Purpose and history of the Bill

The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 is an omnibus Bill which amends the Corporations Act 2001 in addition to various taxation, charities, financial regulation oversight, competition and foreign investment laws in the Treasury portfolio.

Several measures in the Bill (or similar measures) have formed part of previously introduced Bills. Schedule 2—Disclosures about recognised assessment activities was previously contained in Schedule 4 to the Treasury Laws Amendment (Miscellaneous Measures) Bill 2024 (2024 Bill); Schedule 3 —Frequency of periodic reviews was previously Schedule 5 to the 2024 Bill; and parts of Schedule 4 – Minor and technical amendments were also in the 2024 Bill.

Structure of the Bill

The Bill contains 7 schedules:

• Schedule 1 amends the Corporations Act 2001 to extend the existing beneficial ownership disclosure obligations that apply to listed Australian entities, by requiring holders to disclose certain derivative-based interests to the market.
• Schedule 2 amends the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) to allow for certain circumstances where the ACNC can publicly disclose protected ACNC information.
• Schedule 3 amends the Financial Regulator Assessment Authority Act 2021 (FRAA Act) to reduce the frequency of Financial Regulator Assessment Authority (FRAA) reviews of the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA) from two years to five years.
• Schedule 4 makes minor and technical amendments to Treasury portfolio legislation.
• Schedule 5 makes machinery and other technical amendments to Treasury portfolio legislation.
• Schedule 6 extends the operation of Part XICA of the Competition and Consumer Act 2010 (the Prohibiting Energy Market Misconduct provisions) for another five years, from 1 January 2026 to 1 January 2031.
• Schedule 7 amends the Income Tax (Transitional Provisions) Act 1997 (ITTP Act) to extend the $20,000 instant asset write-off by 12 months until 30 June 2026.

Structure of this Bills Digest

This Bills Digest does not provide information in relation to Schedules 4, 5 or 6 because they are adequately covered in the Explanatory Memorandum (pp. 89–125 and 127–128).

As the matters covered by each of Schedules 1, 2, 3 and 7 are independent of each other, the relevant background, stakeholder comments (where available) and analysis of the provisions are set out under each Schedule number.

Committee consideration

At the time of writing, the Bill has not been referred to, or commented on, by any parliamentary committees. On 4 September 2025 the Senate agreed that the Senate Selection of Bills Committee would defer consideration of the Bill until its next meeting.

Schedule 1: Disclosure of information about ownership of listed entities

Background

Beneficial ownership

‘Beneficial ownership’ refers to the natural person who ultimately owns or controls an entity, such as a company or trust, even if they are not the legal owner (p. 3). The Financial Action Task Force’s (FATF) definition of ‘beneficial owner’ includes ‘any other natural person(s) exercising ultimate effective control over the arrangement’ (p. 10).

Beneficial ownership registers

A beneficial ownership register (BOR) is a mandatory database holding information about the natural persons who ultimately own or control a company, trust, or other legal entity. They can be publicly available, or only accessible by law enforcement and tax authorities (p. 6–7).

The primary purpose of BORs is to provide transparency about who ultimately controls or benefits from a company, which the FATF considers:

… is fundamental to prevent the misuse of legal entities, the concealment of funds/assets and anonymity, and to combat illicit financial flows, including tax evasion, money laundering, corruption, and terrorism financing. (p. 7)

Equity derivatives and disclosure issues

An equity derivative is a financial contract (such as options, futures, swaps and warrants) whose value is derived from the performance of an underlying share or share index, rather than from owning the actual shares (p. 7–8).

Equity derivatives pose an issue for BORs because they can be used to gain effective control or economic exposure to a listed company without holding the underlying shares, thereby creating a ‘hidden’ ownership interest that is not captured by traditional registers.

The Takeovers Panel has noted the significance of a holder of a ‘long’ cash-settled derivative having significant economic influence over the underlying asset's price, even if they do not directly own the asset (paras 10–11, 48, 52–53). This can lead to the accumulation of large, undisclosed positions that mimic share ownership and, according to a 2013 OECD working paper, lead to an ‘empty voting’ situation – where the investor directs the derivatives broker’s vote – thus enabling a degree of control over the entity (p. 13).

