HI5015 Report: Legislative Frameworks Impact on Commonwealth Bank

This report investigates the legal and regulatory frameworks governing the Commonwealth Bank of Australia (CBA). It examines the impact of various legislative frameworks, including taxation policies and economic regulations, on the bank's operations. The report analyzes the influence of treaties and conventions, particularly free trade agreements with countries like China and the United States, on CBA's products and services, highlighting the implications for international expansion and market strategies. It also addresses the bank's compliance with regulatory bodies, such as the Australian Taxation Office (ATO), and how these frameworks shape its business practices, including risk management and transparency. The report discusses how these frameworks impact the bank's ability to offer services and products in different regions and its overall financial performance. The analysis covers various aspects of the CBA's operations, including tax compliance, international trade, and the effects of trade agreements on its business strategies and product portfolio. The report concludes with an overview of the implications of the legislative and regulatory environment on the Commonwealth Bank's global presence and financial performance.

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Abstract
The following report will aim at researching on the impacts of different legislative and regulatory
frameworks on the business operations of the Commonwealth bank of Australia. It is one of the
largest banks all over the world. The bank operates in several regions of the world. They have
earned a good reputation in the banking and financial services industry. Several legislative
frameworks regarding economic policies and taxation strategies of the government have been
discussed in the paper. The impact of these frameworks on the business procedures of the
company have been assessed properly. The company efficiently manages all the changes in the
taxation policies of the government. Apart from that, other impacts like fluctuations in Australian
dollars and its influence on buying power of customers have also been reviewed.

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Table of Contents
Introduction......................................................................................................................................3
Legislative regulatory framework for Commonwealth Bank..........................................................3
Impact of treaties or conventions on services and products............................................................6
References......................................................................................................................................10

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Introduction
The aim of the following report is to research on the legal and regulatory frameworks in
which the Commonwealth bank of India operates. The business industry in which the company
operates is the banking and financial services. It is one of the largest banks that operate in several
countries like Asia, United Kingdom, United States and New Zealand (Commbank.com.au
2019). It is also regarded as the largest banking organization in the entire southern hemisphere as
well. The company had been established in the year 1911 and full privatization of the company
took place in the year 1996. The company has employed around 51,800 people in Australia and
all over the world as in 2017 (Commbank.com.au 2019). The global headquarters of the
company is located at Sydney in Australia. The exact location of the head office is Darling
Harbor at Sydney. The bank has more than 1100 branches and 4300 ATMs all over the world.
Legislative regulatory framework for Commonwealth Bank
As a member of the banking and financial services industry, Commonwealth Bank has to
maintain its practices within several legislative and regulatory frameworks. These frameworks
are indeed very much strict because the bank has already been charged with various ethical
challenges. The Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry has indicated the fact that Commonwealth bank had been charged
of fraudulent cases, money laundering and deceptions over the customers (Hayne 2018). So, this
has become evidently very much important that the legislations and all regulatory frameworks
should be maintained by the company properly so they can conduct all their operations in an
ethical manner (Commbank.com.au 2019).

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All the tax regulations must be maintained by the Commonwealth Bank of Australia
because they are the largest corporate taxpayers in Australia. The company and its management
have taken up the conservative approach so it can deal with the economic policies within the
country (Matthews 2016). This is in relation with the political associations and their approach to
provide customers with the swift services without any delay. After the revelation of the ethical
misconducts by the Royal Commission, it has become their utmost responsibility to safeguard
the money of their customers and make sure no unethical thing is being done over there. The
Commonwealth Bank group must ensure the fact that all the taxation laws are being
implemented in their practices and within the jurisdictions where they will operate. All
operations like tax lodgments, reporting, various obligations and disclosures are adhered by the
Commonwealth bank (Commbank.com.au 2019). Otherwise, finance ministry of the country will
be very strict on finding out any flaw if it has been committed. The company is very much
entitled to pay the appropriate amount of the tax that has been fixed on them. This amount of
professional tax will depend on their annual turnover rates indeed (Hayne 2018).
The company must make the proper business transactions that will have a very clear
purpose. Otherwise, it will be very difficult for the organization to cope up with the difficulties
that might arise later. According to various financial experts, it has been evident that taxation
laws are very critical and complicated. Therefore, Commonwealth Bank of Australia must take
the proper steps so the interpretations of these taxation laws are being made. Commonwealth
bank pays most of the taxes to the Australian Taxation Office (ATO). After the highlighting of
the unethical issues, Commonwealth Bank has made the pact with the Australian Taxation Office
(ATO) named the Annual Compliance Arrangement (ACA) (Commbank.com.au 2019). Through
this pact, the company has established the risk management framework that will make sure

