Reserve Bank of Australia Annual Report – 2018 Financial Statements Note 3 – Distribution Payable to the Commonwealth

Net profits of the RBA, less amounts set aside for contingencies or placed to the credit of the RBRF, are paid to the Commonwealth as required by section 30 of the Reserve Bank Act (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 where they 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 2017/18, the RBA recorded a net profit of $3,847 million. Unrealised valuation gains of $3,178 million were transferred to the unrealised profits reserve. Earnings available for distribution therefore amounted to $669 million in 2017/18.

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 2017/18. 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 $1,066 million from earnings in 2016/17 was paid to the Commonwealth in 2017/18, with the balance of $220 million paid in July 2018.

Opening balance 1,286 3,222
Distribution to the Commonwealth (1,066) (3,222)
Transfer from Statement of Distribution 669 1,286
As at 30 June 889 1,286