Inspector-General Practice Statement 7

Subtitle: 
Inspector-General Practice Statement (IGPS) 7 - annual estate returns (AERs)

1. Purpose of the annual estate return

1.1 At the end of each financial year AFSA is required to report to the Parliament on the operation of the Bankruptcy Act 1966 (the Act). This report is submitted to Parliament by the Minister. The annual estate return (AER) is primarily used to collect information on the operation of the Act from debt agreement administrators, controlling trustees and registered trustees ('practitioners').

1.2 The obligation for practitioners to lodge an AER is set out in the Act as follows:

  • Section 170A: For registered trustees and controlling trustees
  • Section 185LEA: For debt agreement administrators

1.3 AFSA also uses the AER process for the following purposes:

  • calculation of the annual realisations charge liability for moneys received by practitioners based on data disclosed on the AER
  • reconciliation of any realisations charge (RC) paid during the year with the annual liability (also refer IGPD 2, Collection of realisations and interest charges)
  • selection of administrations for inspection by AFSA Regulation and Enforcement.

1.4 Information from the Official Trustee on the operation of the Act is collected through a separate process.

2. AER format

2.1 The AER is in the form of a spreadsheet and must be completed electronically and submitted online via AFSA’s AER Online service.  Information to assist online users can be found at AER online.

2.2 The AER form for ‘debt agreements’ is different to the form for 'other insolvency administrations’ as the data set required is different. Examples are shown in the annexure.

2.3 Practitioners can obtain their AER from AFSA’s AER Online . Alternatively, to minimise data entry effort practitioners may configure their systems to export the required AER data to a compliant format AER. If a trustee is also an administrator, they are required to complete two AER forms – one for their debt agreements and the other for their administrations as trustee under the Act.

2.4 An AER obtained from AER Online will be auto-populated with the following details:

  • names of the administrations managed by the administrator/primary trustee during the AER period
  • opening bank balances, previously deferred Realisations or Interest Charge of each of those administrations
  • finalisation dates of those matters that were finalised during the year
  • most recently lodged AER data for the administration, if there has already been a lodgement during the AER period

2.5 An AER must contain the acceptable column and heading layout and be in an xls and xlsx file extension.  Additional columns may be added and will not affect the AER submission.

2.6 An AER form may be submitted with one administration or thousands of administrations.  Multiple submissions of AER forms are allowed.

2.7 When an AER is submitted online any errors or discrepancies found with the AER data will be displayed.  Trustees and administrators must ensure administrations with AER data issues are corrected and AER data resubmitted before the deadline date.

2.8 An AER form may be submitted at any time, including updating previous AER submissions for an administration. The last successful lodgement will be used.

2.9 Amendments may be made to AER lodgements from previous AER Periods to correct any mistakes. For example, if an opening balance for an administration is different on a later AER the closing balance on the earlier AER can be amended.

3.0 The due date for AERs to be lodged by practitioners is within 35 days after the end of the financial year,that is by the fourth of August.

3. AER process

3.1 There are essentially three steps in the AER process:

  1. Obtaining the AER forms. Practitioners can log in to AER Online to obtain an AER for a full or partial year (based on AER lodgement status, administration type or a single administration number)
  2. Submitting AER forms. AER forms are required to be completed and submitted via AER Online before the due date.  A series of checks are performed upon submission of AER forms to ensure data integrity.  Practitioners must ensure any errors identified are corrected and AER forms resubmitted before the due date.
  3. Realisations and interest charge reconciliation.  A Realisations Charge and Interest Charge liability for each trustee or administrator is determined from submitted AER form.  Payments of Realisations and Interest Charge made by the practitioner throughout the year are applied to the liability.  Any underpayment must be paid before the due date.

4. AER time-frame

4.1 The AER process is designed to fit in with annual reporting requirements of government. It is a time critical process and needs to be managed to meet staff, stakeholder and government expectations. General time-frames for each of the three steps are:

Week Event
July (first week) Practitioners can obtain their AER listing their full year required lodgements from AER Online
August (first week) Practitioners must submit completed AERs to AER Online

August (third week)

Complete AER data processing for annual reports and complete RC underpayment/overpayment reconciliations

4.2 Practitioners are issued reminders in the weeks preceding the due date for lodgement, on 4 August.

5. Dealing with extension requests

5.1 Given the tight time-frames for government reporting, extensions of time for lodgement of AERs are granted in limited circumstances. The process has been designed to allow practitioners a five-week period in which to complete and lodge their AERs.

