levy is imposed by this Act, but the payment and collection framework is linked to separate legislation.

Section 9 then says the amount of levy payable by a leviable entity for a financial year is the amount worked out in accordance with the regulations. The Act sets objectives for that process. The total levy payable by all leviable entities for a financial year should equal ASIC's regulatory costs for that year, and the total levy payable by all leviable entities in a particular sector or sub-sector should equal ASIC's regulatory costs relating to that sector or sub-sector for that year.

Those objectives support a user-pays model. In practical terms, the levy is designed to recover ASIC's regulatory costs overall and to allocate those costs across sectors and sub-sectors.

The Act gives the regulations wide scope to determine the amount payable. The regulations may specify an amount or a method for determining an amount. They may set different amounts or methods for different classes of leviable entities, different sectors or different sub-sectors. They may also specify a nil amount or a method resulting in nil.

The regulations can also use methods that refer to acts done or circumstances existing before the commencement of the regulations or before the commencement of the Act. So businesses should not assume that only current-year events can be relevant to the calculation method.

The Act also allows regulations to provide for ASIC to make an annual legislative instrument specifying amounts to be used in a method and the number of leviable entities in a particular class, sector or sub-sector in that financial year. Before ASIC makes that instrument, it must be satisfied, having regard to information provided to ASIC, that the instrument is consistent with the Act's objectives. The instrument can only be made after the last day by which returns for the financial year must be lodged under the collection legislation.

That means practical levy outcomes can depend on both the regulatory formula and the information lodged with ASIC for the year.

Section 10 defines ASIC's regulatory costs for a financial year as the amount determined by ASIC in a legislative instrument for that year. ASIC must specify both the amount of its regulatory costs and the extent to which those costs are attributable to each sub-sector.

There is a statutory cap. The amount determined must not exceed the sum of all amounts appropriated by Parliament for the purposes of ASIC for that financial year.

The Act also tells ASIC what it must not include. ASIC must not include amounts relating directly to the regulation of persons and entities that are not leviable entities, certain costs giving rise to amounts debited from a specified special account, and any amounts prescribed by regulations as excluded.

Subject to those exclusions, ASIC may include costs relating directly or indirectly to the regulation of leviable entities. The Act specifically says this can include costs relating to surveillance, education, guidance, engagement with industry and policy advice. It may also include certain special account credits and depreciation of capital costs.

For businesses, this means the levy is not limited to direct enforcement or case-specific supervision. It can reflect broader regulatory work attributable to your sub-sector.

The Act uses sectors and sub-sectors to allocate regulatory costs. If regulations specify sectors, a sector is a group of one or more entities meeting the criteria in the regulations. If regulations do not specify sectors, a sector is a group of one or more entities each satisfying a particular paragraph of the definition of regulated entity. A sub-sector is a group of one or more entities meeting criteria specified in the regulations.

The Act expressly notes that an entity may form part of more than one sector and more than one sub-sector. This is important for businesses with multiple regulated activities or complex structures.

The Act also deals with under-collection and over-collection from a prior year. If levy collected for a financial year exceeds ASIC's regulatory costs for that year, ASIC must reduce the following year's regulatory costs by the amount of the excess. If levy collected falls short, ASIC must increase the following year's regulatory costs by the amount of the shortfall, to the extent the shortfall does not arise because of waiver under the collection legislation.

When attributing regulatory costs to sub-sectors, ASIC must have regard to statutory principles. Direct regulation costs are attributed to the relevant sub-sector. Indirect regulation costs are attributed across sub-sectors in proportion to regulatory resources dedicated to each sub-sector. Prior-year excesses or shortfalls are attributed to the sub-sector in which they arose. Certain special account amounts are to be attributed over time and in a reasonable manner.

So your levy position may be influenced not only by current-year activity, but also by prior-year collection outcomes in your sub-sector.

The Act contains special rules for structures that are not a single natural person or company.

For a partnership, the Act applies as if the partnership were a person. But obligations that would otherwise be imposed on the partnership are imposed on each partner instead, and may be discharged by any partner.

For an unincorporated association, the Act applies as if the association were a person. But obligations that would otherwise be imposed on the association are imposed on each member of the association's committee of management instead, and may be discharged by any of those members.

For an RSE licensee that is a group of individual trustees, the Act applies as if the group were a person. But obligations are imposed on each individual trustee and may be discharged by any of them.

The Act also deals with trusts where trustees are treated during a period as constituting a single legal entity under section 761FA of the Corporations Act 2001 or a single person under section 15 of the National Consumer Credit Protection Act 2009. In that case, the Act applies to the notional entity as if it were a person. If the trust has two or more trustees during the period, obligations are imposed on each trustee and may be discharged by any trustee. If the trust has only one trustee during the period, the obligation is imposed on that sole trustee.

The practical point is that levy responsibility may sit with individuals behind the structure, not just the trading name or notional entity used in day-to-day operations.

The Act received assent on 19 June 2017 and the whole Act commenced on 1 July 2017. The compiled version referenced here is Compilation No. 4, showing the law as amended and in force on 20 October 2023, and registered on 13 November 2023.

The legislation history in the compilation shows later amendments, including amendments in 2018, 2020 and 2023. If you are relying on this page for a current compliance decision, you should still check the latest version on the Federal Register of Legislation and any current regulations and ASIC instruments made under the Act.

This Act is only one part of the ASIC levy framework. Before relying on it for budgeting or compliance, businesses should check the current regulations, the separate collection legislation and any current ASIC legislative instruments for the relevant financial year.

In particular, check whether your entity is in an exempt class for the year, what class, sector or sub-sector method applies, whether ASIC has made the annual determinations relevant to your category, and whether your business lodged any returns or notifications that affect how ASIC counts entities or applies the method.

If your business changed structure, became regulated mid-year, ceased regulated activity during the year, or operates across multiple regulated categories, get specific advice before assuming the levy does or does not apply.