Relevantly to the Bill, derivative types include:

•  ‘cash-settled’: meaning a person does not need to buy or sell the underlying shares, but is entitled to receive a cash payment linked to the value of the underlying securities and
• ‘physically settled’, meaning that one party has a right to receive the actual underlying securities.

Equity derivatives can be ‘long’ (aiming to benefit from an increase in the price of the underlying security) or ‘short’ (aiming to benefit from a decrease in the price of the underlying security).

Australia’s existing disclosure regime

Australia's disclosure regime is primarily governed by Chapters 6 and 6C of the Corporations Act. Under these rules, a person must publicly disclose a ‘substantial holding’ to the market and the Australian Securities and Investments Commission (ASIC) if they acquire a ‘relevant interest’ in 5% or more of a listed company's total voting shares. Disclosure of movements of at least 1% is also required.

Crucially, the existing rules do not extend to interests arising from most equity derivatives. The exception is physically settleable derivatives, and only to the extent that the counterparty itself has a 'relevant interest' in the underlying shares. Furthermore, the regime only applies to entities listed in Australia that are incorporated or formed in Australia, excluding foreign‑incorporated entities listed on the Australian market (that is, they do not apply to entities listed in Australia but incorporated or listed elsewhere).

Background to the proposed reforms

The beneficial ownership reforms in Schedule 1 appear to be driven by a combination of international recommendations and domestic policy goals.

International recommendations  

In 2015, the FATF assessed Australia’s anti-money laundering and counter-terrorism financing system. It found that, despite Australia’s mature regime for combating money laundering and terrorism financing, Australia’s legislative regime at that time was not sufficient to ensure that accurate and up-to-date information on beneficial ownership of companies is available in a timely manner and was ripe for misuse by criminals (p. 10).

The Explanatory Memorandum (p. 1) notes that the reforms seek to enhance Australia’s compliance with FATF Recommendations relating to the beneficial ownership of companies (e.g. FATF Recommendation 24 (p. 22)).

While the FATF documentation does not specifically address equity derivatives, and they are not mentioned in the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes’ 2024 toolkit or July 2024 report to G20 Finance Ministers and Central Bank Governors, the 2024 toolkit (p. 10) notes that ‘beneficial owner’ includes ‘any other natural person(s) exercising ultimate effective control over the arrangement’ and thereby, by implication, including persons who exercise such control via equity derivatives.

The precise application of the FATF definition of beneficial ownership to equity derivatives has led to ongoing interpretation and national variations. For example:

• The European Union’s Guidance on the EU’s Transparency Directive:
  • indicates that the definition of financial instrument is broadened to all instruments of similar economic effect to holdings of shares and entitlements to acquire shares and
  • explicitly covers cash-settled derivatives as well as similar financial instruments that could result from financial innovation.
• The United States Securities and Exchange Commission (SEC) issued revised guidance stating (p. 114-115) that a cash-settled derivative holder would only be deemed a beneficial owner if they have exclusive or shared voting/investment power, a scheme to evade reporting exists, or they have rights to acquire beneficial ownership.

Domestic policy position

Before the 2022 election, the ALP (then in opposition) announced a multinational tax integrity package to address tax avoidance practices of multinational enterprises and improve transparency through better public reporting of tax information. The proposed measures included public reporting of tax information on a country-by-country basis (covered in a previous Bills Digest) and the creation of public registers of beneficial ownership of companies (the current measure in Schedule 1). However, the ALP election commitment did not explicitly mention equity derivatives.

The Treasury, in relation to its exposure draft explanatory materials explained that the proposed inclusion of equity derivatives:

… is a key reform, which improves market efficiency, competition and transparency, giving market participants better and more timely access to information on the accumulation of substantial interests in listed entities and the dealings and influence of persons who may impact such entities’ future directions. (para 1.28)

Further, in a 2024 policy specifications document Treasury noted that the proposed reform:

… responds to concerns that cash-settled derivatives can be used to hide effective holdings in listed entities, allowing some people to avoid obligations under substantial holder notice requirements and takeovers procedures in the [Corporations] Act. (p. 2)

Consultation

In November–December 2022, the Government conducted public consultation seeking comments on the design features for the first phase of a publicly available beneficial ownership register.