5.2 There may be special circumstances (for example: temporary loss of records due to system problems) where an administrator or trustee may not be able to comply with the four-week time-frame. Under these circumstances an extension of time may be granted upon written application to the Inspector General. Such applications should be forwarded to regulations.enquiry [at] afsa.gov.au (Regulation and Enforcement) for consideration.

6. Dealing with late lodgement

6.1 Practitioners are required by law to lodge an AER for each administration (refer sections 170A and 185LEA of the Act). A practitioner who fails to lodge an AER on time, by 4 August, commits an offence. The penalty is 5 penalty units.

6.2 The failure to provide this information can have an adverse impact on the credibility of the insolvency system.

6.3 In the first instance, after the passing of the lodgement date, contact will be made by Regulation and Enforcement with the practitioner to enquire about the non-lodgement.

Annexure A – AER form for trustees

For Annual estate return spreadsheets for trustees see AER Online.

Annexure B – Trustee instructions on completing the AER

Important note:

1. For every administration reported on the AER each column, except Finalisation Date and Comments, must contain a value (for example: $0.00 or the actual value).

2. When the AER form has been obtained from AER Online, columns marked with '*' are auto-populated or calculated.

3. Minimum trustee remuneration pursuant to section 161B
Where a practitioner has received a payment from the debtor pursuant to section 161B of the Act, for a bankruptcy administration that commenced prior to 1 December 2010, then that receipt need not be brought into account in the estate and should not be included in any of the columns in the AER. No realisations charge is payable on that receipt.

4. Section 188 authorities and PIAs

Where a practitioner was a controlling trustee for a section 188 authority which later became a PIA during the same financial year, there will be two entries in the AER. Any third party funds held in trust pending the outcome of a PIA proposal need not be brought in to account in the section 188 administration except for the amount of costs and fees that are received by the practitioner in the capacity as controlling trustee.

Financial transactions (if any) that occurred during the controlling trustee period should be entered against the section 188 administration and financial transactions that occurred under the PIA need to be entered under the PIA administration. Receipts under a section 188 or a PIA should be reported at column 16 as 'Other Receipts' if it attracts the realisations charge or column 19 “Other Receipts” if that receipt does not attract the realisations charge. Any funds transferred from the section 188 administration in to a PIA administration should be reported using columns 10 and 34.

This will ensure that the realisations charge is only levied once on the same funds.

5. Administrations with more than one estate
Where there is more than one estate in an administration (eg a joint bankruptcy with the husband’s estate, wife’s estate and a joint estate), there is only one entry in the AER for the administration. If there were transactions in each of the estates, the practitioner must add the information from the separate estates and insert the combined estate totals against the single administration.

6. Administrations with joint trustees
Where there are joint trustees in administration, the administration will only appear in the AER of the trustee who is the primary trustee. The other trustee (ie the secondary trustee) will not see this administration and should not request it from AFSA.

7. Missing or extra administrations
If there are administrations missing from the AER or administrations that the practitioner is not responsible for, the practitioner should advise AFSA.

Practitioners should contact AFSA immediately if they believe any of the data that is auto-populated in your AER form is incorrect.

*Row 1

AER period

This cell is pre-filled with the AER financial year period for the administrations the practitioner will be submitting AER data for.  When an AER form is submitted the year must match the online selected AER period.

Practitioner number

This cell is pre-filled with the practitioner registration number for the administrations the practitioner will be submitting AER data for.  When an AER form is submitted the practitioner registration number must match the online selected practitioner registration number.

AER rate

This cell is pre-filled with the applicable realisations charge rate for the AER financial year period the practitioner will be submitting AER data for.   This is used for the automatic calculation of realisations charge due for an administration.

*Columns 1-7 – Administration details
These columns are pre-filled with details of administrations that were active at any time during the financial year and the practitioner was the primary trustee at any time during the financial year as per AFSA’s records.

*Column 8 – Opening balance
The column is pre-filled with the closing balance reported for the administration in the practitioners previous AER.

Note 1: Opening balances will not pre-fill for the 2014/15 AER period.

Column 9 – Funds transferred from another practitioner
Where an administration has been transferred to a practitioner along with funds held in the estate, the amount received needs to be inserted here. AFSA may cross reference this entry with funds transferred out by the other trustee.

Column 10 – Gross sale price of assets
Where a practitioner has sold assets in a bankruptcy or Part XI administration, the gross asset value should be reported here.

Example: A practitioner sold a house property for $500,000 and after the deduction of agent’s commission/settlement fees of $20,000, outstanding water/council rates of $5000 and mortgage of $400,000, you received a net amount of $75,000 in the estate. The figure that gets reported in this column is $500,000.
 

