Chapter

AUSTRALIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1965.
Exchange Arrangement
CurrencyThe currency of Australia is the Australian dollar. It also circulates in several other countries, including Kiribati, Nauru, and Tuvalu.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the Australian dollar is market determined. Licensed foreign exchange dealers may deal among themselves, with their customers, and with overseas counterparties at mutually negotiated rates for both spot and forward transactions in any currency with regard to trade- and non-trade related transactions. However, the Reserve Bank of Australia (RBA) retains discretionary power to intervene in the foreign exchange market. There is no official exchange rate for the Australian dollar. The RBA publishes an indicative rate for the Australian dollar based on market observation at 9 a.m., noon, and 4 p.m. daily.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketActive trading takes place in forward and futures contracts.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Use of foreign exchange among residentsResidents generally require an Australian financial services license (AFSL) to purchase or sell foreign currency except when one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the person is dealing on his or her own account.
Payments arrangements
Regional arrangementsAustralia participates in PACER.
Administration of controlThe Australian Securities and Investment Commission (ASIC) is responsible for the licensing of all financial service providers, including foreign exchange dealers that deal in foreign currency transactions, unless the transactions are settled immediately or in the case of persons dealing on their own accounts.
International security restrictionsFinancial restrictions apply to certain transactions, accounts, and assets relating to certain persons associated with the government of Zimbabwe, and the previous government of Serbia and Montenegro.
In accordance with UN sanctionsEffective May 29, 2003, in accordance with UN Security Council Resolution No. 1483, assets of the former government of Iraq, its senior officials, and their immediate family members are frozen.
In accordance with UN Security Council Resolution No. 1373, the Ministry of Foreign Affairs maintains a list of suspected persons, entities, and assets connected with terrorism. Dealing with the funds or other assets of the listed individuals or groups, or making funds or assets available to them, is prohibited, and any funds in connection with listed individuals or groups are frozen.
On June 3, 2003, financial sanctions against the UNITA movement in Angola were lifted.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesExportation or importation of notes and coins totaling more than the equivalent of $A 10,000 in domestic or foreign currency must be reported to the Australian Transaction Reports and Analysis Center.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyA person generally requires an AFSL to purchase or sell foreign currency except when one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the person is dealing on his or her own account.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyConversion may be effected through a licensed foreign exchange dealer or through a person who is not licensed, provided that one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the person is dealing on his or her own account.
Nonresident Accounts
Foreign exchange accounts permittedA person generally requires an AFSL to purchase or sell foreign currency except when one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the seller is dealing on his or her own account.
Domestic currency accountsYes.
Convertible into foreign currencyConversion must be effected through a licensed foreign exchange dealer or through a person who is not licensed, provided that one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the person is dealing on his or her own account.
Blocked accountsOnly those accounts affected by international security restrictions or UN sanctions are blocked.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresThere are no import-licensing requirements or quotas on imports other than the tariff quota that applies to certain cheeses and curd.
Negative listFor some products, imports are allowed only if written authorization is obtained from the relevant authorities or if certain regulations are observed. Among the goods subject to control are narcotic, psychotropic, and therapeutic substances; firearms and certain weapons; certain chemicals and primary commodities; some glazed ceramic ware; rough diamonds; and various dangerous goods. These controls are maintained mainly to meet health and safety requirements; to meet certain requirements for labeling, packaging, or technical specifications; and to satisfy certain obligations arising from Australia’s membership in international commodity agreements or to meet obligations under international trade embargoes.
Import taxes and/or tariffsA general tariff of 5% applies to most manufactured goods, with the following exceptions. The tariff on passenger motor vehicles and certain automotive components is 15% and is scheduled to be reduced to 5% by 2010. Textiles, clothing, and footwear are subject to tariffs ranging from zero to 25%; tariffs for these goods are scheduled to be reduced to 10% on January 1, 2005. On November 27, 2003, the government announced the post-2005 assistance arrangement for the textile, clothing, and footwear industry. Under this arrangement, tariffs on these products will be reduced to levels between 5% and 10% by February 1, 2010, and to 5% by January 1, 2015. Tariffs for a large range of goods have been abolished.
The ANZCERTA establishes free trade in goods between Australia and New Zealand. On July 28, 2003, the Australia-Singapore Free Trade Agreement came into effect, eliminating tariffs on all goods between the two countries. The SPARTECA provides the Forum Island countries with nonreciprocal, duty-free access to most markets in Australia and New Zealand. Trade between Papua New Guinea and Australia is covered by the Papua New Guinea-Australia Trade and Commercial Relations Agreement. Effective July 1, 2003, all goods produced in the least-developed countries and Timor-Leste may be imported free of duties and quotas. Preferences have been eliminated on imports of some goods, except for those from South Pacific island territories.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExport prohibitions and restrictions in effect are designed to ensure quality control, administer trade embargoes, and meet obligations under international arrangements. These prohibitions are also set up to restrict the exportation of certain defense materials; regulate the exportation of goods that involve high technology and have dual civilian and military applications; maintain adequate measures of control over designated cultural property, resources, flora, and fauna; secure conservation objectives; and respond to specific market distortions abroad. Remaining controls on primary products apply mainly to food and agricultural products. Rough diamonds may be exported only to countries participating in the Kimberly Process Certification Scheme.
Export controls apply to uranium and related nuclear materials (including uranium-bearing sands) to ensure compliance with Australia’s nonproliferation policy obligations. Restrictions also apply to certain other nuclear and related materials. Licenses are required for exports of unprocessed wood, including wood chips. The Department of Agriculture, Fisheries, and Forestry (DAFF) administers export control powers in relation to regulated dairy products under the provisions of the Dairy Produce Act. This system allows the management of exports to some markets where quantitative restrictions apply.
