Bills Digest No. 96 2002-03
Corporations (Fees) Amendment Bill 2002
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
consulted to determine the subsequent official status of the
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Corporations (Fees) Amendment Bill
12 December 2002
House: House of Representatives
1 July 2003
To amend the
regulation making power under the Corporations (Fees) Act
2001 to broaden the range of fees that can be prescribed. The
Bill also facilitates an increase in the amount of fees
This Bill is part of a package of three Bills
which implements the Government s response to Corporate Law
Economic Reform Program Discussion Paper No.7: Streamlining
paperwork under the Corporations Law (known as CLERP
The other Bills in this package are the
Corporations Legislation Amendment Bill 2002 and the Corporations
(Review Fees) Bill 2002.
ASIC collects fees which are imposed under the
Corporations Fees Act 2001 (the Fees Act).(2)
Funds raised through the imposition of fees are paid into
consolidated revenue. ASIC s principal source of funding is an
appropriation from the Commonwealth.
The Fees Act provides that the regulations may
prescribe fees for chargeable matters . This term include things
- the lodgement of a document under the proposed Corporations
- the registration of a document under the Act, and
- the submission to ASIC of a document for examination by
The fee for a chargeable matter need not bear
any relationship to the cost of providing any service that forms
part of, or is related to, that matter.(3) Fees charged
by ASIC currently range from $2 to $1800.
The rationale for imposing fees is to a large
degree based on the principle of cost recovery. The CLERP 7
discussion paper stated that:
Successive governments have taken the view that
the basic level of corporations fees should be set to ensure that,
over time, total revenue from corporations fees approximates the
total costs and outlays associated with the national corporate
The rationale for this is that, because the
national scheme provides general benefits to all companies and all
market participants, its costs should be borne either directly or
indirectly by all companies and market participants rather than
through public funding by taxpayers.(4)
In pursuing the goal of cost recovery the
Government has taken the view that costs that have to be covered by
- the costs incurred by ASIC;
- compensation payments to the States and the Northern Territory
for corporations revenue forgone as a result of the establishment
of the national scheme;
- the costs of other bodies forming part of the national scheme,
including the Australian Accounting Standards Board, the Companies
Auditors and Liquidators Disciplinary Board, the Companies and
Securities Advisory Committee and the Corporations and Securities
- national scheme related costs of bodies that, while not part of
the national scheme, perform functions arising out of the
administration and regulation of the scheme (for example, the
Administrative Appeals Tribunal, the Australian Federal Police, the
Director of Public Prosecutions and the Federal
As the table below illustrates ASIC recovers
funds which are significantly in excess of its operating expenses.
The CLERP 7 discussion paper noted that revenue has been set above
cost recovery to reduce a deficit of $217.6 million that was
accumulated by the national scheme between 1991/92 and
The magnitude by which fees exceed the cost of
running ASIC has fuelled criticism from business that corporations
fees are not about cost recovery but are in fact a disguised form
of taxation.(7) The present fees regime has been
described as an unjustified impost on corporations
In 2001 the Productivity Commission (PC)
conducted an inquiry into cost recovery by Government
agencies.(9) A number of submissions to the inquiry by
industry participants suggested that as the community as a whole
benefited from corporate regulation a reasonable proportion of the
cost should be borne by the whole community through public funding
.(10) The PC rejected this view arguing that the price
of regulated products should reflect the administrative costs of
It should be noted however that a large portion
of the fees collected by ASIC are transferred to the States and the
Northern Territory as compensation for their support of national
corporate regulation. Since 1991/92 the states have received over
$1.4 billion in compensation payments. In 2001/02 $147 million
dollars was divided between the States and Territories. Clause 701
of the Corporations Agreement requires the Commonwealth to make
payments to the Northern Territory and the States. The amount is
indexed in line with movements in the Consumer Price Index. Funds
are distributed in accordance with the percentages set out in
New South Wales
The use of corporations fees to recover the cost
of compensation payments to the States and the Northern Territory
was criticised in submissions to the PC. The Australian
Shareholders Association commented:
We can see no possible justification for the
continuing payment of compensation to the States and the Northern
It is clear that when the administration of
company law was handled at a State level by State Corporate Affairs
Commissions and similar bodies, the amounts collected by the States
as fees significantly exceeded the amounts applied in the
regulation of companies and the securities industry. In other words
these fees constituted a form of State taxation.