Note: Receipts should be shown excluding the GST component, if any. Eg sale of business plant and equipment $11,000 including $1000 GST: only $10,000 should be shown in this column and the GST component of $1000 should be shown under column 19 (Other Receipts not subject to Realisations Charge).

Column 11 – Recoveries from antecedent transactions
Any receipts in relation to recoveries under sections 120, 121 and 122 of the Bankruptcy Act should be reported in this column.

Column 12 – Contributions collected
All income contributions received from bankrupts should be reported in this column.

Column 13 – Sec 73 composition receipts
Any composition monies received should be reported in this column.

Column 14 – Trading receipts
Where a practitioner has continued to trade a debtor’s business, the value of any trading receipts (net of GST) should be shown in this column. (Do not include sale of business assets in this column – these should be shown at column 11.) Trading payments are shown at column 23.

Column 15 – Other receipts
Where there are other types of receipts (eg rents, dividends, royalties, income tax refunds, GST refunds, insurance premium refunds) which are subject to the realisations charge, they need to be reported here.
Notes – any receipts that received in an S188 or PIA needs to be reported in this column.

*Column 16 – Total receipts subject to realisations charge
This column automatically calculates the total receipts for the administration which are subject to the Realisations Charge.

Column 17 – Interest earned on estate funds
If a practitioner has earned interest on estate funds it is reported in this column. This information is used to calculate the practitioners Interest Charge liability. Bank fees and charges paid should be disclosed at column 25.
Note: some trustees maintain a single bank account for all their estates, the interest earned on that single bank account is not required to be apportioned amongst the various estates.

An aggregate interest income may be reported via AER Online if not attributable to an administration.

Column 18 – Other receipts not subject to the realisations charge
If a practitioner has certain receipts which are not subject to the realisations charge (eg creditor advances/indemnities/GEERS/FEG receipts/GST collected on sale of business assets) these should be reported in this column.

*Column 19 – Total receipts
This column automatically calculates the total receipts that you have had in a administration.

Column 20 – Amount paid to secured creditors
Where a practitioner has paid secured creditors from the sale proceeds of assets, the amounts paid should be reported in this column. Using the example shown in the notes to column 10, the amount of $5000 paid for the outstanding water/council rates (these rates are usually secured against the property) and $400,000 paid to the mortgagee would be reported in this column.

Column 21 – Trading payments

Where a practitioner has continued to trade a debtor’s business, the value of any trading payments (payments to suppliers, wages to employees etc), net of GST should be shown in this column.

Column 22 – Costs of administering the estate
All costs of administering an administration should be reported in this column. This includes expenses like legal fees, selling agent’s commission, settlement fees, brokerage on sale of shares etc. Using the example in the notes for column 10, the selling agent’s commission and settlement fees of $20,000 would be reported in this column.
Note: all expenses recorded should include the GST component (if any).

Column 23 – Trustee's remuneration
Any remuneration drawn by the practitioner in the capacity as trustee/controlling trustee should be reported here.
Note: where an administration has been transferred to you by another trustee and you are required to make a payment to the previous trustee for his fees, that fee amount should not be shown in this column but included as 'Other Payments' at column 26.

Column 24 – Dividends paid to creditors
All dividends that were paid to creditors should be reported here. This includes any employee creditor dividends, but does not include payments made to employees out of Fair Entitlement Guarantee (FEG*) funds received from the Department of Employment or payment of petitioning creditor costs.

(*Note: This arrangement was previously known as the General Employee Entitlements and Redundancy Scheme (GEERS) and was managed by DEWR)

Column 25 – Bank fees and charges
Bank fees and charges are shown in this column. This information is used to calculate the practitioner’s interest charge liability. Bank fees and charges include account keeping or account service fees, transaction fees, direct debit fees and cheque deposit fees – all applying whether the transaction is electronic, phone, internet or at the branch. They do not include dishonour fees (cheque or direct debit), overdrawn account fees, financial institutions duty, bank account debits tax or withholding tax, balance enquiries or additional statements.

Column 26 – Other payments
All other payments made out of an administration need to be recorded here. This could include payments like petitioning creditor costs, GEERS/FEG payments to employees, income taxes, net GST on sale of assets etc.

Column 27 – Realisations charge payments
The amount of realisations charge payments that you have already made during the AER period needs to be recorded here. This does not include realisations charge payments you intend on making after submission of the AER.

Column 28 – Interest charge payments
The amount of interest charge payments, if attributable to an administration, that you have already made during the AER period needs to be recorded here.

Column 29 – Refund of surplus to debtor
Where there is a surplus in an estate and a refund has been made to the debtor/bankrupt during the financial year, the refund amount should be recorded here.

*Column 30 – Total payments
This column automatically totals all the payments made from the administration during the AER period.

