Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

AUSTRALIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
Share
  • ShareShare
Show Summary Details

(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: July 1, 1965.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On August 25, 2006, and October 5, 2006, Australia notified the IMF that it had imposed financial restrictions against certain persons and entities associated with the government of Zimbabwe, the former government of the Federal Republic of Yugoslavia, and 12 entities and one individual of the Democratic People’s Republic of Korea. These financial restrictions are administered by the Reserve Bank of Australia (RBA), at the direction of the Australian government.
Other security restrictionsPursuant to UN Security Council sanctions, financial restrictions are imposed on certain listed persons or entities with a connection to the following countries: the Islamic Republic of Afghanistan (Al-Qaida and the Taliban), Côte d’Ivoire, the Democratic Republic of the Congo, the Islamic Republic of Iran, the former government of Iraq, Liberia, and Sudan.
Pursuant to UN Security Council terrorism-related resolutions, Australia has imposed financial restrictions to combat the financing of terrorism. It is prohibited for individuals or entities to hold, use, or deal in those assets or to make assets available to listed persons and entities. The list of entities and persons to which these measures apply is included on the consolidated list maintained by the Department of Foreign Affairs and Trade.
References to legal instruments and hyperlinksCharter of the United Nations Act 1945 and Associated Regulations; Iraq (Reconstruction and Repeal of Sanctions) Regulations; Banking (Foreign Exchange) Regulations 1959; Charter of the United Nations Act 1945 and Charter of the UN (Terrorism and Dealing with Assets) Regulations 2001; Details regarding the financial restrictions imposed by Australia on designated persons and entities are available at www.dfat.gov.au/un/unsc_sanctions/index.html and www.rba.gov.au/MarketOperations/International/FinancialSanctionsCashReporting.
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 counterparts at mutually negotiated rates for both spot and forward transactions in any currency with regard to trade- and nontrade-related transactions. However, the 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 of the trade-weighted index 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.
References to legal instruments and hyperlinksReserve Bank Act 1959: www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/current/bytitle/C276D47C3215A796CA256F71004DA82A?OpenDocument.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsAn Australian financial services license (AFSL) is generally required for foreign exchange transactions by residents, with some exceptions. Foreign exchange contracts are specifically classified as a “financial product” under the Corporations Act 2001 (Act). Thus foreign currency transactions where currency is not immediately exchanged, in recognition of the risk associated with the settlement period, fall within the definition of financial product. Accordingly, dealing, making a market, or giving advice in relation to foreign exchange contracts is regulated by the Act, and requires an AFSL. However, a contract to exchange one currency (whether Australian or not) for another that is to be settled immediately by the physical delivery of notes and/or coins in the second currency is specifically excluded from the definition of financial product.
The Act, in conjunction with the Corporations Regulations 2001, contains further AFSL exemptions that specifically relate to foreign exchange contracts. Two relevant exemptions are (1) for certain dealings in foreign exchange contracts as principal for the purpose of managing financial risk; and (2) overseas entities providing advice on, or making a market in, foreign exchange contracts to “professional investor” clients. Spot foreign exchange contracts are excluded from the definition of derivative.
Payments arrangementsNo.
Administration of controlThe Australian Securities and Investments Commission (ASIC) is responsible for the licensing of all financial services providers, including foreign exchange dealers that deal in foreign currency contracts, by its administration of the AFSL regime.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)If the value of the gold being bought or sold is greater than $A 10,000 or its equivalent, there is an obligation to report the details of the transaction to the Australian Transaction Reports and Analysis Centre.
Controls on exports and imports of banknotesExportation and importation of notes and coins totaling more than the equivalent of $A 10,000 in domestic or foreign currency must be reported to customs for forwarding to the Australian Transaction Reports and Analysis Centre for purposes of combating money laundering and the financing of terrorism.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsOnly those accounts affected by international security restrictions or UN sanctions are blocked. If a nonresident is subject to bilateral sanctions by way of the Banking (Foreign Exchange) Regulations 1959 and holds an account in Australia, RBA approval is required for any payment made to or from that account.
References to legal instruments and hyperlinksn.a.
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 ceramicware; 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.
