Eligible Revenue Information Sessions. Session overview Purpose Legislative obligations of carriers Reporting requirements Type of carrier – Participating.

Eligible Revenue Information Sessions

Session overview

Purpose Legislative obligations of carriers Reporting requirements Type of carrier –

Participating or USO non-participating person? Fees and Charges based on eligible revenue Eligible statutory declaration Eligible Revenue Submission Tools

PURPOSE

Sessions are to assist industry participants to meet their statutory reporting requirements

Why report?

Eligible revenue based on an eligible revenue submission (including substantially compliant eligible revenue return and supporting documents) or otherwise estimated by the ACMA

Used to calculate fees and charges

Penalties and enforcement if non-compliant

What is a carrier?

Under section 7 of the Telecommunications Act 1997, a carrier is the holder of a carrier licence.

Not all carriers have to submit an eligible revenue return from 2010-11

What are the legislative obligations of carriers?

Set out in

Telecommunications Act 1997 (Telco Act)

Telecommunications (Consumer Protection and Service Standards) Act 1999

Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003

NEW! Telecommunications (Participating Persons) Determination 2011 (No.1) (Participating Persons Determination)

Telecommunications (Period for Providing Return of Eligible Revenue) Specification 2010

Telecommunications (Approved Auditor) Determination 2010

Topic TCPSS Act /

Telco Act 1997

Subsidiary Legislation

Participating person must lodge return of eligible revenue in form approved in writing by the ACMA

Section 20

Participating person (vs exempt person)

Section 20A / Section 7

Telecommunications (Participating Person) Determination 2011 (No.1) (Participating Persons Determination)

Period specified in writing by the ACMA for providing returns

Paragraph 20(2)(a)

Telecommunications (Period for Providing Return of Eligible Revenue) Specification 2010

Verification [of return] by statutory declaration

Subsection 20(2)

Calculation of eligible revenue Section 20B Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003

Audit report on return by approved auditor

Section 20D Telecommunications (Approved Auditor) Determination 2010

What are carrier’s reporting requirements?

For each eligible revenue period, a carrier is either:

a participating person - and must submit an Eligible Revenue Submission to the ACMA by 31 October

OR

a USO non-participating person – and must submit an eligible statutory declaration to the ACMA by 31 October

How do I determine what type of carrier I am?

A participating person for an eligible revenue period is an entity that was a carrier at any time during that eligible revenue period [section 20A of the TCPSS Act].

However, the minister has determined that a person is not a participating person when the person (or “grouped carrier”) has:• initial sales revenue;• gross telecommunications sales revenue; OR• eligible revenue

of less than AUD$25 million for the eligible revenue period and the person submits an eligible statutory declaration to the ACMA by 31 October [part 4 of the Participating Persons Determination].

Fees and charges based on eligible revenue

Universal Service Obligation Levy (annual)

National Relay Service Levy (quarterly) Annual Carrier Licence Charge (variable component)

Eligible Statutory Declaration

for a USO Non-participating person

By 31 Oct, the person must provide to the ACMA an eligible statutory declaration stating that the person’s applicable revenue for the eligible revenue period was less than AUD$25 million

A statutory declaration given by a person is an eligible statutory declaration if it is made by a director or company secretary of the carrier and in accordance with the Statutory Declarations Act 1959

Template available on the ACMA Eligible Revenue Portal on the ACMA website

Eligible statutory declaration

Key concepts

Declaration for each eligible revenue period (not multiple periods)

Include revenue of Declared Related Parties (DRPs) and consolidated related parties

Grouped carrier – for revenue calculation

Declaration of revenue must be verifiable to financial statements or other evidence on request or notification from the ACMA

IMPORTANT Regardless of a carrier earning under AUD$25mil revenue

they will be a participating person if they fail to provide an eligible statutory declaration to the ACMA by 31 October

Each participating person must provide a Return and supporting documentation to the ACMA by 31 October or may face penalties/other enforcement action – the Return must be compliant with the Act, i.e. substantially compliant with the form approved by the ACMA

Eligible Revenue Submission

for a participating person

Key reporting concepts

All participating persons to report

Eligible Revenue Submission on a group basis vs individual basis

Disclose revenue of Declared Related Parties (DRPs) and consolidated related parties

Key reporting concepts cont.

Evidence for revenues and deductions

Financial statements of carrier and related parties

Audit report OR Audit Waiver granted by the ACMA

Revenue Allocation Schedule – when submitting ERR Form for more than one carrier

Table 1: Gross Telecommunications Revenue allocationA   B   C

Note Ref Name of Carrier  

ABN/ACN (without spaces)

Gross Telecommunicatio

ns Revenue allocationin $AUD

R1  BIGTelco     22,000,000 R2

 MedTelco  

10,000,000 

R3   

  Total  $32,000,000           Total Gross Revenue  $32,000,000        

  Unallocated  $0

Revenue Allocation Schedule – when submitting ERR Form for more than one carrier

Table 2: Eligible Revenue allocation

Note Ref Name of Carrier  

ABN/ACN (without spaces)

Eligible Revenue

allocation in $AUD

R11 BIGTelco

$19,000,000 

R12 MedTelco

$6,000,000 R13        

 Total  $25,000,000

          Total Eligible Revenue  $25,000,000

 Unallocated  $0

Related Parties

Consolidated related party

an entity:

(a) that is not the participating person; and

(b) the revenue of which is included in the annual consolidated financial statements of the participating person’s ultimate Australian parent entity (whose revenues are fully accounted for in the ERR Form)