There is no justification for the Commonwealth
Government, through the agency of ASIC to continue to levy taxation
on companies and other participants in the securities industry on
behalf of the States and the Northern Territory.
In a practical sense however, it may be argued
that compensation payments to the States and Northern Territory is
the price that companies need to pay in order to obtain the
benefits of a uniform national system of corporate regulation.
Item 1 inserts new
section 5A which provides that the regulation may
prescribe a different fee in relation to a chargeable matter if the
matter is complied with electronically.
According to the Explanatory Memorandum, this
amendment will allow the fees prescribed to reflect lower
processing costs for documents lodged electronically and encourage
electronic lodgement. (12)
The amendment runs contrary to the view
expressed in the CLERP 7 discussion paper that no adjustments
should be made to the fees schedule at this time to further
encourage electronic lodgement or to discourage paper lodgement.
(13) The report commented:
In view of the proposals outlined in this paper
for the abolition of annual returns, and the fact that many
documents either currently do not or, under the CLERP 7 proposals,
will not have a lodgment fee, there is little scope for an
incentive based on a reduction of the lodgment fee for documents
that are lodged electronically.
Section 6 provides that in the
case of all but two chargeable matters the regulations may specify
an amount not greater than $5 000 for a particular matter or
specify a method for calculating the fee. In any event, the fee or
sum of fees for a particular chargeable matter must not exceed $25
000.(14) Items 2 and 3
amend section 6 of the Fees Act to increase the maximum amount of
fee that can be charged to $10 000 from the present $5 000. The sum
of fees for a particular chargeable matter will be capped at $50
000 up from $25 000.
According to the Explanatory Memorandum, the new
ceiling reflects the fact that periodic adjustments based on
changes to the consumer price index would mean that fees would
approach the existing limit.(15) The amount of fee for a
particular chargeable matter is set out in schedule 1 to the
Corporations (Fees) Regulations 2001. Consequently, any proposal to
increase the fees applying to chargeable matters would be subject
to Parliamentary disallowance.
Item 4 amends section 8 to
permit the Governor-General to make regulations in relation
- A copy of the CLERP 7 paper may be found at the following link:
- A separate Act is necessary to exact fees in order to comply
with the requirements of section 55 of the Constitution. That
section provides in part that Laws imposing taxation shall deal
only with the imposition of taxation, and any provision therein
dealing with any other matter shall be of no effect.
- See subsection 5(2) of the Fees Act.
- Corporate Law Economic Reform Program, Simplified Lodgments
and Compliance: Streamlining paperwork under the Corporations Law,
2000, p. 33.
- ibid., p. 36.
- CLERP 7, p. 34.
- Tony Harris, A tax by any other name , Australian Financial
Review, 24 January 2001.
- Tony Harris, Business paying taxes disguised as fees ,
Australian Financial Review, 19 May 2000.
- Productivity Commission, Cost Recovery by Government
Agencies, August 2001. A copy of the report may be found at:
- Submission of the Investment and Financial Services
Association, cited in Productivity Commission, Cost Recovery by
Government Agencies, August 2001, p. F.13.
- Cited in Productivity Commission, Cost Recovery by
Government Agencies, August 2001, p. F.10.
- p. 3.
- CLERP 7, p. 51.
- Fees up to $100 000 may be charged in relation to ASIC s role
in supervising self listed markets. ASIC presently supervises the
self-listing of the Australian Stock Exchange Limited. ASIC also
has the power to perform other functions involving a conflict of
interest (see subsections 6(4) and 6(5).
- Explanatory Memorandum, p. 4.
3 February 2003
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