Reserve Bank of Australia Annual Report – 2014 Financial Statements Note 3 – Distribution Payable to the Commonwealth

Section 30 of the Reserve Bank Act requires that the net profits of the RBA, less amounts set aside for contingencies or placed to the credit of the RBRF as determined by the Treasurer after consulting the Board, shall be paid to the Commonwealth (see Note 1(g)). Also under section 30, unrealised profits from foreign exchange, foreign securities and Australian dollar securities are not available for distribution. Instead they are transferred to the Unrealised profits reserve, where they remain available to absorb future valuation losses or are realised when relevant assets are sold. Unrealised losses are, in the first instance, absorbed within the Unrealised profits reserve and are offset against unrealised profits accumulated from previous years. For purposes of distribution, if such losses exceed the balance in this reserve, the amount by which they do so is initially charged against other components of income, with any remaining loss absorbed by the RBRF.

In 2013/14, the Reserve Bank recorded an accounting profit of $9,392 million, including revenue from the Commonwealth grant of $8,800 million. Unrealised losses of $640 million were absorbed within the Unrealised profits reserve, while $3 million was transferred from the Asset revaluation reserve to the Statement of Distribution, from the sale of a property at Kirribilli. Earnings available for distribution amounted to $10,035 million in 2013/14.

After consulting the Reserve Bank Board, the Treasurer determined that a sum of $8,800 million was to be placed from distributable earnings to the credit of the RBRF in 2013/14. This transfer is the equivalent of the proceeds from the Commonwealth grant. Accordingly, a sum of $1,235 million is payable as a dividend to the Commonwealth from earnings available for distribution in 2013/14. The Treasurer has determined that an amount of $618 million be paid in early 2014/15, with the balance to be paid in 2015/16. No dividend was distributed from earnings in 2012/13.

2014 $M 2013 $M
Opening balance 500
Distribution to the Commonwealth (500)
Transfer from Statement of Distribution 1,235
As at 30 June 1,235