Updated NTA Calculation Instruments and RG166 Issued
ASIC has changed the various class orders and legislative instruments that apply to NTA capital requirements and at the same time has re-issued RG166, last week, in the middle of financial reporting and audit season.
The new legislation and guidance applies immediately. As a result, everyone will need to look at the updated legislation and regulatory guide, from now on, when are calculating NTA and related things.
The new instruments are:
ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647. This applies to responsible entities of registered schemes, investor-directed portfolio service (IDPS) operators and corporate directors of retail corporate collective investment vehicles (CCIVs).
ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648. This applies to licensed custodians.
ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669.
The new RG166 can be found at:
The substantive changes are that the following have been clarified or updated:
The ‘value of fund assets’ used in the definition of average value of fund assets for an RE calculating NTA, has been clarified as gross – i.e, you cannot offset fund assets and liabilities.
Deferred tax assets have been specifically mentioned as having to be treated as excluded assets.
An AFSL holders investments in; MIS’s, superannuation products, and CCIV’s, are only excluded from NTA if the licensee has power or control over the MIS, superannuation product, or CCIV.
ASIC has clarified that where an AFSL is ‘dormant’, or where some authorisations are used and others are not, then the holder must comply with all NTA and related requirements for all the authorisations on the licensee, whether or not they are currently being used. For a dormant custodian, the lower NTA requirement under s912AC(4)(b) will apply, or the licensee can rely on s912AC(5), which would mean there is no applicable NTA requirement.
For a custodian, revenue of authorised rep’s must be included in the revenue calculation when calculating NTA.
These changes / clarifications will generally increase the amount of NTA required to be held if the licensee was not treating the items as per the new rules previously.
The key point is that you must look at the new rules prior to finalising your audit and FS70.
LNP Audit and Assurance provides services to around 100 AFSL holders and we are happy to discuss the above or any other compliance or audit issues you may have.
With best regards.