In the latest stage of its push to simplify business redtape by modernising business registers, the Australian Government has turned its attention to the role of registry fees, publishing a Consultation Paper and beginning consultation on potential areas for reform (noting that regulatory fees are not part of this review).
The reasons for reform of registry fees
The Australian Securities and Investments Commission (ASIC) registers are important as a wide array of businesses and individuals rely on the data held on those registers when making decisions about counterparties that they may wish to transact with. Government agencies also rely on that data to inform policy decision-making and to allow regulators, such as ASIC, to undertake regulatory activities. The ongoing accuracy of the data is therefore vital, with fees incentivising companies and other entities to keep their data up-to-date and to consider their ongoing solvency (at least on an annual basis). This process of verification further breeds business and community confidence in the registers, allowing businesses to focus on their core functions.
ASIC currently collects a range of fees through the operation of the ASIC registers. In 2017/18, ASIC collected A$925m in registry fees and recorded over 122.4 million registry searches. The amount collected in registry fees has increased annually in the past decade, caused by more searches, registered companies and business names, as well as fee indexation.
The modernisation of business registers provides a timely opportunity for the Government to review both the quantum and nature of these fees, to ensure the business registers are funded sustainably.
Four key areas of potential reform
Annual review fees – does one size fit all?
Currently, differential annual review fees are payable depending on whether a company is proprietary, public or special purpose. However, even amongst proprietary companies, there is a huge range of differently sized companies. One option is to change the model so that smaller companies pay a lower review fee than larger companies. This minimises costs, reduces the compliance burden on small businesses and increases equity.
However, the Government has acknowledged that there will be mixed opinions on where the threshold should sit, for example, whether the definition of small business should be based on thresholds on capital or aggregated turnover.
Late fees replaced by an interest charge
Second, there is a proposal to replace late payment fees with an interest charge. This is similar to a model currently used by the Australian Tax Office if a taxpayer does not pay on time. Another option is to increase the penalty fees for late lodgement of annual review information while lowering the fees associated with late payments of money from the annual review process.
Removing search fees
Given the increasing digitisation of data on the registry, there is a proposal that search fees be abolished for publicly available electronic information, maintaining fees only in limited circumstances where older data is stored in paper format. This is in line with the Government's recently implemented Open Data policy and encourages more business opportunities, innovation and economic efficiency.
A new infrastructure fee
Fourth, there is a proposal to introduce an infrastructure fee on all Application Programming Interface users who on-sell data or make a financial gain from accessing data stored on the register. Currently, there is no distinction between fees paid by large commercial searches of the registry and those who search the database infrequently to verify their own or another's business status. The aim of this proposal is to use funds raised to cover the cost of future system upgrades, as well as providing a testing environment to improve system integration and a sandbox to encourage testing of innovative products. However, the Government has not yet indicated at what level the fee will be set.
Next steps in registry fee reform
The proposed changes are a positive step towards cutting down the regulatory burden associated with setting up and running Australian businesses. They will also allow Australia's regulatory regime to better adapt to technological disruption.
Consultation on these changes has now closed, with submissions due to be published on the Treasury website. The Government has indicated that recommendations from this review will feed into a more detailed business case being considered by the Government in 2019, with any changes to the current fee regime to be delivered over the longer term as part of the wider Modernising Business Registers Program.