Reserve Bank of Australia Annual Report – 2012 Financial Statements Note 3 – Distribution Payable to Australian Government

Section 30 of the Reserve Bank Act requires that the net profits of the Reserve Bank of Australia, less amounts set aside for contingencies or placed to the credit of the RBRF as determined by the Treasurer after consultation with the Board, shall be paid to the Australian Government (see Note 1(f)). 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 Reserve for Unrealised Profits on Investments 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 Reserve for Unrealised Profits on Investments and offset against unrealised profits accumulated from previous years. 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 amount absorbed by the RBRF.

In 2011/12, the Bank recorded an accounting profit of $1,076 million. Earnings available for distribution were $1,096 million, comprising underlying earnings of $710 million plus realised gains of $405 million minus $19 million in unrealised investment losses. Unrealised losses of $20 million on the Bank's superannuation assets were absorbed by an unrealised profits reserve.

After consulting the Reserve Bank Board, the Deputy Prime Minister and Treasurer has determined that a sum of $500 million will be paid from earnings available for distribution as a dividend to the Australian Government and that $596 million will be placed to the credit of the RBRF.