Column 31 – Funds transferred to another practitioner
Where a practitioner has transferred an administration with funds to another trustee, the amount transferred needs to be reported here. AFSA may cross-reference this with the funds reported as received by the other trustee.

*Column 32 – Closing balance
This column automatically calculates the closing balance in the administration based on the receipts and payments disclosed by a practitioner in the previous columns. This balance should be the same as the balance of the administration’s estate account.

*Column 33 – Realisations charge deferred previous period
This column is pre-filled from / validated against the realisations charge deferred to next period which was reported for the administration in the previous year AER.

*Column 34 – Realisations charge due for current period
This column automatically calculates the total realisations charge that is due based on the realisations charge liable receipts and exempt payments that the practitioner has reported in the previous columns.

Note: As per Bankruptcy (Estate Charges) Act 1997 S6.1A, no charge is payable in respect of a particular administration if the amount of Realisations Charge calculated as due for a charge period is less than $10. If a practitioner chooses to not pay the Realisations Charge because it is less than $10 an amount of zero should be reported here.

Column 35 – Realisations charge deferred to next period
Where a practitioner intends to defer payment of the realisations charge due for the administration this must be reported here.  The Act allows for realisations charge to be deferred to the next AER period if the realisations charge is less than $50 and the administration is not finalised. A partial deferral of realisations charge is not allowed.

*Column 36 – Realisations charge liability for the period
This column automatically calculates the total realisations charge liability, including any previously deferred realisations charge.  If payment of realisations charge is being deferred to the next AER period or the amount of realisations charge is not being paid due to being less than $10 then a liability amount of zero should be reported here.

*Column 37 – Interest charge deferred previous period
This column is pre-filled from / validated against the interest charge deferred to next period which was reported for the administration in the previous AER.

*Column 38 –Interest charge due for current period
This column automatically calculates the interest charge that is due based on the interest earned and bank fees/charges you have entered at columns 17 and 25 respectively.

Note: As per s5(1A) of the Bankruptcy (Estate Charges) Act 1997, no charge is payable in respect of a particular administration if the amount of interest charge calculated as due for a charge period is less than $10. If a practitioner chooses to not pay the interest charge because it is less than $10 an amount of zero should be reported here.

Column 39 – Interest charge deferred to next period
Where a practitioner intends to defer payment of the interest charge due for the administration this must be reported here.  The Act allows for interest charge to be deferred to the next AER period if the interest charge is less than $50 and the administration is not finalised. A partial deferral of interest charge is not allowed.

*Column 40 – Interest charge liability for the period
This column automatically calculates the total interest charge liability, including any previously deferred interest charge.  If payment of interest charge is being deferred to the next AER period then the liability will be zero.

Column 41 – Finalisation date
Where a practitioner has finalised an administration during the year, the date of finalisation needs to be recorded in this column.
Note 1: An error will be displayed if a finalisation date is supplied and:

  • The administration has a closing balance
  • It is s188 administration.
  • The practitioner has transferred an estate to another trustee
  • It does not fall within the AER period being lodged
  • The practitioner has reported a deferral to next period of realisations or interest charge

Column 42 – Comments
Optional comments can be reported here.  This may be helpful when resubmitting new AER data for an administration or when amending an AER for a previous period.

Annexure C – AER form for administrators

For Annual estate return spreadsheets for administrators see AER Online.

Annexure D – AER instructions for administrators

Important note:

1. For every administration reported on the AER each column, except Finalisation Date, Total value of creditor claims and Comments, must contain a value (for example: $0.00 or the actual value).

2. When the AER form has been obtained from AER Online, columns marked with '*' are auto-populated or calculated.

3. Missing or extra administration

If there are administrations missing from the AER or administrations that the practitioner is not responsible for, the practitioner should advise AFSA.

The practitioner should contact AFSA immediately if they believe any of the data that is auto-populated in the AER form is incorrect.

*Row 1
AER Period

This cell is pre-filled with the AER financial year period for the administrations the practitioner will be submitting AER data for.  When an AER form is submitted the year must match the online selected AER period.

Practitioner number

This cell is pre-filled with the practitioner number for the administrations the practitioner will be submitting AER data for.  When an AER form is submitted the practitioner number must match the online selected practitioner number.

AER rate

This cell is pre-filled with the applicable Realisations Charge rate for the AER financial year period the practitioner will be submitting AER data for.   This is used for the automatic calculation of Realisations Charge due for an administration.

*Columns 1-6 – Administration Details
These columns are pre-filled with details of administrations that were active at any time during the financial year and the practitioner was the administrator at any time during the financial year as per AFSA’s records.

