The Minister says: these reforms will, for the first time, create a single whistleblower protection regime, in the Corporations Act, to cover the corporate, financial and credit sectors, and create a new whistleblower protection regime in the taxation law, to protect those who expose tax misconduct.
These reforms are a significant milestone for whistleblowers – they can now come forward with confidence that they will be protected under a comprehensive and robust legal framework, knowing that they will have access to redress if they are victimised as a result of blowing the whistle.
Treasury says: the Bill creates a single whistleblower protection regime in the Corporations Act 2001 (Corporations Act), to cover the corporate, financial and credit sectors, and creates a new whistleblower protection regime in the taxation law, to protect those who expose tax misconduct.
The proposed legislation delivers on the Government’s commitment under the Open Government National Action Plan and tax integrity measure announced in the 2016 Budget.
The reforms to the Corporations Act include:
- expanding the protections to a broader class of people;
- expanding the types of disclosures that will be protected under the framework;
- allowing disclosures to parliamentarians and the media in certain circumstances, if preconditions are satisfied;
- imposing new stringent obligations to maintain the confidentiality of a whistleblower’s identity;
- making it significantly easier for a whistleblower to bring a claim for compensation where he or she has been victimised;
- creating a new civil penalty offence so that law enforcement agencies will be able to take action against companies where the civil standard of proof can be met; and
- requiring all large companies to have a whistleblower policy in place, with penalties for failing to do so.
The new whistleblower protections in the taxation law are broadly consistent with the enhanced protections under the Corporations Act, and will facilitate disclosures about tax misconduct being made directly to the ATO.
Background
Outlining the background, Treasury says:
- The Government announced a number of tax integrity measures as part of the Federal Budget in May 2016. It promised as part of this to introduce tax whistleblower legislation which would be operational by 1 July 2018.
- In December 2016 the Government committed, under the Open Government National Action plan, to harmonise corporate sector whistleblower provisions with those existing in the public sector and to introduce legislation for this by December 2017 together with tax whistleblower provisions.
- The Government commenced consultation on a paper in December 2016 on corporate and tax whistleblowing, which concluded in February 2017. Thirty four (34) submissions were received (available now at the Treasury website). It consulted also with regulatory and enforcement agencies. It began developing legislation in June to meet the December 2017 timeframe that the Government had committed to for corporate and tax law reform. The design process took into consideration these submissions and consultations as well as those received by the Committee referred to below and the evidence that was before the Committee on corporate sector concerns.
- Separately, in late 2016, the Government agreed to establish the above-mentioned parliamentary Committee. The Committee held public hearings in the first half of 2017. In addition, it received 75 submissions (including some which were common to the Treasury consultation process). These are available at the Australian Parliament website. The Committee issued its report on 13 September 2017.
The Minister expands on this, noting: that the Government’s recently formed Expert Advisory Panel will now consider the draft legislation as part of the first phase of the Expert Panel’s work. The Panel will assess the draft legislation against the recently released report of the Parliamentary Joint Committee on Corporations and Financial Services into Whistleblower Protections in the corporate, public and not-for-profit sectors (PJC Report), and will provide advice to Government on how the draft legislation measures up against the PJC Report’s recommendations.
The Government will consider the Expert Panel’s advice and the feedback received from the consultation before finalising the legislation for introduction to Parliament in the last sitting week of the year.
The second phase of the Expert Panel’s work will involve considering the remaining recommendations in the PJC Report and providing further information and advice to Government, to assist it in formulating its response to the PJC Report.
Stakeholders are invited to comment on the draft legislation and supporting explanatory material available at the Treasury website. Submissions for this consultation will close on 3 November 2017.
The taxation related equivalent ‘whistleblower’ provisions are set out and referred to below, along with the Law Council of Australia’s Taxation Committee’s areas of focus for planed consultation.
(1) A disclosure of information by a person (the discloser) qualifies for protection under this Part if:
(a) the discloser is, or has been, an eligible whistleblower in relation to a whistleblower entity; and
(b) the disclosure is made to:
(i) a whistleblower disclosee in relation to the whistleblower entity; or
(ii) a legal practitioner, for the purpose of obtaining legal advice or representation; and
(c) the disclosure is covered by subsection (2) or (3).
(2) This subsection covers a disclosure of information if the discloser has reasonable grounds to suspect that the information indicates that any of the following has not complied with a taxation law:
(a) the whistleblower entity;
(b) an associate (within the meaning of section 318 of the Income Tax Assessment Act 1936) of the whistleblower entity.
(3) This subsection covers a disclosure of information if the discloser has reasonable grounds to suspect that the information indicates that any of the following has avoided tax imposed by a law of the Commonwealth:
(a) the whistleblower entity;
(b) an associate (within the meaning of section 318 of the Income Tax Assessment Act 1936) of the whistleblower entity.
- 14ZZU Whistleblower disclosees
-
14ZZV Eligible whistleblowers
- 14ZZW Disclosure that qualifies for protection not actionable etc.
- 14ZZX Victimisation prohibited
- 14ZZY Right to compensation
- 14ZZZ Name of discloser or victim not to be published by court
- 14ZZZA Identifying information not to be disclosed etc. to courts or tribunals
- 14ZZZB Costs only if proceedings instituted vexatiously etc.
- 14ZZZC Confidentiality of whistleblower’s identity
Proposed areas on which the Law Council of Australia proposes to make submissions
The LCA has identified some key issues which may assist in the consultation:
- the appropriateness of expanding the protections to a broader class of people, to include former officers, employees and suppliers as well as associates of the entity in relation to which the disclosure is made, and specific family members of employees, officers and others of a regulated entity;
- the appropriateness of expanding expand the types of disclosures that will be protected under the framework. Is the scope of conduct that may be subject of protected disclosures broad enough?;
- should the ‘good faith’ requirement for disclosures be eliminated so that generally the motivation of whistleblowers cannot be taken into account in determining whether a disclosure out to quality for protection or not;
- the appropriateness of allowing disclosures to parliamentarians and the media in certain circumstances, if preconditions are satisfied;
- the effectiveness of imposing new stringent obligations to maintain the confidentiality of a whistleblower’s identity and whether the obligations are sufficiently comprehensive;
- the effectiveness of immunities provided for whistleblowers in respect of information they disclose;
- the effectiveness of channels making it significantly easier for a whistleblower to bring a claim for compensation where he or she has been victimized;
- the effectiveness of the new civil penalty offence so that law enforcement agencies will be able to take action against companies where the civil standard of proof can be met;
- the effectiveness of requiring all large companies to have a whistleblower policy in place, with penalties for failing to do so; and
- any related matters.