Penalty Unit Value to Increase as do Risks for Breach and Failure to Comply


Penalty Unit Value to Increase as do Risks for Breach and Failure to Comply

Of recent time, various Federal Government agencies have commented that levels of compliance with Federal legislation have dropped and that perhaps it was time to increase penalties associated with various offences.

The aim would be to encourage repeat offenders to comply, properly, penalise properly those who offend, give cause for parties to think hard on the risks of proposed actions and to encourage voluntary disclosure of breaches which removes the prospect of penalties being payable at all.  Of course, that also creates the potential for increased revenue from penalties as well!

As anticipated, the Federal Government has now moved to increase penalties by way of increasing the value of a “penalty unit” in Commonwealth legislation from $110 to $170 per unit.

However, it is worthwhile to recall that this increase in penalties applies not just to penalties under the Customs Act 1901 but to all penalties under Commonwealth whether related to criminal prosecutions, Customs prosecutions, actions by DAFF, actions by DECO or any Government agency which has the capacity to impose penalties.  Under the Customs Act 1901 it will cause new complexities as penalties are often expressed as multiples of duties underpaid or numbers of penalty units.

It is also worthwhile to note that penalties are only part of the story – in matters affecting revenue, where there is a breach then the underpaid revenue will also need to pay back. It has the consequential effect that penalties payable under the Infringement Notice Scheme (expressed as a percentage of liability under the Customs Act 1901 as in other legislation such as the Corporations Act) will increase accordingly.

As a result, in relation to offences committed on or after 28 December 2012, the financial risk increases significantly.  Accordingly, should there be any potential liabilities or actions of which you are aware whether in relation to your own operation or in relation to the business of your clients, it may well be prudent to disclose those particular liabilities now to try and reduce the prospect of increased penalties taking effect should the relevant proceedings commence after 28 December 2012.