The initial proposal was to require certain unlisted entities regulated under the Corporations Act to maintain publicly accessible beneficial ownership registers. However, the Government also sought feedback on proposed amendments to the substantial holding notice and tracing notice regimes in the Corporations Act. That consultation did not specifically reference equity derivatives. However, Ownership Matters (a governance advisory firm for institutional investors) submitted:

… aligning substantial shareholder disclosures with beneficial interest disclosures would help address the use of derivative instruments such as swaps and securities lending by market participants seeking to build a ‘blocking stake’ in the context of aiding or blocking a takeover’. (p. 2)

In November–December 2024, the Government consulted on an exposure draft of the Treasury Laws Amendment Bill 2024: enhanced disclosure of ownership of listed entities, explanatory materials and consultation questions. The focus of the consultation was on listed entities and derivative-based interests. Treasury issued a list of consultation questions. In response, the Government received 21 submissions (including 2 confidential submissions).

In December 2024, Treasury released policy specifications for beneficial ownership reform in Australia. The document referred to derivatives at p. 2.

Key issues and provisions

Schedule 1 amends the existing disclosure regime to:

• include equity derivatives into the Chapter 6C disclosure regime and make associated changes to the substantial holding notice requirements
• require foreign entities listed on Australian markets and their shareholders to disclose interests in securities to the same standard as Australian entities
• improve access to, and usability of, existing tracing notice registers, including making the registers available to journalists and academics
• confer powers on ASIC to incentivise compliance and protect market participants, including increased penalties for existing Chapter 6C offences and expanding ASIC’s tracing notice and freezing order powers.

Issue: Inclusion of a broad range of derivatives in disclosure rules

Schedule 1 significantly expands the substantial holding disclosure regime by capturing a broader range of equity derivatives. Currently, the disclosure regime is limited: only a fraction of derivative-based interests are captured, and for physically settleable equity derivatives, a person in the bought position (i.e. the holder of the derivative) gains a 'relevant interest' only to the extent the counterparty has a ‘relevant interest’ in the underlying securities. Crucially, the regime does not apply to non-physically settleable derivatives (e.g. cash-settled derivatives).

Item 16 seeks to address this by inserting Division 2 into new Part 6C.1A of Chapter 6C of the Corporations Act. This creates a new definition of ‘deemed economic interest’ to capture interests arising from equity derivatives, regardless of the consideration type at settlement or whether the counterparty has a ‘relevant interest’ in the underlying securities.

In submissions to the consultation draft, industry stakeholders including the Alternative Investment Management Association (AIMA) (p.2), the Australian Financial Markets Association (AFMA) (p. 2), and the Financial Services Council (FSC) (p. 2) opposed the inclusion of cash-settled derivatives. They argued that this would impose an unnecessary compliance burden with only marginal benefits, as fund managers and superannuation funds are not acquiring the interests to exert influence.

The AIMA (p. 2-3) noted that the US SEC continues to exclude cash-settled derivatives from disclosure except in certain situations defined in pre-existing law, and the UK has several express exemptions. The Law Council of Australia (LCA) (p. 1) argued that the change is unnecessary and the existing rules are already operating effectively, as Takeovers Panel Guidance Note 20 (GN 20) already requires disclosure of an aggregate relevant interest and long equity derivative position at 5% or more (and subsequent movements of 1% or more).

The Financial Services Council (FSC) (p. 3) also opposed the inclusion of cash-settled derivatives. It argued that it would be better to ‘amend rules prohibiting market manipulation.’ The AIMA (p. 2) made the same recommendation.

Issue: physically settled derivatives

Item 21 would insert paragraph 671BB(1)(b) requiring a person in the bought position of a physically settled derivative to distinguish between two categories in their disclosure notice:

• the ‘relatable derivative-based holding percentage’ (the hedged position, relatable to the counterparty’s holding) (Explanatory Memorandum para 1.42)
• the ‘deemed physically settleable derivative-based holding percentage’ (the unhedged position, Explanatory Memorandum paras 1.51–1.53).

The AIMA (p. 3) and the FSC (p. 5–6) argued this is problematic as fund managers or superannuation funds in the bought position would typically have no actual knowledge of their counterparty’s hedging position.

