The Treasurer has released drafts of the Major Bank Levy Bill 2017 and the Treasury Laws Amendment (Major Bank Levy) Bill 2017.

UPDATE: The Bill was passed by both houses on 19 June 2017.

From 1 July 2017 all Authorised Deposit-taking Institutions (ADIs), foreign and domestically-owned, with greater than $100 billion in licensed entity liabilities will be liable to pay the major bank levy. This will include Australia’s four major banks. The threshold will be indexed to growth in nominal Gross Domestic Product.

The major bank levy will equal 0.015 per cent of each affected bank’s licensed entity liabilities each quarter (0.06 per cent per annum), excluding Additional Tier 1 capital, deposits protected by the Financial Claims Scheme (FCS) and the quarterly average value of Exchange Settlement Account (ESA) balances held with the Reserve Bank of Australia (RBA).

The levy will not apply to deposits or assets, such as mortgages. It will also not apply to other financial institutions, such as  smaller banks, credit unions, building societies, insurance companies or superannuation funds.

Liabilities captured by the levy include, for example corporate bonds; commercial paper; certificates of deposit; Tier 2 capital instruments; operational liabilities and non-FCS protected deposits.

The first levy calculation and instalment will be delayed by three months to provide additional time for banks to make necessary systems changes.

The government is expecting payments for the September and December quarters 2017 on March 21 2018.

The levy will be administered by the ATO, with APRA’s role being solely to assist with data collection.