House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

Chapter 6 - Record keeping and confidentiality of information

Outline of chapter

6.1 New Part 7 of the Act requires certain records to be made and kept. New Part 7 also seeks to ensure that information provided under this Act is not disclosed unnecessarily or put to unauthorised use.

Context of amendments

6.2 To support the operation of the Act and regulations, people must make and keep records to record and support their compliance with their obligations under the legislation.

6.3 In examining significant proposals, the Treasurer and departmental officers frequently consult with Commonwealth, State and Territory government departments, agencies and authorities with responsibilities relevant to the proposals. The advice and comments provided by such agencies are important in assessing whether they raise any national interest issues.

Detailed explanation of new law

Record keeping

6.4 A person must make and keep records of every action, transaction, event or circumstance relating to the matters shown for the length of time shown in the table below.

6.5 The records must be in English or readily accessible so that they can be translated into English if necessary. Records may be kept in hard copy or electronic form. [Schedule 1, item 4, section 119]

6.6 A person who fails to make and keep records in accordance with the Act may be guilty of an offence unless the Treasurer notified the person that they do not need to make or keep the record. The maximum penalty for this offence is 30 penalty units (currently $5,400). [Schedule 1, item 4, section 119]

6.7 The offence is one of strict liability. In general terms, this means that it is only necessary for the prosecution to prove the alleged action, inaction or state of affairs - the person's intention is irrelevant. It is considered appropriate for this offence to be one of strict liability because it would be difficult for the prosecution to prove the person's intention and the maximum penalty is a fine rather than a period of imprisonment.

Confidentiality of information

Disclosure of protected information for a purpose not authorised by the Act or regulations is an offence

6.8 It is an offence for a person to record, disclose or otherwise use protected information unless the making of the record, disclosure or use is authorised by new Part 7 of the Act or an exception applies. [Schedule 1, item 4, section 128]

6.9 Protected information is defined by new section 120 to mean information that is obtained under, in accordance with, or for the purposes of the Act and regulations. The definition of 'protected information' excludes information specified in an exemption certificate for new dwellings or an exemption certificate provided for by the regulations. That is so that there is transparency where necessary. For example, buyers will be able to confirm whether an exemption certificate is valid. It also excludes information that is obtained by a person engaged under the Public Service Act 1999 who is employed in the Australian Taxation Office (ATO) who obtained the information under, in accordance with or for the purposes of this Act as a result of a delegation or subdelegation under new subsection 138, or as a result of a request by the Treasurer that the Commissioner of Taxation (Commissioner) exercise his or her powers under this Act. That is because such information will become subject to the information protection regime in the Taxation Administration Act 1953 (TAA 1953). [Schedule 1, item 4, section 120]

6.10 The penalty for this offence is imprisonment for two years, a fine equivalent to 120 penalty units (currently $21,600), or both. If a body corporate is found guilty of this offence, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 600 penalty units. These penalties are appropriate because of the damage that could be done to a person as the result of an unauthorised use or disclosure of information about that person.

Exception for use of information in good faith

6.11 The offence relating to protected information does not apply if the person makes a record of, or discloses or otherwise uses protected information in good faith in performing, or purportedly performing, his or her functions or duties under this Act, or in exercising or purportedly exercising his or her powers under this Act. [Schedule 1, item 4, section 129]

6.12 In any prosecution, the defendant bears the evidential burden with respect to this exception. This is justified because in many cases it is within the defendant's knowledge as to why the person used or disclosed the protected information. The effect is that the defendant must adduce or point to evidence that suggests a reasonable possibility that one of the exceptions applies. Once this is done, the prosecution must refute this beyond reasonable doubt to obtain a conviction (see section 13.3 of the Criminal Code).

Authorisation of disclosures of protected information for the purposes of this Act

6.13 To assess whether a particular foreign investment or proposed foreign investment may be contrary to the national interest it is often necessary for the official assisting the Treasurer to perform his or her functions under this Act to consult with a number of Commonwealth, State and Territory government agencies. The Bill therefore authorises a person to disclose protected information if it is for the purpose of performing the person's functions or duties under the Act or regulations and the disclosure is to a person who is:

•

a Minister, an officer or an employee of the Commonwealth, a State, the Australian Capital Territory or the Northern Territory;

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an officer or employee of a Commonwealth, State or Territory body; or

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a person appointed by the Commonwealth for the purposes of this Act (for example, a member of the Foreign Investment Review Board, a non-statutory body established to advise the Treasurer on foreign investment, including applications made under this Act). [Schedule 1, item 4, subsection 121(1)]

6.14 A person who obtains protected information under new subsection 121(1) is also permitted to make a record of disclose or otherwise use the information for the purposes for which the information was disclosed to the person. The person may also disclose the protected information for the purposes for which it was disclosed, but only to:

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a Minister, an officer or an employee of the Commonwealth, a State, the Australian Capital Territory or the Northern Territory;

•

an officer or employee of a Commonwealth, State or Territory body; or

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a person appointed by the Commonwealth for purposes of this Act. [Schedule 1, item 4, subsection 121(2)]

Other circumstances in which protected information may be recorded, used or disclosed

6.15 In broad terms, a person is authorised to record, disclose or use protected information if:

•

the information is disclosed to a Minister responsible for the administration of specified Commonwealth statutes, or the accountable authority of a Commonwealth entity that deals with the administration of any of those Acts, for the purposes of administering those Acts; [Schedule 1, item 4, subsection 122(1)]

•

the information is disclosed to a Minister responsible for agriculture, industry policy, investment promotion, taxation policy or foreign investment in Australia for the purpose of enabling the Minister to discharge that responsibility; [Schedule 1, item 4, subsection 122(2)]

•

the information is disclosed to the Secretary of a Department administered by a Minister responsible for agriculture, industry policy, investment promotion, taxation policy or foreign investment in Australia for the purposes of assisting that Minister to discharge their responsibilities; [Schedule 1, item 4, section 122(3)]

•

the information is disclosed to an enforcement body ^[8] within the meaning of the Privacy Act 1988 if the person reasonably believes it is reasonably necessary for one or more enforcement related activities ^[9] within the meaning of the Privacy Act conducted by an enforcement body; [Schedule 1, item 4, section 123]

•

the information specifies matters prescribed by the regulations for the purposes of reporting on the administration of this Act and the information does not identify, nor is reasonably capably of being used to identify, a person; [Schedule 1, item 4, section 124]

•

the protected information disclosed is already in the public domain (other than as a result of the contravention of new Division 3 of Part 7); [Schedule 1, item 4, section 125]

•

the record, disclosure or use is in accordance with the written consent of the person to whom it relates; or [Schedule 1, item 4, section 126]

•

the disclosure is to a court or tribunal, or in accordance with an order of a court or tribunal, for the purposes of proceedings if the Commonwealth is a party to the proceeding and the Treasurer is satisfied that it is not contrary to the national interest. [Schedule 1, item 4, section 127]

No requirement to provide information

6.16 The unauthorised release of protected information could cause significant harm, particularly where it is highly commercially sensitive. For that reason a person cannot be required to produce any document in his or her possession or to disclose any matter or thing of which she or he had notice to a court, tribunal, authority or person having power to require the production of documents or answering questions. [Schedule 1, item 4, section 130]