House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Productivity, Competition, Charities and Treasury, the Hon Dr Andrew Leigh MP)

Chapter 8: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025

Schedule 1 – Enhanced disclosure of ownership of listed entities

Overview

8.1 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.2 Schedule 1 to the Bill amends Chapters 6 and 6C of the Corporations Act 2001 to enhance the substantial holding and tracing notice regimes, which, amongst other things, govern the disclosure of beneficial ownership for listed entities.

8.3 Schedule 1 to the Bill includes amendments intended to:

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bring interests arising from equity derivatives into the Chapter 6C disclosure regime – streamlining disclosure requirements and ensuring the same level of regulatory oversight, and penalties for misconduct, apply with respect to all interests required to be disclosed to the market;

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require foreign-registered entities listed on Australia's financial markets and their shareholders to disclose interests in securities to the same standard as Australian-registered listed entities and their shareholders;

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clarify when the existing and new disclosure requirements crystallise and introduce greater flexibility to simplify some of the disclosures required;

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improve access to, and usability of, existing registers of information about relevant interests in listed entities collected via tracing notices; and

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confer on ASIC appropriate powers to incentivise compliance with the streamlined disclosure regime and protect market participants, including increased penalties for existing offences in Chapter 6C.

Human rights implications

Right to a fair trial

8.4 Schedule 1 to the Bill engages the right to a fair trial, as well as the presumption of innocence in Article 14 of the International Covenant on Civil and Political Rights (ICCPR). Article 14 of the ICCPR provides that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.

Strict liability offences

8.5 Schedule 1 to the Bill contains strict liability offences in relation to:

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failing to give a substantial holding notice or the failure of a listed foreign body to comply with equivalent disclosure obligations;

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failing to comply with a direction from ASIC or a key person to make a disclosure;

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body corporates failing to comply with their obligations relating to where the tracing notice register is kept; and

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failing to comply with a freezing notice.

8.6 These strict liability offences engage the right to a fair trial as they involve the imposition of criminal liability without a mental fault element. However, strict liability offences are compatible with the presumption of innocence if they are reasonable, necessary and proportionate and in pursuit of a legitimate objective.

8.7 Strict liability offences are appropriate in this circumstance, as it is necessary to strongly deter misconduct that can have a serious detriment for financial markets and the public more generally.

8.8 Having strict liability apply to these offences also reduces non-compliance by ensuring that regulators can efficiently and expeditiously deal with low-level offending. This in turn bolsters the integrity of the regulatory regime enforced by the Australian Securities and Investments Commission and maintains public confidence in the regime.

8.9 The strict liability offences in this Schedule generally meet all the conditions listed in the Attorney-General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.

8.10 However, the penalties for failing to give a substantial holding notice or tracing notice are 120 penalty units. While these penalties exceed the maximum amount recommended by the Guide to Framing Commonwealth Offences, the increased penalties are reasonable and proportionate as they reflect the seriousness of the offence and will act as a sufficient deterrent. In addition, the new offences will only capture a small cohort of individuals and others liable rather than the public at large.

8.11 The application of strict liability, as opposed to absolute liability, preserves the defence of honest and reasonable mistake of fact to be proved by the accused on the balance of probabilities. This defence maintains adequate checks and balances for persons who may be accused of such offences.

8.12 Given the importance of providing more public oversight of the ownership of beneficial interests, and ensuring the integrity of the regulatory model, this obligation is a reasonable and proportionate means of achieving the legitimate objective of enhancing the substantial holding notice and tracing notice regimes.

Reversal of the burden of proof

8.13 Schedule 1 of the Bill also engages Article 14(2) of the ICCPR because it imposes an evidential burden on a defendant in the following circumstances:

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in relation to offences for failing to provide certain information in or accompanying a substantial holding notice, a defendant bears an evidential burden in relation to whether they knew, or were reasonably able to know, the information;

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in relation to offences for failing to provide certain documents on request, a defendant bears an evidential burden in relation to whether the relevant document is not in the person's possession, or whether the document is readily available to the person making the request;

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in relation to offences for failing to comply with a tracing notice, a defendant bears an evidential burden in relation to the extent to which the information required to be disclosed is known to the defendant.

8.14 Additionally, Schedule 1 of the Bill imposes a legal burden on a defendant who wishes to raise a defence that they have not complied with a key person issued tracing notice on the basis that the giving of the notice is vexatious.

8.15 The imposition of evidential or legal burdens on a defendant in relation to those defences is appropriate, proportionate, and reasonable. Principally, this is because the relevant matters will be peculiarly within the knowledge of the defendant. For example, a defendant will be peculiarly aware of the extent to which certain information is known to them.

8.16 Additionally, placing an evidential or legal burden on the defendant is further justified because it would be significantly more difficult and costly for the defendant to disprove these matters than it would be for the prosecution to establish or prove these matters.

Right to privacy

8.17 Schedule 1 of the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it allows for the collection, use and storage of information.

8.18 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR, and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

8.19 The nature of the types of information that Schedule 1 to the Bill makes subject to disclosure, and the circumstances where such information can be requested, are reasonable and proportionate. It is targeted to the information necessary to understand a person's beneficial interests and their influence over securities and entities. Schedule 1 to the Bill does not allow for the collection of sensitive personal information.

8.20 The importance of allowing transparency and improving the efficiency of financial markets warrant the limitation of the right to privacy in this instance.

8.21 Increasing the availability of beneficial ownership information is intended to discourage the use of complex structures to obscure tax liabilities and facilitate financial crimes. Greater levels of transparency increase the tools available to regulators and law enforcement in performing their functions and powers.

8.22 It also supports transparency by providing greater access to information to interested members of the public, such as journalists and academics, who play a key role in initiating and encouraging public debate.

8.23 Access to beneficial ownership information supports the efficient operation of financial markets by increasing the information available to persons making investment decisions and their ability to conduct due diligence on prospective acquisitions, ultimately supporting more efficient resource allocation.

Conclusion

8.24 Schedule 1 to the Bill is compatible with human rights as where any rights are limited, the limitation is reasonable, legitimate and proportional.

Schedule 2 - Australian Charities and Not-for-profits Commission review Rec 17 – Secrecy Provisions

8.25 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.26 Schedule 2 to the Bill amends the ACNC Act to allow for the disclosure of information about ACNC investigations, subject to a safeguard of a public harm test. The amendments allow the ACNC Commissioner to authorise an ACNC officer to disclose information about a recognised assessment activity in relation to a registered entity suspected of contravening a provision of the ACNC Act or not complying with a governance standard or external conduct standard.

8.27 The ACNC Commissioner may authorise disclosure about whether or not the ACNC is investigating a registered entity where information about the entity's alleged conduct is already publicly available, if satisfied that the disclosure is necessary to:

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prevent or minimise the risk of significant harm to public health, public safety or an individual; or

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prevent or minimise the risk of significant mismanagement or misappropriation of funds or assets of the registered entity in question, or contributions to that registered entity; or

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prevent or minimise the risk of significant harm to the public trust and confidence in the Australian not-for-profit sector, or to a part of the sector.

8.28 Alternatively, the ACNC Commissioner may authorise the disclosure of more information and in a broader range of circumstances, but the entity may object to the disclosure. The Commissioner may only authorise the disclosure if satisfied that it is necessary to:

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prevent or minimise the risk of significant harm to public health, public safety or an individual; or

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prevent or minimise the risk of significant mismanagement or misappropriation of funds or assets of the registered entity in question, or contributions to that registered entity.

8.29 The ACNC Commissioner must also be satisfied that disclosure of the information would not cause disproportionate harm to the registered entity or to an individual connected to the entity.

Human rights implications

Article 14 of the ICCPR

8.30 Article 14 establishes rights to due judicial process and procedural fairness. These rights apply in both civil and criminal proceedings, and in matters before both courts and tribunals.

8.31 Schedule 2 to the Bill engages these rights as it includes an evidential burden on a defendant. It does this by creating new exceptions to the secrecy provisions in the ACNC Act, allowing an ACNC officer to disclose protected information if authorised by the ACNC Commissioner.

8.32 Placing the evidential burden on the defendant in this case is appropriate, proportionate and reasonable. This is because whether the ACNC Commissioner has authorised a disclosure is peculiarly within the knowledge of ACNC officers.

8.33 Placing an evidentiary burden on the defendant is further justified because it would be significantly more difficult for the prosecution to disprove these matters than it would be for the defendant to establish these matters.

8.34 Engaging the right to a fair trial in this way is necessary because it achieves the legitimate objective of ensuring that information about entities registered with the ACNC is not disclosed in ways that may cause harm but may be disclosed when doing so would prevent harm. Placing an evidentiary burden on the defendant ensures that secrecy offences are effectively prosecuted.

8.35 As such, Schedule 2 to the Bill is consistent with the right to a fair trial under Article 14 of the ICCPR.

Article 17 of the ICCPR

8.36 Schedule 2 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it allows ACNC officers to disclose protected ACNC information relating to investigations into entities registered with the ACNC. This may include information relating to individuals associated with the entity.

8.37 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

8.38 The amendments only allow an ACNC officer to disclose protected ACNC information about a new or ongoing investigation into an entity if this is authorised by the ACNC Commissioner. The ACNC Commissioner may only authorise disclosure if they are satisfied that it is necessary to prevent or minimise the risk of significant harm to the public, and individual, the entity, or public trust and confidence in the Australian not-for-profit sector.

8.39 If the information being disclosed is personal information, the ACNC Commissioner must also be satisfied that the disclosure is necessary to achieve the objects of the ACNC Act.

8.40 The ACNC Commissioner must also consider whether disclosure may cause disproportionate harm to the entity or an individual connected to the entity.