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Commonwealth bank of Australia is completely compliant with all the taxation policies initiated
by the ATO. As a part of this pact or treaty, the company is liable to report all transactions,
challenges and several issues to the ATO very frequently (Matthews 2016). This is how the ATO
will be able to find out any kind of fraudulent activities and challenges within the banking
industry.
Through the implementation of this pact, both ATO and Commonwealth bank of
Australia would be able to resolve all the challenges. The resolution process will be undertaken
in the most effective manner. Thus, the legislative and regulatory framework of the organization
will protect the privacy rights and deposited money of their customers. The Commonwealth
Bank of Australia has a very significant presence all over the Asia Pacific region and various
countries like New Zealand, UK and USA. The party dealings of the bank in the international
sphere will depend upon the issues like derivative arrangements, dividends and loans. The
authorities of the Commonwealth Bank group have made it mandatory that the organization
should be able to adopt the lower risks within their jurisdiction. All the tax related risks should
be identified and disclosed to the tax department and auditors to maintain the taxation regulatory
frameworks (Gylfason, Martínez‐Zarzoso and Wijkman 2015). The contribution of the
Commonwealth has been on the increase as well as their profits are rising up.
Commonwealth Bank has always been in line with the highest level of integrity so they
can be open to all the changes in the taxation laws. The professional tax to be paid to the
Australian Taxation Office is 30%. Apart from that, there are various rates of the professional
taxes to be paid in different countries (Armstrong 2015). The tax rate in Hong Kong is 16.5%,
17% in Singapore, 28% in the United Kingdom that includes the banking levies and 28% in New
Zealand as well. The total amount of the tax revenues are published by the ATO. Many measures

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have been taken in this situation so the transparency can be improved largely. The codes of tax
transparency are completely maintained by keeping in mind all the probable future developments
(Li, Wang and Whalley 2017). The company is very much keen on engaging with the issues in
taxation. They will look to deal with all these issues in a very proactive manner.
Commonwealth Bank taxation policies are also in line with the Organization for
Economic Co-operation and Development (OECD). They have to ensure that all their intra-group
transactions and international related parties should be in compliance with all the policies of the
Commonwealth Bank. These legislations and regulatory frameworks should also be followed in
the country regarding the principles of their tax governance in the United Kingdom. According
to the framework, all significant issues and challenges should be reported to the Chief Financial
Officer, Chief Executive Officer and the Board Audit Committee as well (Wilson 2015).
Commonwealth bank of Australia must go by these frameworks to ensure utmost transparency in
their operations.
Impact of treaties or conventions on services and products
The trade agreements and treaties are very common issues when a company operates in
different countries apart from their home country as well. The free trade agreements and various
trade related treaties have always been a significant part of their business operations (Cranston
and Van Sante 2018). These business operations have always been significant for them because
they are regarded as the largest bank in the Southern Hemisphere. The free trade agreements with
China have been the most interesting aspects of their solidarity and powerful presence in the
Asia-Pacific market (Schlagwein, Thorogood and Willcocks 2014). The bank has heartily
welcomed this agreement that has taken place between China and Australia. The Chief Executive

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Officer of the company has described the aspect of this free trade agreement as a very crucial
thing for the business development between China and Australia and this will be beneficial for
both the governments (Dai, Yotov and Zylkin 2014).
The company representatives have said that this free trade agreement will be the most
important development for the business opportunities between China and Australia. As a result,
the economic condition of both the countries will improve with the growth of their GDP rates.
One of the fundamental strategies for Commonwealth bank is to expand internationally and
especially in Asian market. China is their primary target since it is becoming a global
superpower by all aspects (Commbank.com.au 2019).
This agreement will benefit various sectors because most sectors are largely dependent on
the banking and financial services sector. As a result of this, the bilateral services trade will be
highly benefitted as well. The restrictions on the Australian firms will be made less since the
licensing arrangements will be placed on the streamline (Schlagwein, Thorogood and Willcocks
2014). The products and banking services provided by the Commonwealth Bank of Australia
will profit because the barriers will be less as a result of the free trade agreements. The company
had opened their branches in China at Shanghai and Beijing during the years 2010 and 2013
(Commbank.com.au 2019). They have also made some strategic investments in the country of
China that will pave the way for higher benefits as well. Their product portfolio has benefitted
because they have made a new joint venture with Qiu Bank in life insurance to attract the
customers (Bendini and Barone 2014).
Due to the advantages of the free trade agreements between China and Australia,
Commonwealth Bank had opened the County bank located at the central region of China in the