*Column 7 – Date proposal was lodged with Official Receiver
This column is pre-filled with the date the debt agreement proposal was lodged with the Official Receiver. This date is relevant in determining which debt agreements attract the realisations charge and interest charge.

*Column 8 – Opening balance
The column is pre-filled with the closing balance reported for the administration in the previous AER.

Note 1: Opening balances will not pre-fill for the 2014-15 AER period.

Column 9 – Funds transferred from another practitioner
Where a debt agreement has been transferred from another administrator (eg from the Official Trustee or other administrator), the funds, if any, that were transferred along with that debt agreement need to be entered in this column.

Column 10 – Debt agreement payments collected
Receipts from debtors during the course of the year should be shown in this column.
These receipts attract the Realisations Charge if the debt agreement arose out of a proposal that was lodged with the Official Receiver on or after 1 July 2007.

Column 11 – Other receipts not subject to realisations charge
Where an administrator receives any other type of funds in relation to the debt
agreement, it should be shown in this column. These types of receipts will be rare but could include instances where a dividend cheque was returned unpresented by a creditor or a person returns a dividend cheque that may have been issued by the administrator in error. These types of receipts do not attract the realisations charge.

*Column 12 – Total receipts
This column automatically calculates the total receipts that the practitioner has had in an administration..

Column 13 – Expenses

Where a practitioner makes any payments to cover expenses in relation to the debt agreement, these amounts are entered in this column. An example of such an expense will be where a cheque received from the debtor under the debt agreement payment plan is dishonoured and the bank charges a dishonour fee.

Column 14  – Administration fees
Any fees drawn by the practitioner during the course of the financial year should be reported here.

Column 15 – Dividends paid to creditors
The total dividends paid to creditors during the financial year should be shown in this column.

Column 16 –Other payments
Where the practitioner has made any other payments in relation to the debt agreement the amount needs to be shown in this column. Such payments will be rare but may include for instance a dividend cheque that was returned in a previous financial year and reissued in the current financial year.

Column 17 – Realisations charge payments
The amount of realisations charge payments that the practitioner has already made during the AER period needs to be recorded here.   This does not include realisations charge payments you intend on making after submission of the AER.

Columns 18 – Refunds to debtor
Any refunds paid to the debtor should be recorded in this column. Entries in this column would be extremely rare but could arise where creditors withdraw their claims or total receipts from the debtor are more than sufficient to pay out the terms of the agreement.

*Column 19 – Total payments
This column automatically totals all the payments made from the administration during the AER period.

Column 20 – Funds transferred to another practitioner
If the administration of a debt agreement has been transferred to another administrator (eg to the Official Trustee or another administrator) then any funds that were transferred as part of the administration need to be recorded here.

*Column 21 – Closing balance
This column automatically calculates the closing balance in the administration based on the receipts and payments disclosed by you in the previous columns. This balance should be the same as the administration’s bank balance.

*Column 22 – Realisations charge deferred previous period
This column is pre-filled from / validated against the realisations charge deferred to next period which was reported for the administration in your previous year AER.

*Column 23 – Realisations charge due for current period
This column automatically calculates the total realisations charge that is due based on the realisations charge liable receipts that you have reported in the previous columns.

Note: As per s6(1A) Bankruptcy (Estate Charges) Act 1997, no charge is payable in respect of a particular administration if the amount of realisations charge calculated as due for a charge period is less than $10. If the practitioner chooses to not pay the realisations charge because it is less than $10 an amount of zero should be reported here.

Column 24 – Realisations charge deferred to next period
Where the practitioners intends to defer payment of the realisations charge due for the administration this must be reported here.  The Act allows for realisations charge to be deferred to the next AER period if the realisations charge is less than $50 and the administration is not finalised. A partial deferral of realisations charge is not allowed.

*Column 25 – Realisations charge liability for the period
This column automatically calculates the total realisations charge liability, including any previously deferred realisations charge.  If payment of realisations charge is being deferred to the next AER period or the amount of realisations charge is not being paid due to being less than $10 then a liability amount of zero should be reported here.

Column 26 – Finalisation date
Where the practitioner has finalised the administration of the debt agreement (for example: all distributions have been made and the administrator has no further duties under the agreement) then the date of the last distribution to creditors is to be inserted in this column as the finalisation date.

Note 1: The finalisation date is not the date of completion; where the debtor has made all payments under the agreement to the administrator.

Column 27 - Total value of creditor claims
Where a debt agreement has been reported as finalised, the total value of claims by creditors should be supplied here.

Column 28 – Comments
Optional comments can be reported here.  This may be helpful when resubmitting new AER data for an administration or when amending an AER for a previous period.