Related Parties

Declared related party

Any entity that earns telecommunications sales revenue from the Australian telecommunications industry and that is not a participating person or a consolidated related party and is owned at any time during the eligible revenue period (>49%) by the owner of the carrier

Multiple Parties Schedule in ERR Form

Table 1: Ownership

Group Name:  

Note Ref Carrier Name  

Carrier Licence Number  

ABN/ACN (without spaces)

M1 BIGTelco    

M2 MedTelco      

M3        

Ultimate holding company

Bluetone

50% 50%

Carrier X

Multiple Parties Schedule in ERR Form

Table 2: Declared Related Parties

Please refer to Sections 6 and 7 of the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 to determine if you have any Declared Related Parties

Declared Related Party (DRP) Name  

(A)Proportion of Carrier owned

by Ultimate holding

company (participating

person interest)  

(B)Proportion

of DRP owned by Ultimate holding

company (party

interest)DRP Factor

(A x B)M13           0.00%

M14           0.00%

M15           0.00%

M16           0.00%

Bluetone 50% 50% 25%

Carry through to revenue and deductions sheets – example:

Table 1: Sales Revenue (per financial statements)A B    D E  

Note Ref

Name of Group/Carrier or name of DRP  

DRP factor % if applicable

(automatically applied from

"Multiple Parties" sheet)   

Total Revenue in $AUD

Carrier/Group Portion of Revenue  

R1 Bluetone       

R2      

25% $100,000 $25,000

Carrier A

Ultimate Australian Parent

Co X

Co Y

Co Y1Co Z

Co M

Co N1

Co N2

Co N3

Co N

100% 50%

Co J

Co K

90%

80%

80%

50%

50%

100%

50%

50%

90%50%

50%

Parent interest in Co N2: =(90%x100%x50%)+(90%x80%x50%)=45% + 36%=81%

Parent interest in Carrier A: =90%x80%x80%=58%

Multiple Parties Schedule in ERR Form

Table 2: Declared Related Parties

Please refer to Sections 6 and 7 of the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 to determine if you have any Declared Related Parties

Declared Related Party (DRP) Name  

(A)Proportion of Carrier owned

by Ultimate holding

company (participating

person interest)  

(B)Proportion

of DRP owned by Ultimate holding

company (party

interest)DRP Factor

(A x B)M13           0.00%

M14           0.00%

M15           0.00%

M16           0.00%

Co N2 58% 81% 47%

A complete Eligible Revenue Submission (ERS) is made up of two parts:

1. A Return Eligible Revenue Return Form (ERR Form) Final Financial Statements for carrier and related parties Outline of Business Structure

2. Supporting Documents Independent Audit Report Statutory Declaration – Management Certification

ERR Form

>Eight sheets (was 17 in 2008-09) and built in related party percentages>Prepare ERR Form in accordance with relevant Australian Accounting Standards>whole Australian dollars (AUD$) and English >exclusive of GST

Calculating Eligible Revenue Initial sales revenue Less Non-telco sales revenue and revenue earned whilst

not a licence holder = Gross telecommunications sales revenue Less Deductions:

- Overseas Activities and Acts in Australia for services outside Australia

- Customer equipment- Content services- Exempt base station- Infrastructure revenue- Inter-Person Input Payments

What is telecommunications revenue?

> Revenue earned from the telecommunications industry from carrying on business as a carrier or carriage service provider, or...

What is telecommunications revenue?

… supply goods or services for use in connection with the supply of a listed carriage service; supply a content service using a listed carriage service; manufacture or import customer equipment or customer cabling; or

install, maintain, operate or provide access to:

(i) a telecommunications network; or

(ii) a facility; used to supply a listed carriage service.

Audit report on return

An eligible revenue return given to the ACMA under section 20 must be accompanied by a report of an approved auditor that:

(a)is in a form approved in writing by the ACMA; …

This is the ACMA independent audit report form published for the relevant year on the:

ACMA Eligible Revenue Portal http://www.acma.gov.au/WEB /STANDARD/pc=PC_410118

Approved auditor

> Subsection 8F(1) of TCPSS Act – meaning of approved auditor:

A reference in this Part to an approved auditor is a reference to a person included in a class of persons specified in a written determination made by the ACMA for the purposes of this section

Approved auditor

Telecommunications (Approved Auditor) Determination 2010 specifies the following as approved auditors:

1. Registered auditors under Part 9.2 of the Corporations Act 2001

2.Authorised audit companies registered under Part 9.2A of the

Corporations Act

3.Auditors-General

Find an approved auditor who is either a registered auditor or authorised audit company by using the professional registers on the ASIC website: http://www.search.asic.gov.au/pro.html

Audit Report on Return - s20D TCPSS Act

The approved auditor must provide an audit opinion on the complete Return, not only the ERR Form

Only exception is where an audit waiver or a conditional audit waiver has been granted by the ACMA.

Requesting an Audit Waiver (may be a conditional audit waiver)

> Applies to only one eligible revenue period

> Request prior to lodging all other documents in an Eligible Revenue Submission

> Audit waiver is more likely to be approved where:- other sufficient and appropriate evidence is provided - when carrier did not hold the licence for the full eligible revenue

period- no significant errors in prior period returns- administrative expense is prohibitive for carrier compared to

expected revenue from telecommunications activity in Australia

Tools

for carriers