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province of Henan. There are more advantages of this free trade agreement. As an impact of this
agreement, Commonwealth Bank of Australia has been able to make the joint venture
partnership named BoCommLife (Cranston and Van Sante 2018). This provides the customers
with life insurance services. Another joint venture partnership has been made with the First State
Cinda Fund Management Company. This is an important part of the global asset of their
business. As a result of this joint venture strategy, Commonwealth Bank of Australia would be
able to provide the special services for investment for Chinese people (Schlagwein, Thorogood
and Willcocks 2014). Evidently, it is very much clear that this agreement has helped the
company to grow its products and services by all means and increase their overall profits as well.
The trade agreements between Australia and United States have also been very much
beneficial for the Commonwealth bank of Australia as well. The trade relationships between the
two nations will definitely improve after this trade agreement. United States is regarding as the
biggest and most significant investors in Australia (Decker and McCracken 2018). Still, there are
some areas in this context that are of huge importance for the business operations of
Commonwealth Bank. Most important sections where the concerns lie are the impact of the
agreements on Australian dollar, managing the risks related to currency, managing all the terms
of payment and providing financial solutions for all the contexts. It is quite evident that the
activities of import and export will provide a huge impact on the currency exchanges and stocks
of the company. These fluctuations are very common and certain risks will be there as well. The
impacts can be felt by the Commonwealth bank when they will provide their services and
products to the customers in offshore countries (Howell 2015). The impacts are obvious because
these international transactions are made either in US dollars or Euros.

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The overall exchange rate of the Australian dollar is floating so the value of the
Australian dollars can experience ups and downs on a regular basis. The overall value of the
dollar will affect the selling and purchasing in the offshore countries (Decker and McCracken
2018). This is why the challenges might occur on different grounds indeed. The cash flow gap is
also a risk in this matter and the company has to assess this to sell their products and services
properly. The Forward Exchange Contract must be made secure in terms of providing customers
with the right choices for their products and services. The reduction of costs and profits and their
increase are all dependent largely on the rates of Australian dollars indeed (Howell 2015). These
issues must be kept in the minds of the customers of different offshore countries. The
management authority of different countries going through the business trade agreements should
access both the positive and negative points of this issue.

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References
Armstrong, S., 2015. The economic impact of the Australia–US free trade agreement. Australian
Journal of International Affairs, 69(5), pp.513-537.
Bendini, R. and Barone, B., 2014. Trade and economic relations with China 2014. Policy
Department, Directorate-General for External Policies.
Commbank.com.au (2019). Personal banking including accounts, credit cards and home loans -
CommBank. [online] Commbank.com.au. Available at: https://www.commbank.com.au/
[Accessed 17 Dec. 2019].
Commbank.com.au (2019). Importing and exporting basics - CommBank. [online]
Commbank.com.au. Available at: https://www.commbank.com.au/business/can/legal-and-
government-advice/trading-offshore.html [Accessed 17 Dec. 2019].
Cranston, R. and Van Sante, T., 2018. Principles of banking law. Oxford University Press.
Dai, M., Yotov, Y.V. and Zylkin, T., 2014. On the trade-diversion effects of free trade
agreements. Economics Letters, 122(2), pp.321-325.
Decker, F. and McCracken, S., 2018. Central banking in Australia and New Zealand: historical
foundations and modern legislative frameworks. Research Handbook on Central Banking, p.245.
Gylfason, T., Martínez‐Zarzoso, I. and Wijkman, P.M., 2015. Free trade agreements, institutions
and the exports of eastern partnership countries. JCMS: Journal of Common Market
Studies, 53(6), pp.1214-1229.

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Hayne, K.M., 2018. Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry. Interim report, Commonwealth of Australia, Canberra, ACT,
Australia.
Howell, N.J., 2015. Revisiting the Australian code of banking practice: is self-regulation still
relevant for improving consumer protection standards. UNSWLJ, 38, p.544.
Li, C., Wang, J. and Whalley, J., 2017. China’s regional and bilateral trade agreements. In THE
ECONOMIES OF CHINA AND INDIA Cooperation and Conflict: Volume 1: China and India—
The International Context and Economic Growth, Manufacturing Performance and Rural
Development (pp. 175-194).
Matthews, A., 2016. The financial services industry: Whistleblowing and calls for a royal
commission. Precedent (Sydney, NSW), (136), p.35.
Schlagwein, D., Thorogood, A. and Willcocks, L.P., 2014. How Commonwealth Bank of
Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS
Quarterly Executive, 13(4).
Wang, Y., 2016. Australia-China relations post 1949: Sixty years of trade and politics.
Routledge.
Weatherall, K., 2015. The Australia-US free trade agreement’s impact on Australia’s copyright
trade policy. Australian Journal of International Affairs, 69(5), pp.538-558.
Wilson, J.D., 2015. Mega-regional trade deals in the Asia-Pacific: Choosing between the TPP
and RCEP?. Journal of Contemporary Asia, 45(2), pp.345-353.