In part 2 of the look at the new legislation introduced by the government to ensure more robust protection for whistleblowers, we will examine the introduction of the completely new whistleblower protections under the taxation regime. Specifically, the new regime will be introduced to better protect people who disclose information to the ATO on tax avoidance behaviour and other tax issues.
New whistleblower protections under the taxation regime introduced by the government has been designed to better protect people who disclose information to the ATO on tax avoidance behaviour and other tax issues. Under the legislation, eligible whistleblowers includes not only officers and employees but also people who supply goods and services to the entity (whether paid or unpaid) and their associates and/or spouses. The categories of eligible whistleblowers ensure that the regime targets those individuals who are most likely to have reliable information about the tax affairs of the entity.
In order to qualify for protection, a whistleblower must have reasonable grounds to suspect that the information indicates misconduct or an improper state of affairs or circumstances in relation to the tax affairs of the entity. However, the legislation ensures that they do not need to have knowledge of specific taxation laws. A qualifying disclosure is any information that may assist the Commissioner to perform his/her functions or duties.
One major difference between the corporate whistleblowers regime and the tax whistleblowers regime is that there is no provision for emergency disclosures.
According to the government this is to prevent confidentiality of taxpayer information from being breached especially in cases where the tax affairs are complex and require a long investigation time. Releasing such information may lead to unwarranted reputational damage and could encourage vexatious disclosures.
Where an eligible whistleblower has made a proper disclosure, they can expect the following level of protection:
- confidentiality of identity (unless disclosed to certain government departments, or with the consent of the whistleblower);
- protection from legal action;
- make it an offence to cause or threaten to cause detriment to a whistleblower or another person in the belief or suspicion that a disclosure has been/may have been/proposed to be made;
- compensation for damage suffered for conduct in relation to disclosure or belief of disclosure being made; and
- ensuring information that might reveal the identity of a whistleblower is not required to be disclosed to a court or tribunal.
However, where a whistleblower makes a disclosure that impacts their own tax affairs, there may be consequences. For example, a taxpayer gets paid cash in hand for work and doesn’t report that income in his or her tax returns. Subsequently, he or she discovers that the workplace is also in breach of their tax and superannuation obligations and makes a qualifying disclosure of all the breaches including his or her own unreported income. Whilst that disclosure qualifies for protection and the information disclosed is not admissible against him in criminal proceedings or proceedings for the imposition of penalty, the ATO may treat it as a voluntary disclosure in determining his liabilities for penalties in respect of unpaid tax.
Ready to blow the whistle?
If you’re thinking of making a whistleblowing disclosure in relation to tax matters, remember that these protections are not yet law. Once Parliament passes the legislation, the tax whistleblowing regime will apply to disclosures made on or after 1 July 2018. It may be wise in the meantime find out what your legal position is and consult your tax expert, particularly in light of the above example. If you think you may have tax issues, contact us today.