Consultation Paper on Tax and Corporate Whistleblower Protections Released

Thursday 22 December 2016 @ 11.00 a.m. | Corporate & Regulatory | Crime | Taxation

On 20 December 2016 the Minister for Revenue and Financial Services, The Hon Kelly O'Dwyer (the Minister), launched a consultation to be based on the "Review of tax and corporate whistleblower protections in Australia" (the consultation paper), to seek public comments to assist the Government with the:

  • introduction of appropriate protections for tax whistleblowers; and 
  • assessment of the adequacy of existing whistleblower protections in the corporate sector.

Part of Budget Commitment to Tackling Misconduct

The Media Release announcing the consultation indicates that the consultation is part of the Government's 2016-17 Federal Budget  plans to introduce new arrangements to better protect tax whistleblowers as part of its ". . . commitment to tackling tax misconduct". 

Additionally, the Media Release indicates the consultation is part of the Open Government National Action Plan, which sees the Government committed to ensuring appropriate protections are in place for people reporting corruption, fraud, tax evasion or avoidance, and misconduct within the corporate sector. 

This consultation paper is also intended to complement the work of the recently established Parliamentary Inquiry into whistleblower protections in the corporate, public and not-for-profit sectors  [announced on 30 November 2016 and which is to report by 30 June 2017 (Submissions closing 10 February 2017)]. 

Source and  Purpose of the Consultation Paper

The consultation paper is reported to be based on the findings of "a landmark research project" into whistleblowing entitled, Whistling While They Work 2, headed by Griffith University's professor of public policy and law, AJ Brown, and produced in conjunction with the relevant regulators including the Australian Securities Information Commission (ASIC).

The project is reported to have surveyed 702 organisations and one of its most interesting research finds so far is that:

". . . almost one in four organisations had no particular system for recording and tracking wrongdoing concerns and "did not currently have any strategy, program or process for supporting and protecting staff who raise concerns".

Further, the survey is reported to have found that only 46 percent of organisations provided potential whistleblowers with access to a management-designated support person inside the organisation.

Findings that are said to indicate that:

" . . .  Australia needs to get with the pace and create a holistic approach to dealing with whistleblowers".

Hence, the purpose of the consultation paper is reported as being intended to assist members of the public in making submissions to either or both inquiries. The paper:

  • gathers together information about existing whistleblower provisions already operating in Australia, including those made under the recent amendments to the Fair Work (Registered Organisations) Amendment Act 2016 (Cth)(see the ABCC reforms), and overseas in major comparable jurisdictions;
  • includes critiques of existing Australian provisions;
  • canvasses a range of options for reform of existing protections under the Corporations Act 2001 (Cth) and similar provisions under other financial system legislation administered by ASIC and APRA which apply to corporations;
  • canvasses a proposal for tax legislation to introduce specific protections for whistleblowers; and
  • identifies the variety of legislative approaches that may be taken by the Government to broader reform in this area generally.

Results of Public Submissions

The Media Release indicates that  the results of the consultation process and public submissions received in response to the paper are to be made available to the Parliamentary Inquiry [Submissions for this consultation will close on 10 February 2017].

Minister's Comments on Release of Consultation Paper

In the introduction to the consultation, the Minister recognises the importance of whistleblowers to maintaining the integrity of both the tax and business/financial sectors of our economy and acknowledges that, while laws have been in place for a long time to protect whistleblowers, they have not been used enough and have not proved adequate for the job:

"The importance of protecting corporate whistleblowers has been recognised for many years. However, while legislative protections have formed part of the Corporations Act 2001 (Cth) since 2004, they have been sparingly used and are increasingly perceived as inadequate having regard to recent advances in the public sector and overseas."

In the case of tax matters, protection for whistleblowers has, according to the Minister, been to secretive and hard to guarantee in any event. 

"Currently, there are no specific protections for tax whistleblowers, and the range of secrecy and privacy provisions relied upon are incapable of guaranteeing absolute protection."

The Minister states further that the Government is seeking to achieve: 

"Active protection of whistleblowers to encourage them to make disclosures ... and the Government is determined to ensure it has the right legislative settings in place to achieve this, while at the same time ensuring disclosures can be fully investigated and that procedural fairness is provided to those who may be the subject of a disclosure."

To the above ends, the Minister indicates that the consultation paper: 

" . . . deals with a series of concerns which have been identified through recent evaluations of existing whistleblower protections and presents a number of options for addressing perceived shortcomings." 

The issues the paper seeks comments on include:

  •  who should qualify for protection;
  •  what matters whistleblowers may disclose;
  •  anonymity;
  •  motives in disclosing;
  •  adequacy of protections against retaliation; and
  •  adequacy of compensation arrangements, and whether a rewards system should be introduced. 

The paper also covers proposals for enhancing internal company procedures for the reporting misconduct to appropriate regulatory agencies and whether there is in fact a need for an oversight agency responsible for whistleblower protection.

According to media reports, "whistleblowing" and the legal issues around it will occupy more of the Government's attention. In the coming year, success of any eventuating measures, laws will, it is reported, be based on whether a " . .  . holistic approach with standalone legislation is taken" or whether we fall back into the ". . . piecemeal approach with lots of different legislation and a lot of confusion".

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

Related Articles: