More Government Overreach
Ordinary Australians, vulnerable and wealthy alike, will be exposed and at risk of being targeted for identity theft, cybercrime and discrimination. The Australian Federal Government proposes to implement a public register of beneficial ownership to record who ultimately owns, controls, and receives benefits from companies and other legal vehicles operating in Australia. This proposal is contained in Treasury’s Consultation Paper: “Multinational tax integrity: Public Beneficial Ownership Register” (“Consultation Paper”). The proposed register is being justified as part of the Government’s election promise to ensure that “multinational entities pay a fairer share of tax”. Our reading of the Consultation Paper reveals that the proposed regime’s impacts will be felt far beyond multinational entities and appears to be another case of significant government over-reach and erosion of the privacy of ordinary Australians. As proposed, it will directly affect ordinary Australians and may impose significant compliance burdens on millions of Australian entities.
The new regime will be introduced in phases.
The first phase will cover entities regulated under the Corporations Act 2001 – including Australian private proprietary companies, public companies and investment vehicles. (It may also catch incorporated charities and Non-Profits.) These entities will be required to maintain registers of certain beneficial owners (including natural persons). Future phases are intended to include a centralised public register and encompass additional types of entities (and will most likely include private family trusts). Much of this information is to be made public, while other information is to be kept secret for the personal safety of individuals. For example, it is proposed that the name of a beneficial owner and their month and year of birth will be disclosed, but not the day within the month. The Government is seeking input in respect of the privacy implications of the proposed regime.
The proposal raises many significant issues. The Proposed Register:
- will do little (if anything) to achieve Treasury’s stated aim of “ensuring multinational enterprises pay a fairer share of tax” as, among other things the public nature of the Proposed Register is not necessary to achieve this. All entities captured by first phase disclosures already supply (and can be requested to supply) great amounts of information about shareholders and relevant interests to ASIC, the ATO and other regulators.
- assumes, in our view incorrectly and without any evidence, that the information of the kind contemplated in the Consultation Paper (some of which is highly sensitive) needs to be made public in order to expose tax liabilities when, as above, ASIC and the ATO already have access to shareholder information, tax records and returns, and regular and audited financial reports.
- is contrary to the fundamental right that law abiding Australians have to structure their business personal and financial affairs in a private manner.
- breaches Australia’s international obligation to uphold privacy rights
- will create significant real risks to individuals and their personal information that flow from making the Proposed Register public. Ordinary Australians, vulnerable and wealthy alike, will be exposed and targeted for identity theft, cybercrime and discrimination.
- will likely impose disproportionately significant compliance and regulatory burdens and costs on private unlisted entities, in particular small private companies.
- proposes to impose disclosure obligations on the settlors, beneficiaries and appointors of trusts when they have no interest in the assets of a trust and no control over its operations and proposes to impose disclosure obligations on family trusts which are entirely inconsistent with the discretionary nature of such trusts.
- Generally takes a “sledgehammer” approach when there are small incremental improvements that could instead be made.
We are very concerned at the extent of government overreach being proposed and the continuous progression towards total erosion of our privacy rights. We are participating in consultation and lobbying efforts against these developments.