Licenses with quotasQuantitative restrictions may be imposed on some goods to fulfill obligations under relevant international agreements. Such goods include certain industrial chemicals, some ozone-depleting substances, and hazardous waste.
To protect public health and safety and the environment, quantitative restrictions may be applied to genetically modified organisms and some therapeutic substances and goods.
The tariff quota that applies to certain cheeses and curd is administered through a licensing system.
Import taxes and/or tariffsMost agricultural products enter Australia duty-free; the simple average applied tariff is 1.3% and the average limit is 5%. A general tariff of 5% applies to many manufactured goods, with the following exceptions. The tariff on passenger motor vehicles and certain automotive components is 10% and is scheduled to be reduced to 5% by 2010. Textiles, clothing, and footwear are subject to tariffs ranging from zero to 17.5%. Under the government’s post-2005 assistance arrangement for the textile, clothing, and footwear industry, tariffs on these products will be reduced to levels of 5% and 10% by January 1, 2010, and to 5% by January 1, 2015. Tariffs for a large range of goods have been abolished.
Tariff concessions are available under the Tariff Concession System for most goods subject to a tariff, where it can be substantiated that there is no domestic manufacturer of substitutable goods. There are also a variety of concessions available for specific purposes, such as to accommodate split import consignments and to encourage investment in major projects.
The ANZCERTA establishes free trade in goods between Australia and New Zealand. Australia has other free trade agreements (FTAs) with Singapore, Thailand, and the United States. Under the FTAs, goods originating in Singapore are duty-free, and tariffs on goods originating from Thailand and the United States are being phased out over 10 years commencing January 2005. The SPARTECA provides the Forum Island countries with nonreciprocal, duty-free access to most markets in Australia and New Zealand. All goods produced in the least developed countries and Timor-Leste may be imported free of duties and quotas.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
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 Kimberley Process Certification Scheme (an international effort to eliminate the trade in “conflict diamonds”) and each shipment must be accompanied by a certificate issued by the Department of Industry, Tourism and Resources.
Export controls apply to uranium and related nuclear materials (including tantalum and mineral sands containing monazite) to ensure compliance with Australia’s nonproliferation policy obligations and safeguards regime. Restrictions also apply to certain other nuclear and related materials. Export permits for uranium and other nuclear and related materials are issued by the Department of Industry, Tourism, and Resources. Export permits are required from the Australian Radiation Protection and Nuclear Safety Agency for the export of high-activity radioactive sources. 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. The DAFF also administers quotas for beef and sheep meat into the restricted U.S. and EU markets. 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. As per Australia’s 2006 WTO-notified state trading enterprises (STEs) notification, there are four WTO-notified STEs operating in Australia that have some form of export control powers. AWB International Limited (AWBI) is the only national body. There are three state-level entities that have export powers for selected agricultural products. Wheat marketing arrangements, including the status and powers of the AWBI, are currently under review, and there are temporary arrangements in effect for determining applications for bulk wheat exports from entities other than the AWBI. Australian government decisions arising from the review are expected to be made before June 30, 2007, when the temporary arrangements expire.
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 that they do not enter breeding stocks and to a legal undertaking by the exporter to ensure that these exported merino rams will be slaughtered. There is no restriction on the export of merino rams or reproductive material to New Zealand.
Export taxesNo.
References to legal instruments and hyperlinksCustoms (Prohibited Exports) Regulations 1958; www.comlaw.gov.au/ComLaw/Legislation/LegislativeInstrumentCompilation1.nsf/0/96C3E8FFDD52E095CA257287001AC437?OpenDocument.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating natureThe acquisition 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.
Purchase locally by nonresidentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsForeign governments, their agencies, and international organizations are not permitted to issue bearer securities and, when borrowing in the Australian capital market, must advise the Australian authorities of the details of each borrowing after its completion.
