Enhanced Protections for Tax and Corporate Whistleblowers

From 1 July 2019, Australia’s corporate whistleblower scheme will be strengthened to enhance protection for persons who disclose sensitive tax and corporate information in certain circumstances.

This alert applies to all organisations in Australia. The Bill will amend the NATIONAL – Corporations Law module and provisions from the Bill will likely be introduced into a new module entitled NATIONAL – Protections for Tax Whistleblowers

Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Cth)

Please be advised that the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill (Cth) (the Bill) passed on 19 February 2019 and received Royal Assent on 12 March 2019.

The Bill will amend the Taxation Administration Act 1953 (Cth) (the TA Act) and the Corporations Act 2001 (Cth) (Corporations Act), and is scheduled to commence on 1 July 2019.

Increased protections for tax whistleblowers

At present, any individual is permitted to make a disclosure about an entity’s tax affairs to the Australian Taxation Office (ATO), however there is currently no specific scheme protecting those tax whistleblowers. Furthermore, there is currently no provision for remedies for those whistleblowers who suffer victimization or other damage in relation to making such disclosures.

The Bill will introduce protections and remedies in the TA Act for tax whistleblowers who make protected disclosures about breaches of Federal taxation laws or misconduct in relation to an entity’s tax affairs, including for example partaking in tax avoidance behavior.

A disclosure of information by an individual will qualify for protection under the Bill if the disclosure is made by an eligible whistleblower to the Commissioner of Taxation or to an eligible recipient. The new section 14ZZU of the Bill defines an eligible whistleblower as the following persons in relation to an entity (i.e. individuals, companies, partnerships, trusts and superannuation entities):

  • an officer (within the meaning of the Corporations Act 2001 (Cth)) of the entity;
  • an employee of the entity;
  • an individual who supplies services or goods to the entity (whether paid or unpaid);
  • an employee of a person that supplies services or goods to the entity (whether paid or unpaid);
  • an individual who is an associate (within the meaning of section 318 of the Income Tax Assessment Act 1936 (Cth)) of the entity;
  • a spouse or child of an individual referred to in any of points above;
  • a dependant of an individual referred to in any of the points above, or of such an individual’s spouse;
  • an individual prescribed by the regulations for the purposes of this paragraph in relation to the entity.

An eligible recipient is defined in section 14ZZV of the Bill and includes:

  • an auditor, or a member of an audit team conducting an audit of the entity;
  • a registered tax agent or BAS agent who provides services to the entity;
  • a person authorised by the entity to receive disclosures that may qualify for protection under the Bill;
  • a person or body prescribed in the regulations;
  • if the entity is a body corporate, a director, secretary or senior manager of the body corporate or other employee or officer who has functions or duties in relation to the entity’s tax affairs;
  • if the entity is a trust, a trustee of the trust or a person authorised by the trustee to receive whistleblower disclosures; or
  • if the entity is a partnership, a partner or a person authorised by the partner to receive whistleblower disclosures.

Organisations should be aware that under section 14ZZW of the Bill, it is an offence for a person to disclose an eligible whistleblower’s identity or information that is likely to lead to the identification of the whistleblower (confidential information). The penalty for this offence is imprisonment for 6 months or 60 penalty units (currently $12,600) (or both).

Under section 14ZZY of the Bill, it is also an offence for a person to victimise a whistleblower or another person by engaging in conduct that causes detriment, where the conduct is based on a belief or suspicion a person has made, may have made, proposes to make or could make a disclosure that qualifies for protection. It is also important to note that the offence of victimisation also covers threats to cause detriment to the whistleblower, or a person who assists the whistleblower. Detriment is defined broadly in the Bill to include:

  • dismissal of an employee;
  • injury of an employee in his or her employment;
  • alteration of an employee’s position or duties to his or her disadvantage;
  • discrimination between an employee and other employees of the same employer;
  • harassment or intimidation of a person;
  • harm or injury to a person, including psychological harm;
  • damage to a person’s property;
  • damage to a person’s reputation;
  • damage to a person’s business or financial position; and
  • any other damage to a person.

A breach of section 14ZZY will incur a penalty of 2 years imprisonment or 240 penalty units (currently $50,400) (or both).

Improving protection for whistleblowers in the corporate and financial sectors

At present, whistleblower protection regimes covering corporate and financial sector whistleblowers are found in a number of different Acts including the Corporations Act, the Banking Act 1959 (Cth), the Insurance Act 1973 (Cth) and the Superannuation Industry (Supervision) Act 1993 (Cth). The purpose of the Bill is to consolidate those existing whistleblower protections in the corporate and financial sectors into a single strengthened whistleblower scheme under the Corporations Act.

Organisations should be aware that under the new strengthened whistleblower scheme, the categories of individuals who can make a protected disclosure (eligible whistleblowers) is expanded to include former employees and contractors.

It is also important to note that the Bill will expand the types of disclosures that may be protected by the Corporations Act to also include disclosures of conduct which constitute misconduct or an improper state of affairs or circumstances.

Further, the new section 1317AAD of the Corporations Act will include protections for public interest and emergency disclosures. This provision will permit persons to disclose certain information to Parliamentarians or journalists where the disclosure would be in the public interest or the information concerns a substantial and imminent danger to the health or safety of one or more persons or the natural environment. To qualify for this protection the discloser will be required to meet certain pre-conditions.

Finally, it is important to note that the new section 1317AI of the Corporations Act requires public companies and large proprietory companies to have in place a whistleblower policy which covers the requirements of that section including for example information about how a company will support whistleblowers and protect them from detriment. Organisations will have 6 months from the commencement of the Bill to implement a compliant whistleblower policy.

Please click here to access the Bill.


For further information please contact the Law Compliance team:

Phone: 1300 862 667

Email: info@lawcompliance.com.au