Chapter 8: Accounting and related matters
In-house Marshal’s fees (staff costs) and the fee charged by Australian Border Force when an ABF Officer undertakes the arrest are borne by the Court and should not be recovered from the plaintiff or other party or res unless, for example, additional staff are required to replace, or perform the usual duties of, the Marshal. However, a log of the time spent on an arrest should be kept so that the impact of the arrest on the resources of the registry can be monitored. Annexure 2(b) is an example of a log for this purpose.
All expenses reasonably incurred by the Marshal are recovered from the relevant party or proceeds of sale.
The Court’s Admiralty Committee discussed this issue at its March and August 2006 meetings in light of the impact of the Federal Court of Australia Regulations (item 21 (previously item 17) of Schedule 1).
For in-house Federal Court Marshals the level of remuneration that may be recovered is that of Federal Court Staff Level 6 (FCSL 6). Marshals who are beyond this salary level are paid at their current salary rate.
In accordance with the FCA Certified Agreement 2011-2014 a Marshal is paid an on-call allowance that commences with the arrest of a vessel and ceases on its release unless the relevant District Registrar and the Marshal agree that an earlier date is appropriate in the circumstances of a particular arrest (see para 43.1 of the agreement).
Section 23 of the Public Governance, Performance and Accountability Act 2013 gives the accountable authorities of non-corporate Commonwealth entities power to enter into arrangements, and approve commitment of relevant money, on behalf of the Commonwealth, . The Registrar has delegated this power to those Court Officials listed in the Schedule of Delegations, see at http://fca.intranet.fedcourt.gov.au/general/Finance/rmi/delegations.
The Marshal’s financial delegation is up to $5,000 or to the value of funds held against the matter in the Court’s Special Public Money Account (Official Marshals Account). The amount held against the matter is the balance of the Marshal’s Receipt and Expenditure Record as reconciled with the project code balance.
The Marshal’s bank account is a separate account to the Court’s other funds. The following documents will be of assistance in using the Marshal’s bank account:
- Guide to Admiralty Processing
- Annexure 24(a) Financial One Code Structure
- Annexure 24(b) Sample Project Code Ledger
- Annexure 24(c) Project Code Balances.
Otherwise, contact Matthew Davis, Director, Financial Accounting, in the Principal Registry on 02 9230 8823 for further assistance.
Where a registry is seeking reimbursement for the salaries and expenses of a Marshal incurred during an arrest, money will need to be moved from the Marshal’s account into the Marshal’s section 31 account. Instructions for this transfer are at:
- Instructions for the Transfer of Moneys to Marshal Section 31 Account.
The Marshal’s costs and expenses under rules 41 and 69 of the Admiralty Rules 1988 payable in respect of the arrest, custody and sale or release of a ship or other property under the Admiralty Act 1988 are covered under Div 81 of the A New Tax System (Goods and Services Tax) Act 1999 exempt from GST from 1 January 2007. These fees and charges are included in fees and charges which do not constitute consideration and therefore are excluded from being taxable by provisions 81-15.01(d) or (e) of A New Tax System (Goods and Services Tax) Regulation.
The effect of these provisions is that GST is not payable on Marshal’s costs and expenses nor on any demand made by the Marshal.
The Australian Taxation Office has issued a publication on valid tax invoices and GST credits. Tax invoices are important documents for the operation of the GST system. They must contain certain information to be valid.
A supplier must issue a tax invoice if any taxable sales made are more than $82.50 (including GST) and the purchaser requests it.
For taxable purchases the Court can use tax invoices to claim the correct amount of GST credits for those purchases.
To claim a GST credit for purchases that cost more than $82.50 (including GST) the purchaser must be registered for GST and have a valid tax invoice. If an incorrect or incomplete tax invoice is used to claim a GST credit, the GST credit may not be allowed by the ATO.
To claim GST credits for purchases that cost $82.50 or less (including GST) the purchaser must keep documents such as cash register dockets, receipts or invoices to support the claim.
The supplier must be registered for GST before a claim of the GST credit on a purchase can be made.
What is a valid tax invoice?
A valid tax invoice for taxable sales that total less than $1,000 or $1,000 or more must contain the following:
|Taxable sales that total less than $1,000||Taxable sales that total $1,000 or more|
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Where the GST to be paid is:
- exactly one-eleventh of the total price, the tax invoice should show the GST amount separately or provide a statement such as ‘total price includes GST’; or
- less than one-eleventh of the total price, the tax invoice should show the GST amount and the total amount excluding GST for the sales.
A valid tax invoice for both a taxable sale and either a GST-free or input taxed sale, must also:
- clearly identify each taxable sale
- show the total amount of GST to be paid; and
- show the total amount payable for the sales.
The tax invoice must contain this information before it can be used to work out the correct amount of GST credit that can be claimed. This is because the amount of GST included on such an invoice will be less than one-eleventh of the total price you are liable to pay.