Issue: non-physically settled derivatives: discretion to assign a value of zero

The Bill (item 16, proposed subsection 671AK(1)) would confer on ASIC a discretion to assign (via legislative instrument) certain derivatives a value of zero. The intention, as noted in the Explanatory Memorandum (para 1.90), is to exclude derivatives that do not give rise to a sufficient level of influence, for example:

… ASIC may consider it appropriate to assign a value of zero to certain cash settled derivatives held by a long position holder and referencing an index or other basket of securities, because the derivatives do not make up a sufficiently large component of, or otherwise give rise to a sufficient level of influence over, any individual class of security to warrant recognition of a deemed economic interest.

The AFMA (p. 6) opposed this mechanism, arguing that addressing the matter through an ASIC legislative instrument ‘would create a significant amount of uncertainty and potential divergence from the economic reality of a derivative arrangement’. The AIMA (p. 4) argued that this approach would create uncertainty for the industry, suggesting it would be more practical if the legislation itself excluded (or included) particular kinds of derivatives.

Issue: substantial holding notice changes

Proposed section 671D (item 21) enhances the disclosure regime by including a person's 'deemed economic interests' alongside their existing relevant interests when calculating if the 5 per cent substantial holding threshold is reached. The effect of this is that disclosures are now also triggered by movements related to derivatives, even if the overall holding remains stable.

For example, a party in the bought derivative position must disclose when their 'derivative-based holding percentage' moves by 1 percentage point or more, which promotes transparency by limiting information asymmetry in the market (proposed paragraphs 671B(1)(c) and 671BK(1)(a)).

Furthermore, disclosure is required for any shift of 1 percentage point or greater in the internal composition of the derivative-based holding. This applies to movements within the three derivative categories: relatable, deemed physically settleable, or deemed non‑physically settleable interests (proposed paragraph 671B(1)(c) and 671BK(1)(b)).

Issue: takeover bid and listing triggers

Schedule 1 clarifies two key points in time that trigger a substantial holding disclosure obligation, providing legislative certainty: when a takeover bid commences, and when an entity is first listed.

In relation to takeover bids, the disclosure requirement for a substantial holding in the target entity is triggered when the bid period starts, either when an off-market bid's bidder's statement is given to the target or when a market bid is announced to the financial market (proposed paragraph 671B(1)(d) and subparagraph 671BA(1)(b)(i)). This formalises (p. 44) ASIC’s existing regulatory approach.

In relation to listing, the amendments require disclosure for a person who already holds a substantial interest at the moment an entity becomes a 'Chapter 6C body'—that is, when the entity is first listed on a declared financial market (proposed paragraph 671B(1)(b)).

Issue: tracing notices changes and access by journalists and academics

The existing tracing notice regime is primarily governed by Part 6C.2 of the Corporations Act. This Part empowers both listed companies and ASIC to issue a 'tracing notice'.

A tracing notice directs a member of the company to disclose full details regarding their own relevant interest in the company's shares and the names and addresses of others who have a relevant interest in, or have given instructions about, any of the shares. Tracing notices are a key tool used by regulators and companies to uncover the ultimate beneficial ownership of listed entities.

Schedule 1 of the Bill amends Chapters 6 and 6C of the Corporations Act to enhance the tracing notice regime by:

• expanding the class of persons who can be the subject of a tracing notice to include persons reasonably suspected of having certain kinds of involvement with listed entities, or of being associates of such persons or of other persons already subject to disclosure requirements
• aligning the information required under an ASIC-issued tracing notice with the information required under substantial holding notices.

Schedule 1 also extends the right of fee-free inspection of tracing notice registers to both journalists and academics (proposed section 672DD, item 54). The Bill defines ‘journalist’ and ‘academic’ by an employment-based test (Schedule 1, items 52 and 55). The Explanatory Memorandum notes (para 1.239):

This approach balances the advantages of fee-free access to information with the costs that entities incur in providing copies. It allows journalists and academics to identify which registers, or parts of registers, are of interest before they decide whether to pay for copies, while ensuring that entities do not receive excessive requests for copies.

The Explanatory Memorandum explains that (paras 1.6 to 1.9) the intention behind increasing the availability of companies’ beneficial ownership information, including to journalists and academics, is to:

• support public debate by providing great transparency
• discouraging financial crime, particularly by discouraging the use of complex structures to obscure tax liabilities and facilitate financial crimes
• supporting 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) and
• assisting regulators in performing their functions (e.g. in the assessment of foreign investment applications and the enforcement of sanctions).

