Insights

15/10/18

Getting ready for the new tax whistleblower regime

At the end of 2016 the Australian Government committed to a plan to ensure 'whistleblowers' who report corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector are adequately protected from criminal and civil suits.

As highlighted in our article Backing corporate activists: five ‘need-to-knows’ about proposed whistleblower reforms, the reforms propose to:

  • expand the class of potential whistleblowers (including former employees, goods and services contractors, officers and relatives and dependants of these persons);
  • sweep direct managers and supervisors into the class of persons to whom a protected disclosure can be made;
  • allow disclosures to be protected even if made anonymously;
  • strengthen protections and penalties, including by introducing civil penalties of up to $1 million for companies contravening confidentiality or anti-victimisation protections, and allowing whistleblowers to bring claims for compensation, in most cases, without the threat of adverse costs orders and with the benefit of a reversed burden of proof;
  • introduce protections for certain 'emergency disclosures' to a journalist or a member of parliament where a reasonable period has passed since making a protected disclosure to a regulator and the whilstblower reasonably believes there is an imminent risk of serious harm or danger to the public or the financial system; and
  • introduce a criminal offence for public and large proprietary companies who do not have a whistleblower policy available to officers and employees.

In addition to the above, the reforms will also implement a new “tax whistleblower regime” which introduces a specific scheme for whisteblowing about tax affairs and suspected tax avoidance.

Tax whistleblower regime – what you need to know

While the corporate and tax whistleblower regimes are designed to provide similar protections to whistleblowers, there are certain differences in the tax whistleblower regime that internal policies will need to reflect.  These include:

  • The list of 'eligible recipients' who can receive disclosures from tax and corporate whistleblowers differ.  For example, tax disclosures can only be made to the Commissioner of Taxation.  On the other hand, corporate disclosures may only be made to either the Australian Securities and Investments Commission or the Australian Prudential Regulation Authority;
  • Tax whistleblowers will only be protected if they make disclosures in circumstances where they consider the information may assist that eligible recipient in performing their “functions or duties in relation to the tax affairs of the entity or an associate”;
  • Tax whistleblowers will be protected when they report improper conduct of both their employer and their employers’ associates (as defined in the tax law); and
  • While emergency disclosures to a journalist or a member of Parliament may be permitted in respect of corporate misconduct, this will not apply to disclosures in respect of tax misconduct.

It was originally intended that the Bill (which remains before the Senate) would be passed in June and apply to disclosures made on or after 1 July 2018.  Whilst this date has now passed, companies should prepare for the new regime coming into force shortly after its enactment.  Additionally, from 1 January 2019 (unless this date is revised), the new regime will require public companies, large proprietary companies and proprietary companies that are trustees of registrable superannuation entities to have an internal policy in place with information about the protections available to whistleblowers.  Failure to have an appropriate policy in place will be a strict liability offence attracting a fine of up to $12,600 (or 60 penalty units).

Affected businesses should start taking action to review their existing whistleblower policy and make appropriate changes to reflect the new regime.  More importantly, if they do not have a policy at all, now is the time to start putting one together.  We have already helped some of our larger clients update their policies for compliance with the new laws. 

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