8.41 These requirements ensure that any disclosure of information about individuals is reasonable and appropriate, as the ACNC Commissioner may only authorise disclosure of information where necessary to prevent or reduce the risk of significant harm, and must consider whether disclosure could cause disproportionate harm.

8.42 The amendments allowing for the disclosure of protected ACNC information are therefore consistent with the right to protection against arbitrary or unlawful interference with privacy under Article 17 of the ICCPR.

Conclusion

8.43 In summary, the reversal of the evidential burden of proof is consistent with the right to a fair trial under Article 14 of the ICCPR as it ensures that secrecy offences are effectively prosecuted.

8.44 Allowing for the disclosure of information in certain circumstances is consistent with the right to protection against arbitrary or unlawful interference with privacy under Article 17 of the ICCPR

8.45 As such, Schedule 2 to the Bill is compatible with human rights because to the extent that it may limit human rights or freedoms, those limitations are reasonable, necessary and proportionate.

Schedule 3 - Frequency of Financial Regulator Assessment Authority Reviews

Overview

8.46 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.47 Schedule 3 to the Bill amends the Financial Regulator Assessment Authority Act 2021 to require reviews of each regulator to be conducted by the Financial Regulator Assessment Authority every five years, rather than on a rolling biennial basis.

8.48 These changes will reduce the administrative burden on the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA) and will allow for a more comprehensive review process for these financial regulators.

Human rights implications

8.49 Schedule 3 to the Bill does not engage any of the applicable rights or freedoms.

8.50 Schedule 3 to the Bill does not affect any of the rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The purpose of the amendments is to extend the time between reviews of ASIC and APRA to allow these reviews to be broader and more in-depth.

Conclusion

Schedule 3 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 4 – Minor and Technical Amendments

Overview

8.51 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act.

8.52 Divisions 1 and 2 of Part 1 amend the CCA; Division 3 to 7 of Part 1 amend the Corporations Act; Division 4 of Part 1also amends the Corporations (ATSI) Act; Division 8 of Part 1 amends the IGT Act; Divisions 1 to 3 of Part 2 amend the GST Act; Division 2 of Part 2 also amends FT Act and TAA; Division 4 of Part 2 amends the ITAA 1997; and Part 3 amends the Excise Act.

8.53 The minor and technical amendments maintain and improve the quality of Treasury legislation by:

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enhancing readability and administrative efficiency;

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reducing unnecessary red tape; and

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making other technical changes.

Human rights implications

8.54 Schedule 4 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

8.55 Schedule 4 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 5 – Machinery and Other Technical Amendments

Overview

8.56 Schedule 5 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act.

8.57 Schedule 5 to the Bill makes machinery and other technical amendments to Treasury portfolio legislation. The amendments demonstrate the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation. The amendments correct unintended drafting outcomes, update legislative references, simplify provisions and reduce red tape.

8.58 While similar in nature to the minor and technical amendments in Schedule 5 to the Bill, the machinery and other technical amendments need to be in place as soon as possible to enable ongoing administration of key government programs and address unforeseen outcomes of previous legislative changes that undermine the proper functioning of various government initiatives.

Human rights implications

8.59 Schedule 5 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

8.60 Schedule 5 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 6 - Extend Operation of the Prohibiting Energy Market Misconduct Provisions

Overview

8.61 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.62 Schedule 6 to the Bill extends the operation of Part XICA of the Competition and Consumer Act 2010 (CCA) for another five years, from 1 January 2026 to 1 January 2031.

Human rights implications

8.63 Schedule 6 to the Bill does not engage any of the applicable human rights or freedoms.

8.64 Part XICA of the CCA provides a legislative framework consisting of prohibitions and remedies tailored to conduct in electricity markets. It contains provisions that:

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require electricity retailers to pass through cost savings to their customers;

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prohibit electricity generators refusing to offer electricity financial contracts for the purpose of substantially lessening competition; and

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prohibit bidding conduct by generators which is designed to distort or manipulate the spot market.

8.65 Section 153B of the CCA currently provides that Part XICA, and any other provision of the CCA to the extent that it relates to Part XICA, will cease to be in force on 1 January 2026.

8.66 Section 153A of the CCA outlines the operation of Part XICA, including the cessation date of 1 January 2026.

8.67 Schedule 6 to the Bill amends sections 153A and 153B to extend the cessation date to 1 January 2031.

8.68 The extension of the operation of Part XICA and relevant provisions of the CCA for another five years does not engage any of the applicable human rights or freedoms.

Conclusion

8.69 This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 7 - $20,000 instant asset write-off for small business entities

Overview

8.70 Schedule 7 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

8.71 Schedule 7 to the Bill amends the ITTP Act to extend the $20,000 instant asset write-off by 12 months until 30 June 2026. This will allow small businesses (with an aggregated annual turnover of less than $10 million) to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose on or before 30 June 2026. The extension will improve cash flow and reduce compliance costs for small businesses.

Human rights implications

8.72 Schedule 7 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

8.73 Schedule 7 to the Bill is compatible with human rights as it does not raise any human rights issues.