On money market instruments
Sale or issue locally by nonresidentsThe regulations governing bonds or other debt securities apply.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsThe regulations governing bonds or other debt securities apply.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Controls on direct investment
Inward direct investmentControls apply to (1) investments in banking, real estate, mass circulation and ethnic newspapers, broadcasting (including television), civil aviation, and uranium; (2) proposals falling within the scope of Australia’s Foreign Acquisitions and Take-overs Act 1975, which broadly covers acquisitions of urban land, acquisitions of partial or controlling interests in Australian companies or businesses with total assets valued at more than $A 100 million ($A 871 million for U.S. investors in nonsensitive sectors) and other arrangements relating to foreign control of companies and businesses; (3) proposals to establish new businesses or projects, where the total investment is $A 10 million or more for non-U.S. investors; (4) investments by foreign governments or their agencies; (5) investments to the extent that constituent states or territories of Australia exercise legislative and administrative control over such investment; and (6) ownership of Australian flag vessels, except through an enterprise incorporated in Australia.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsControls apply to the acquisition of real estate in Australia, except for the acquisition (1) of direct interests in nonresidential commercial real estate valued at less than $A 5 million or $A 50 million, where such real estate is not on the heritage list for non-U.S. investors or $A 871 million for U.S. investors (heritage listed or otherwise); (2) of interests in time-share schemes, where the entitlement of the foreign interest and any associates is less than four weeks a year; (3) of residential real estate by approved migrants, special category visa holders, and other foreign nationals entitled to permanent residence in Australia, including Australian permanent residents not ordinarily resident in Australia and special category visa holders buying through Australian companies and trusts; (4) by nonresident Australian citizens, either directly or indirectly through Australian companies and trusts; (5) of offices and residences by foreign government missions for use as official missions or residences for staff subject to sale to Australians or other eligible purchasers when no longer being used for those purposes; (6) of minority interests in public companies and trusts whose principal assets are composed of real estate, to the extent permitted by regulations under the Foreign Acquisitions and Take-overs Act; (7) of real estate by general insurance companies operating in Australia, where the acquisitions are made from the reserves of the companies and are within the prudential guidelines of the insurance commissioner; (8) by life insurance companies, representing investment of their Australian statutory funds, by Australian pension funds of foreign employers, and by foreign-controlled charities or charitable trusts operating in Australia for the primary benefit of Australians; (9) of strata-titled hotel rooms in designated hotels, where each room is subject to a long-term hotel agreement; (10) of residential real estate by Australian citizens and their foreign spouses, where they purchase as joint tenants; and (11) of Australian urban land by foreign-controlled responsible entities acting on behalf of managed unit trusts and other public investment schemes registered under Chapter 5C of the Corporations Law, when they are investing primarily for the benefit of fund investors or unit holders ordinarily resident in Australia.
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.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsAn AFSL issued by the ASIC is generally required to provide financial products advice, to deal in financial products (including securities, derivatives, and certain foreign exchange contracts), to create a market for a financial product, to operate a registered scheme, or to provide custodial or depository service. The license is subject to specific obligations under the Corporations Act, including the obligation to comply with conditions of the license. Certain disclosure requirements apply in relation to retail clients. Authorized 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
Insurance companiesForeign-owned life insurance companies may operate only in the form of locally incorporated subsidiaries unless prescribed by regulation to be able to operate as a branch. Under the Life Insurance Act 1995, only U.S. life insurers are allowed to operate in Australia through branches. However, branches of foreign incorporated life insurers operating prior to the introduction of the Life Insurance Act 1995 are permitted to continue to operate.
Pension fundsThe Australian superannuation (pension) industry is regulated primarily under the Superannuation Industry (Supervision) Act 1993 (the SIS Act). Under the SIS Act, all trustees (excluding trustees of self-managed superannuation funds and public sector superannuation schemes) are required to obtain a license from APRA, and to register all funds under their trusteeship with APRA prior to accepting contributions.
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsAustralian regulation of collective investment schemes does not impose investment restrictions of the type mentioned under this item. Instead it imposes high-level duties on managers of such schemes; for example, to exercise a reasonable degree of care and diligence and to act in the best interests of scheme members.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange measuresAugust 25. The authorities notified the IMF that Australia had imposed financial restrictions against certain persons and entities to protect international security.
October 5. The authorities notified the IMF that Australia had imposed financial restrictions against certain persons and entities to protect international security.

    Other Resources Citing This Publication