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Foreign banks could fall under bank levy, warns APRA

Australian branches of foreign banks could be liable to pay the "big bank levy" should they exceed the liabilities threshold, the Australian Taxation Office (ATO) and Australian Prudential Regulation Authority (APRA) have revealed.

As announced in the federal budget, a 6-basis-point levy will now apply to the five largest banks (with assessed liabilities of $100 billion or more), with the first payment due on 21 March 2018.

According to the Treasury, the levy would bring in $6.2 billion over the budget.

Following on from a public consultation on the draft reporting standards for the levy (which will affect ANZ, Commonwealth Bank of Australia, NAB, Macquarie and Westpac), the ATO and APRA have released a joint response to the submissions.

APRA reportedly received six submissions to the consultation; however, five of them (presumably from the five authorised deposit-taking institutions [ADIs] affected) have not been released as they are “confidential”.


The remaining submission, from the Australian Financial Markets Association (AFMA), which represents the interests of more than 100 participants in the wholesale banking and financial market, has been released.

Echoing concerns raised by the banks during the Senate Economics Legislation Committee hearing into the major bank levy, the association highlighted the “short consultation period”; the wish for the levy to be applied only to Australian operations of banks (and not their foreign bank branches); assurances that should any global liabilities reported by a bank to APRA under another reporting standard were to exceed the levy threshold, they would not “inadvertently” come under the scope for the levy; and clarity over the differences between the terms “licensed ADI” and “authorised ADI”.

While the response does not address all of these concerns, the reporting standard clarifies that "licensed ADI" aligns with the accounting concept of a "parent".

Notably, the submission reveals that the standard has been amended to require ADIs to report interbank loans from ADIs and foreign banks as one item.

Further, it states that the primary legislation applies to foreign ADIs. However, the liabilities that are taken into account in determining whether the major bank levy applies to a foreign ADI are only those relating to their Australian branch operations.


While there are currently no foreign banks whose Australian branch liabilities exceed the $100 billion major bank levy threshold, the two bodies have clarified that should the liabilities relating to the Australian branch operations of a foreign ADI exceed that threshold in the future, the foreign banks will be liable to pay the levy. 

Other clarifications from the submission include:

- ADIs will only be required to submit to APRA a single reporting form, which will then be taken as having been received by the ATO;
- As the major bank levy is self-assessed, the ATO will accept amendments as and when they are reported to APRA and will manage any additional payments or refunds;
- The due date for the reporting form now matches APRA’s capital adequacy reporting requirements, given that the reporting standard includes data relating to capital instruments (as such banks now have 30 business days following the end of the relevant quarter);
- Relevant amounts paid under the levy must be calculated and reported on a quarterly basis, and not on an annual basis; and
- Reporting will be done on a "best endeavours" basis for the reporting periods ending on or before 30 June 2019 in recognition that “current systems may require upgrading to accommodate the new reporting standard, as well as time needed to develop appropriate governance processes”.

The final reporting standard, ARS 760.0, has now been released by the ATO, and will apply for the quarter ending 30 September 2017 and subsequent quarters.

[Related: RBA downplays bank levy impact]

Foreign banks could fall under bank levy, warns APRA

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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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