Cattle, sheep or goat meat, and livestock may be exported only by persons or firms licensed by the DAFF. If other countries impose quantitative restrictions on imports of meat or livestock, the DAFF may, in conjunction with industry, introduce measures to control Australian exports to conform with those restrictions.
Other Commonwealth statutory marketing authorities that have export control powers are Horticulture Australia Limited, the Australian Honey Board, the Australian Wheat Board, and the Australian Wine and Brandy Corporation. The Australian Wheat Board’s powers make it the sole exporter of Australian wheat.
With quotasAustralia has a complete ban on the export of merino ewes, their genetic material, ova, and embryos to any country other than New Zealand. However, merino breeding rams purchased at designated export auctions and semen from rams included in the National Register of Semen Export Donors (administered by the Australian Association of Stud Merino Breeders) may be exported. Sales are subject to DAFF approval and an annual quota of 800 rams a year, with a provision for up to 100 rams to be placed on a semen donor register. No ram nominated for collection of semen for export may be physically exported. The export restrictions do not apply to merino rams intended for slaughter; however, the export of these rams is subject to controls to ensure they do not enter breeding stocks, and a legal undertaking by the exporter to ensure that this merino ram exported will be slaughtered. There is no restriction on the export of merino rams or reproductive material to New Zealand.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsThe purchase of shares and other securities of a participatory nature, which may be affected by laws and policies on inward direct investment, may require notification to the Australian authorities. Foreign governments, their agencies, and international organizations are not permitted to issue bearer bonds and, when borrowing in the Australian capital market, must advise the Australian authorities of the details of each borrowing after its completion. Subject to certain disclosure requirements, overseas banks may issue securities in the wholesale capital market in amounts of $A 500,000 or more. An AFSL issued by the ASIC is required to provide financial products advice; to deal in financial products (including securities, derivatives, and foreign exchange contracts that are not derivatives or a contract to exchange one currency for another that is to be settled immediately); or to create a market for a financial product. The AFSL entails specific codes of conduct and obligations, and subjects the licensee to certain disclosure requirements in relation to retail clients.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Controls on derivatives and other instrumentsAn AFSL is required to purchase or sell foreign currency except when one of the following conditions is met: (1) the transaction is settled immediately, (2) the person is not a dealer in foreign currency, or (3) the person is dealing on his or her own account.
Sale or issue locally by nonresidentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Controls on direct investmentYes.
Inward direct investmentPrior authorization is required for (1) acquisitions by foreign investors of a substantial interest in an Australian business with total assets of $A 50 million or more or when the proposal values the business at or over that amount (a substantial interest occurs when a single foreigner and any associates have 15% or more ownership of a business or several foreigners have 40%); (2) all investments subject to special restrictions (i.e., in the banking, civil aviation, airports, shipping, media, telecommunications, and real estate sectors), including those below the $A 50 million threshold; (3) direct investments by foreign governments or their agencies, irrespective of size; and (4) proposals to establish new business when the total amount of the investment is $A 10 million or more.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsAll acquisitions of residential real estate, including vacant land, must be documented, unless exempt by regulation. Acquisitions of nonresidential commercial real estate for development are normally approved, as are acquisitions of developed nonresidential commercial real estate. Acquisition of developed nonresidential commercial real estate is exempt if the total value of the property is less than $A 50 million and if the property is not subject to heritage listing. If the property is subject to heritage listing, the total value of the property may not exceed $A 5 million.
Approval is also usually granted for acquisitions of vacant land for development, subject to certain conditions, and for acquisitions of dwellings (including condominiums) direct from a developer, either “off the plan,” while under construction, or completed but never occupied, provided that no more than 50% of the total number of dwellings are sold to foreign investors.
Foreign acquisitions of established residential real estate are normally approved only in cases involving temporary residents who acquire the property as their principal place of residence for a period in excess of 12 months, subject to resale of the property upon departure. Foreign persons who are entitled to reside permanently in Australia or those who purchase as joint tenants with an Australian spouse are not required to seek approval to acquire any form of residential real estate. Foreign acquisition of residential real estate (including condominiums) within a designated integrated tourist resort is exempt from authorization.
Controls on personal capital transactions
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsTransfers may be subject to approval of the authorities in cases where the gift involves a foreign person obtaining an interest in Australian urban land.
Provisions specific to commercial banks and other credit institutionsAuthorized deposit-taking institutions are subject to prudential requirements, e.g., liquidity management and credit concentration.
Investment regulations
In banks by nonresidentsPrior approval from the Treasurer is required for any person or group—domestic or foreign—to acquire a 15% or larger share in a financial sector company, including authorized deposit-taking institutions and any nonoperating holding company for these institutions in Australia.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidentsForeign-owned life insurance companies can operate only in the form of locally incorporated subsidiaries.
Other controls imposed by securities lawsThe rules of the Australian Stock Exchange require that, to be a participating organization of the exchange, a majority of the directors must be Australian residents. This rule does not prohibit foreigners from owning participating organizations.
Authorized deposit-taking institutions, insurance companies, and pension funds are supervised by the Australian Prudential Regulation Authority.
Changes During 2003
Arrangements for payments and receiptsMay 29. In accordance with UN Security Council Resolution No. 1483, assets of the former government of Iraq, its senior officials, and their immediate family members were frozen.
June 3. Financial sanctions against the UNITA movement in Angola were lifted.
Imports and import paymentsJuly 1. All goods produced in least-developed countries and Timor-Leste were allowed to be imported free of duties and quotas.
July 28. The Australia-Singapore Free Trade Agreement came into effect.
November 27. Tariffs on textiles, clothing, and footwear products were scheduled to be reduced to levels between 5% and 10% by January 1, 2010, and to 5% by January 1, 2015.

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