Whilst most stakeholders did not comment directly on the provision for fee-free access to the tracing notice registers for journalists and academics, the FSC (p. 6–7) was opposed, arguing that granting fee-free access to a select group means the costs of the proposal will significantly outweigh its benefits.

Issue: capturing foreign listed bodies

Schedule 1 extends the Chapter 6C disclosure regime to entities incorporated or formed outside Australia but listed on an Australian market (items 3 and 43, proposed sections 671A and 672DE).

To prevent duplicate reporting, ASIC may declare, by legislative instrument, that equivalent foreign disclosure requirements exempt a holder from Australian obligations (item 21, proposed section 671F). If an exemption is granted, the foreign entity itself must relay the holder’s information to the Australian market operator, with fault-based and strict liability offences created for non-compliance (with maximum penalties of 480 and 120 penalty units, respectively) (items 21 and 27, proposed subsections 671F(3), (5) and (6), and Schedule 3, of the Corporations Act).

Issue: Enforcement and freezing powers

Schedule 1 would expand ASIC’s existing tracing notice and freezing order powers to support its regulatory oversight of Chapter 6C bodies. Paragraph 1.206 of the Explanatory Memorandum states the replacement provisions widen the class of tracing notice recipients and differentiate between ASIC’s power to issue a notice for regulatory purposes and the power for key persons of Chapter 6C bodies (or ASIC, via a Chapter 6C body member request) to do so. Paragraph 1.251 states that the freezing powers largely replicate section 72 of the Australian Securities and Investments Commission Act 2001. According to paragraph 1.14 this enables ASIC to undertake more effective investigations and fact finding ahead of seeking final resolution of relevant contraventions (e.g., applying to a court or the Takeovers Panel for remedial orders).

The Australian Custodial Services Association (ACSA) noted (p. 11) that overseas enforcement of the expanded requirements could lead to challenges.

AFMA argued (p. 8): ‘There is concern about the potential significant consequences of the freezing powers proposed to be granted to ASIC in relation to any contravention of substantial holder notice disclosures and tracing notice provisions.’ AFMA saw the provision as creating risks for practitioners, ‘because the freezing order proposal results in the writer of an equity derivative being subject to a freezing order due solely to the actions of the taker (i.e. no fault of writer).’ The law firm Clayton Utz (p. 8) argued the freezing orders power ‘should not provide ASIC with the ability to make orders that affect the substantive rights of market participants without appropriate checks and balances’.

The LCA (p. 15) noted that extension of the Chapter 6C disclosure regime to foreign entities listed on the ASX would potentially require holders of "relevant interests" to comply with substantial shareholding notification and tracing notice requirements. The LCA (p. 15):

• questioned whether there had been direct consultation with the approximately 150 foreign companies listed on the ASX that would be impacted by the change and
• stated that these foreign companies ‘will no doubt be surprised’ that they are now subject to Australian disclosure laws that were not a condition of their listing on the ASX.

The LCA further argued (p. 16):

… the proposed application of the tracing notice regime to these foreign companies may act to disincentivise major foreign companies from maintaining a listing on ASX, or, if they are already listed on the ASX, it may encourage them to delist from the ASX to the detriment of local shareholders.

Issue: increased penalties

Schedule 1 doubles penalties for certain existing fault-based and strict liability offences under Chapter 6C. This aims to align the penalties with similar high-end non-custodial offences within the Corporations Act and reflects the market-sensitive nature of the information provided under the substantial holding and tracing notice regimes (Explanatory Memorandum paras 1.271–1.272). The relevant offences and increases include:

• the fault-based offence of failing to give a substantial holding notice: 4 years’ imprisonment (currently 2 years’ imprisonment); 4,800 penalty units for a body corporate (currently 2,400 penalty units) (subsections 671B(8) and 1311C(2) and item 63)
• the strict liability offences of failing to give a substantial holding notice (subsection 671B(9)) and failing to respond to a tracing notice (current section 672B(1); proposed subsection 672AB(2), item 31): 120 penalty units (currently 60 penalty units); 1,200 penalty units for a body corporate (currently 600 penalty units) (subsection 1311C(1) and item 46)
• offences relating to failing to keep a tracing notice register or failing to provide copies: 60 penalty units (600 penalty units for a body corporate) (section 672DA, subsection 1311C(1); items 65 and 67).