The costs of vehicle usage for the arrest of a ship during the custody and on release of the ship should be applied as follows:
(a) where Court vehicles are used the costs will be borne by the Court
(b) where a non-Court vehicle is used (such as a rental car or the Marshal’s private vehicle) the costs will be recovered from the plaintiff.
Annexure 2(c) provides a sample vehicle log.
It will be necessary from time to time for the Marshal to procure large expense items (over $20,000) during an arrest and custody of a ship. The policy on procurement of these items is set out in the Chief Executive Instructions and generally provides that three quotations are to be obtained. Expenses incurred by the Marshal that may fall within this category include berthing charges; bunkers and lubricants, tugs, specialised equipment, provisions and other services. The procurement of these items or services may be from a sole supplier based at or near the port or berth where the ship is held under arrest. It is the case in some smaller ports that there will be one tug provider, one company that provides linesmen, one ships’ providores and more than likely one agent of a fuel supplier that can arrange bunker supplies.
Usually berthing arrangements are made by the ship’s agent prior to the ship berthing and in any event the port authority may be the only provider for the size of ship that is under arrest. It is incumbent upon the Marshal to secure the most economical rate for any cost or expense incurred by the Marshal regardless of whether there is a sole supplier or competitive quotes can be obtained. Where the port authority controls the berth experience has shown that they will negotiate a much cheaper rate for the Marshal and more so if there are indications that the arrest will be prolonged or the vessel will be sold.
In other circumstances the ship’s agent or the charterer or owner of the ship may have an agreement with a supplier such as ship’s providore to victual the ship (food and stores). The arrangement can continue while the ship is in custody provided there is no excessive charging and the rates of charge are similar to previous prices charged by that supplier. All lists prepared for food and stores must bear the Master’s signature and the ship’s stamp.
In the circumstances where there is a sole provider of the goods and services the Marshal should make a file note of the enquiries made to establish there is no other provider of those goods and services and the rates are reasonable. In the case of berthing charges, a letter from the Harbour Master (or other appropriate person) stating that they are the sole provider and setting out the agreed rates would suffice.
Where there are other competing suppliers of the goods and services copies of the quotations obtained should be retained on the Marshal’s file for internal checking and audit purposes.
It would not generally be the case that where there is a sole provider of goods and services the Marshal obtains a Court order or a direction to engage that supplier. It is more the position where the Court has ordered a ship to be sold and payments are to be made from the sale Fund (the res). It is the practice of the Court that payments from the sale Fund are transparent and controlled by the Court. In this way the sale is supervised by the Court. The Court order that is made to open a foreign currency account provides the name and position of the signatories and limits the amount of a payment that can be made by the Marshal from the Fund. Usually the amount is limited to US$2,000.00 to be drawn from the account without the further order of the Court.
In practice payments are usually scheduled in an affidavit and an order is obtained and this is the preferred course to take.
There are occasions where the Marshal may approach the Court for an order such as moving a ship to another berth, mooring or to anchor at the request of the Harbour Master. Whilst the Court order may not approve the payment it does order the Marshal to move the ship and should include that the costs of the move form part of the Marshal’s cost and expenses of the arrest. The Marshal should make arrangements at reasonable rates within the time constraints.
Shortly after an arrest and where the need arises the Marshal may approach the Court for an omnibus order. That order may allow the Marshal at his or her discretion to take measures to preserve the ship; move the ship within the limits of the port; supply reasonable victuals, fuel, water and communications and to arrange medical attention for any member of the crew. Where the circumstances allow the Marshal should provide the supplies and services at competitive rates unless there are existing arrangements or a sole supplier.
The Marshal may at any time apply to the Court for directions pursuant to rule 48. This process has been used by the Marshal when seeking large amounts of funds to cover the supply of provisions, marine gas oil, berthing charges, insurance and other Marshal’s expenses where the ship had exhausted its provisions and required an urgent fuel delivery. It has been used to obtain orders to replace essential officers and crew, for example, the Master, engineers and other key crew members where they were randomly leaving the ship during the sale process. As the cost of engaging crew was significant and crew levels had to be maintained until the ship was sold the Marshal obtained orders that the crew costs be funded by the plaintiff as Marshal’s costs and expenses.
In accordance with audit requirements, the Marshal must reconcile his/her accounting records monthly, when the ship is released from arrest, when it is sold and when the project code or account is closed.
A procedure setting out the process to be followed by the Marshal is at Annexure 22. Included with the procedure is the Finance One code structure and copies of a Project Code ledger and Project Code balances. The Form of Reconciliation can be found at Annexure 2(e). The procedure also addresses the transfer of funds where amounts need to be charged to the Marshal’s account to reimburse Court funds for payments incorrectly coded. It also sets out what should be done to close the account.
There needs to be a review of the final reconciliation of invoices and expense logs to arrest accounts prior to closure of the arrest account. The review and signing off of checklists, reconciliations and other documents will be undertaken by staff within the arresting Registry appointed by the District Registrar.
That person will also sign the Control Sheet as Checking Officer for the Control Sheet (see Annexure 23).