Bills Digest No. 9 2001-02
Bankruptcy (Estate Charges) Amendment Bill 2001
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
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Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Bankruptcy (Estate Charges) Amendment
Bill 2001
Date Introduced: 7 June 2001
House: House of Representatives
Portfolio: Attorney-General
Commencement: At the same time as the
Bankruptcy Legislation Amendment Act 2001.
To amend the Bankruptcy (Estate Charges) Act
1997 to:
- exempt any surplus in a bankrupt estate from the scope of the
realisation charge
- align charge periods with the financial year
- remove current payment obligations for the interest charge and
the realisations charge if the amount payable would be less than
$10, and
- close some charge-avoidance opportunities.
This Bill accompanies the Bankruptcy Legislation
Amendment Bill 2001. The Background to both Bills is contained in
the Bills Digest on the Bankruptcy Legislation Amendment Bill 2001,
No. 9 of 2001-02.
Under section 6 of the Bankruptcy (Estate
Charges) Act 1997, a realisations charge is payable by the
trustee, whether the Official Trustee or a private registered
trustee, to the Commonwealth. The charge is payable on the
administration of all bankrupt estates including deceased estates,
and also in relation to deeds of assignment, deeds of arrangement
or compositions entered into by debtors under Part X of the
Bankruptcy Act 1966. It is not payable on Part IX debt
agreements or compositions or schemes of arrangement under Division
6 of Part IV of the Bankruptcy Act 1966.
Realisations charge
Currently, the realisations charge is payable
within 21 days of the end of the 'charge period' (subsection 6(3)).
The charge periods are 1 November to 30 April, and 1 May to 31
October in any year (subsection 4(1)). Item 1
amends the charge periods to align them with the financial year. In
future, the charge periods will be 1 January to 30 June, and 1 July
to 31 December in any year. As a transitional measure, the charge
period during which the Bill commences will be extended by two
months to either 30 June or 31 December to enable subsequent charge
periods to line up with the financial year (item
11).
Item 6 also extends the charge
payment period from 21 days to 35 days, to account for possible
inconvenience because of the holiday period in January. This will
apply to charge periods ending after the Bill commences
(item 13).
Item 4 extends the realisations
charge to apply also to amounts received by a trustee of a
composition or scheme of arrangement under Division 6 of Part IV of
the Bankruptcy Act 1966. This is because these measures
had been favoured over Part X arrangements because of the charge on
the latter but not on the former.(1) This will apply to
all compositions or schemes of arrangement that are accepted by
creditors after the Bill commences (item 14).
The realisations charge will not be payable on
any surplus money in the bankrupt's estate (item
7). The charge is calculated as a percentage of the total
amount received by the trustee. Currently, this includes any
amounts which are surplus to the amount required to pay off the
bankrupt's debts in full. The proposed amendment will exempt any
surplus amount from the charge. This will apply to amounts received
after the Bill commences (item 15).
Item 8 contains an
anti-avoidance provision which will treat amounts of money which
are 'applied or dealt with on behalf of the trustee' as being
amounts received by the trustee, and thus subject to the
realisation charge. This is designed to counter avoidance
arrangements which are sometimes entered into, whereby the trustee
directs money to be paid in a certain manner without actually
receiving the money.(2) This will apply to amounts
applied or dealt with after the Bill commences (item
16).
Interest charge
Currently, any interest paid on money banked by
the trustee before distributing it is payable as a charge to the
Commonwealth (section 5). Item 3 extends the
charge payment period from 21 days after the charge period to 35
days. This will apply to charge periods ending after the Bill
commences (item 13).
Low charge amounts
Neither the realisations charge (item
5) nor the interest charge (item 2) is
payable if it would be less than $10 in any particular 6 month
charge period. This is designed to 'reduce handling costs for
trustees and the Commonwealth alike'.(3) The regulations
may substitute a higher amount for the current amount of $10. This
will apply to charge periods ending after the Bill commences
(item 12).
- Explanatory Memorandum, p. 3.
- Explanatory Memorandum, p. 4.
- Explanatory Memorandum, p. 2.
Katrine Del Villar 25 July 2001 Bills Digest
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ISSN 1328-8091
© Commonwealth of Australia 2000
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