Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)Chapter 2: PwC response - Extending tax whistleblower protections
Outline of chapter
2.1 Schedule 2 to the Bill amends Part IVD of the TAA 1953 to extend whistleblower protections to eligible whistleblowers who make disclosures to the TPB where they believe the information may assist the TPB to perform its functions or duties under the TAS Act.
2.2 All legislative references in this Chapter are to the Bill unless otherwise stated.
Context of amendments
2.3 In August 2023, the Government announced a package of reforms in response to tax adviser misconduct in Australia, to ensure that tax advice is provided in accordance with appropriate professional and ethical standards. The PwC scandal exposed severe shortcomings in Australia's regulatory frameworks, including limitations in the abilities of Australia's regulators to receive and share information from whistleblowers. These limitations arbitrarily and negatively constrain the integrity of the taxation system.
2.4 Whilst individuals are currently protected when they make disclosure of information to the Commissioner for the purposes of taxation law, there is no similar protections for disclosures made to the TPB. The 2019 TPB Review concluded the inability of the TPB to receive information from an eligible whistleblower was an anomalous outcome. As such, the Commissioner is equipped to address tax misconduct that falls within the Commissioner's purview, but the TPB is not equally able to address malicious practices by tax practitioners or scheme promoters.
2.5 The package of reforms announced by the Government included:
- •
- Protecting a new range of disclosures under Part IVD of the TAA 1953; and
- •
- Reversing the burden of proof for claims of protection under the Act to better align with public interest disclosures.
2.6 Schedule 2 to the Bill implements these objectives through legislative changes to the whistleblower provisions in the TAA 1953.
Comparison of key features of new law and current law
Table 2.1 Comparison of new law and current law
| New law | Current law |
| A disclosure of information qualifies for protection if made to the Commissioner to assist the Commissioner perform their functions or duties under the taxation law, or to the TPB to assist the TPB to perform its functions or duties under the TAS Act. | A disclosure of information qualifies for whistleblower protection if made to the Commissioner to assist the Commissioner to perform their functions or duties under the taxation law. |
| A discloser is further protected if they make disclosures for the purposes of obtaining assistance in relation to a disclosure to a medical practitioner, psychologist or an entity prescribed in the regulations. | A discloser qualifies for protection if the disclosure of information is made to a legal practitioner for the purposes of obtaining legal advice or representation about disclosures made to the Commissioner or an eligible recipient. |
| The burden of proof is reversed for claims for protection from liabilities by a discloser, applying in a similar manner to parts of the PID Act. | A discloser that qualifies for protection is not subject to several liabilities in relation to the disclosure. |
Detailed explanation of new law
New protected disclosures
Tax Practitioners Board
2.7 A discloser is protected under Part IVD of the TAA 1953 if they make disclosures to the TPB or the Commissioner where the discloser considers the information may assist the TPB to perform its functions and duties under the TAS Act. [Schedule 2, item 3, subsection 14ZZT(1A) of the TAA 1953]
2.8 Although such disclosures are intended to assist the TPB in addressing tax practitioner misbehaviour, a discloser is also protected if they provide such information via the Commissioner. [Schedule 2, item 3, subparagraph 14ZZT(1A)(b)(ii) of the TAA 1953]
2.9 Once information is disclosed to the TPB, the Board has the power to use this information as necessary or convenient for performing its functions under section 60-15 of the TAS Act.
2.10 Providing this whistleblower protection to disclosures to the TPB is necessary and appropriate, as it will allow the TPB to regulate malicious practices more effectively by tax practitioners or scheme promoters that would be harmful to the public or undercut the Australian revenue system.
Other disclosures
2.11 The Bill expands the types of disclosures that can be made to entities other than the Commissioner or the TPB to support eligible disclosers in obtaining assistance in the process of whistleblowing. In addition to disclosures made to legal practitioners under the existing subsection 14ZZT(3), disclosures of information are also protected when made to entities prescribed in the regulations of which the discloser is a member. Entities that may be prescribed in the future include:
- •
- relevant professional associations;
- •
- bodies that represent the professional interests of disclosers; and
- •
- registered organisations under the Fair Work (Registered Organisations) Act 2009 (such as trade or industry unions).
2.12 During consultation, stakeholders expressed that the draft amendments extended the range of disclosure too broadly. Consequently, the entities a discloser may rely on for professional assistance has been limited to prescribed entities to protect sensitive tax information and ensure that disclosures are not incorrectly made to entities outside the scope of the whistleblower regime. [Schedule 2, item 4, subparagraph 14ZZT(3A) of the TAA 1953]
2.13 Disclosures of information made to medical practitioner or psychologists also qualify for protection under Part IVD. This protection aligns the whistleblower regime with exemptions found in the National Anti-Corruption Commission Act 2022, to support the health and wellbeing of whistleblowers. [Schedule 2, item 4, subparagraph 14ZZT(3B) of the TAA 1953]
Treatment of disclosed information
2.14 As information received under new subsection 14ZZT(1A) may be made to either the TPB or the Commissioner, both the respective secrecy and confidentiality provisions within Division 355 of the TAA 1953 or Subdivision 70-E of the TAS Act may apply. For the avoidance of doubt and to ensure that such disclosed information is appropriately protected, only one Act applies to a disclosure at a time.
2.15 If a disclosure is made to the Commissioner, then the disclosed information is protected information under paragraph 355-30(1)(a) of the TAA 1953. As such, recording or disclosing information received under 14ZZT(1A) to another entity is an offence under section 355-25 of the TAA 1953. [Schedule 2, item 6, subsection 14ZZTA(1) of the TAA 1953]
2.16 Conversely, if the disclosure is made to the TPB, then the information is treated as official information as defined in section 90-1(1) of the TAS Act. As such, recording or disclosing information received under 14ZZT(1A) to another entity is an offence under section 75-35 of the TAS Act. [Schedule 2, item 6, subsection 14ZZTA(2) of the TAA 1953]
Claims for protection
2.17 Section 14ZZXA establishes evidentiary burdens and procedures regarding claims for protection made under section 14ZZX. These are made to align with section 10 and section 23 of the PID Act 2013.
2.18 Where an individual makes a claim under section 14ZZX, the evidential burden of proof is reversed such that the individual bears the onus of substantiating their claim for protection. [Schedule 2, item 8, subsection 14ZZXA of the TAA 1953]
2.19 The Guide to Framing Commonwealth Offences states that it may be appropriate for the evidentiary burden of proof to be placed on a defendant where the facts in relation to the defence are peculiarly within the knowledge of the defendant. Where a whistleblower is making a claim that they have made a disclosure that qualifies for protection under Part IVD of the TAA 1953, it will be uniquely within their knowledge as to the circumstances of the information they disclosed and their motivations for doing so.
Commencement, application, and transitional provisions
2.20 Schedule 2 to the Bill commences on later of the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent; and 1 July 2024. The amendments apply on commencement.