The Explanatory Memorandum (para 1.272) notes that whilst the increased strict liability penalties are above the maximum specified in the Guide to Framing Commonwealth Offences, this is justified by the seriousness of the breach, the need for deterrence, and the fact that the offences apply to a small, specific cohort of liable individuals.

Issue: Transition period

The FSC (p. 6) noted feedback from members suggesting that many fund managers and superannuation funds would not be able to comply with a proposed 6-month transition period and proposed an 18-month transition. The Bill now provides (clause 2) for a 12-month transition period.

Policy position of non-government parties/independents

At the time of writing, the positions of the non-government parties and the independents on Schedule 1 was not known. However, the Greens have previously supported the creation of a public register showing the ultimate beneficial owners of corporations. An ALP media release in 2019 claimed: ‘Despite committing to a beneficial ownership register in 2016, the Liberals completely dropped the policy.’

Position of major interest groups

In the December 2024 consultation, major interest groups generally supported the Bill’s aim to combat tax avoidance and for increased transparency. The Australasian Investor Relations Association (AIRA), the Australian Council of Superannuation Investors (ACSI), MUFG Corporate Markets, Ownership Matters (OM), Transparency International Australia and the Tax Justice Network Australia (TJNA) broadly supported the reforms. TJNA (p. 1) thought the reforms should go further to cover trusts and other unlisted legal entities.

On the other hand, as noted above, AFMA, AIMA, FSC and LCA were critical of several aspects of the Bill, including the inclusion of cash-settled derivatives.’ The AFMA (p.1) considered that the proposed amendments extended beyond FATF recommendations relating to beneficial ownership and beyond listed company disclosure requirements in other jurisdictions.

Schedule 2: Disclosures about recognised assessment activities

Background

The Australian Charities and Not-for-profits Commission (ACNC) is Australia's charity regulator. It is responsible for registering charities, providing guidance on their obligations, and maintaining the public register of charities. The ACNC's work helps maintain public trust in the charity sector by ensuring charities are accountable and promoting good governance,

Part 7-1 of the Australian Charities and Not-for-profits Commission Act 2012 (ACNC Act) protects the confidentiality of 'protected ACNC information'. Protected ACNC information (section 150-15) is information that:

• was disclosed or obtained under, or for the purposes of, the ACNC Act
• relates to the affairs of an entity and
• identifies the entity or is reasonably capable of being used to identify the entity.

Protected ACNC information can only be used or disclosed when an exception in Subdivision 150-C of the ACNC Act applies (sections 150-30 to 150-50). The exceptions are narrow. Using or disclosing protected ACNC information when no exception applies is an offence under section 150-25 of the ACNC Act. According to the ACNC Commissioner this means:

When allegations of wrongdoing by a charity, its leaders or its staff are raised, we are not able to say publicly if we are looking into the allegations or, if we have looked, and decided the claims were baseless or there is insufficient evidence.

A Review Panel convened by the Government addressed the issue of the ACNC confidentiality provisions in its 2018 report. The report noted (pp. 72-73) the ACNC’s submission that the secrecy provisions may impede public confidence in the ACNC’s compliance activities and that other Commonwealth regulators such as ASIC, the ACCC and the APRA have greater discretion in their ability to make public statements. Recommendation 17 of the report was:

The Commissioner be given a discretion to disclose information about regulatory activities (including investigations) when it is necessary to protect public trust and confidence in the sector. (p. 77)

Consultation

According to Treasury:

A 2021 consultation with the charity sector also revealed support for increased disclosures given the educational benefits and the potential to lift public trust and confidence in a sector that relies heavily on donors and philanthropists to support its activities.

In September–October 2023 Treasury consulted on the Treasury Laws Amendment (Measures For Consultation) Bill 2023: ACNC Review Rec 17 – Secrecy Provisions. While submissions are currently not available on the Treasury website, several submissions are available online.

