Reserve Bank of Australia Annual Report – 2017 Financial Statements Note 3 – Distribution Payable to the Commonwealth

In terms of section 30 of the Reserve Bank Act, net profits of the RBA, less amounts set aside for contingencies or placed to the credit of the RBRF, are paid to the Commonwealth (see Note 1(h)). 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 or mature. 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 of the unrealised profits reserve, the amount by which they do so is initially charged against other components of net profit, and any remaining loss is absorbed by the RBRF.

In 2016/17, the RBA recorded a net accounting loss of $897 million. Unrealised valuation losses amounted to $2,179 million and were absorbed by the balance of the unrealised profits reserve. In addition, a sum of $4 million, mainly reflecting accumulated valuation gains on the Bank's plant and equipment assets, was transferred from the asset revaluation reserve to the Statement of Distribution as part of an accounting policy change for the measurement of such assets (see Note 1(e)). Earnings available for distribution therefore amounted to $1,286 million in 2016/17. As the Board regarded the balance of the RBRF as appropriate for the risks held on the balance sheet, it recommended that no transfer to this reserve be made from net profit in 2016/17. Accordingly, the Treasurer, after consulting the Board, determined that the full sum of earnings available for distribution be paid as a dividend to the Commonwealth. An amount of $3,222 million from earnings in 2015/16 was paid to the Commonwealth in 2016/17.

Opening balance 3,222 2,501
Distribution to the Commonwealth (3,222) (2,501)
Transfer from Statement of Distribution 1,286 3,222
As at 30 June 1,286 3,222