Key issues and provisions

Issue: Disclosure powers

Under item 1 of Schedule 2, proposed section 150-51 (the ‘limited disclosure power’) allows an ACNC officer to disclose protected ACNC information – i.e. that the Commissioner is carrying out a ‘recognised assessment activity’ if the Commissioner has authorised the disclosure. The Commissioner may authorise the disclosure if satisfied:

• there is publicly available information that suggests that a registered entity has either contravened a provision of the ACNC Act or has failed to comply with a governance standard or external conduct standard and
• the disclosure is necessary to prevent or minimise the risk of significant harm to public health, public safety or an individual; significant mismanagement of the registered entity in question; or significant harm to public trust and confidence in the Australian not-for-profit sector, or to a part of it.

Under proposed section 150-52 (the ‘general disclosure power’), an ACNC officer may disclose information related to a ‘recognised assessment activity’ if the Commissioner has authorised the disclosure. Under proposed paragraph 150-52(3)(b), the disclosure must be for the purpose of describing a recognised assessment activity being carried out, or proposed to be carried out, in relation to a suspected contravention of the ACNC Act or non-compliance with a governance standard or external conduct standard.

The Australian Institute of Company Directors (AICD) (p. 2) had significant concerns with the proposal to allow the Commissioner to disclose new and ongoing ACNC investigations, as disclosure, in many instances, could prejudice a charity’s access to natural justice and pose serious long term reputation risks.

The Community Council for Australia (CCA) said: ‘In terms of broader public disclosure of the name of a charity that may be under investigation, this should only happen if the charity involved agrees to be publicly named, or chooses to name themselves, and where there is public interest in the complaint.’ It recommended ‘a fairer and more balanced process is required where the ACNC Commissioner may recommend making certain identifying information about an ACNC decision public to an independent panel of representatives’.

Issue: Risk of significant harm

Under proposed subsections 150-51(3) and (4) and 150-52(3) and (4), the Commissioner must apply a ‘public harm’ test – that is, the Commissioner must be satisfied that the harm to the entity or to a specified individual is not disproportionate.

The Law Council of Australia (LCA) considered (p. 4) that the test under proposed paragraph 150-52(3)(c)(i) should also refer to other legal persons, not merely individuals. This would capture the risk of significant harm to other charities.

The AICD recommended (pp. 1- 2) that the public harm threshold be amended to specifically account for the impact of a disclosure on the financial viability of the charity and its related parties.

Issue: Notification to an entity

Under item 1, proposed section 150-54(1), the Commissioner may notify an entity that the Commissioner is considering authorising public disclosure of information that concerns that entity. Under proposed subsection 150-53(1) the Commissioner must notify the entity that the Commissioner has exercised the general disclosure power and provide the entity with an opportunity to respond before the information can be disclosed.

The LCA’s view (p. 2) was that procedural fairness required that the Commissioner always give notice to an entity subject of the proposed disclosure, before making a disclosure and must be required to consider any objection by that entity.

The AICD (p. 3) did not support the provisions relating to the Commissioner having the option of notifying a charity of a pending disclosure. It recommended that, at a minimum, the Commissioner must provide the charity with a notice that the Commissioner is considering making a disclosure. It also proposed requiring the Commissioner to consult with the relevant charity prior to making a disclosure.

Issue: Procedural fairness

The AICD recommended (p. 2) that consideration be given to establishing an independent oversight mechanism where the Commissioner must consult with an external panel or body on a pending disclosure decision.

Issue: Commissioner’s decision must be on reasonable grounds

Proposed paragraph 150-52(3)(a) provides that the Commissioner may authorise disclosure of protected ACNC information if the Commissioner ‘reasonably suspects’ that a registered entity has contravened a provision of the ACNC Act, or has not complied with a governance standard or external conduct standard. The LCA recommended that this be amended to require that the Commissioner ‘reasonably believes’ the relevant matters, because ‘reasonably suspects’ is a lower threshold than ‘reasonably believes’, and  ‘reasonably believes’ is the language that the ACNC Act uses in relation to decisions of the Commissioner of similar import.

Policy position of non-government parties/independents

The policy position of the non-government parties and independents is not known at this stage.

Schedule 3: Frequency of periodic reviews

Background

This measure was previously included in Schedule 5 to the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 (Better Targeted Superannuation Concessions Bill).

The Financial Regulator Assessment Authority (FRAA) was established in response to recommendations 6.13 and 6.14 (p. 41) of the 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal Commission found failures by ASIC and APRA to adequately address misconduct. The legislation establishing the FRAA was discussed in a Bills Digest.

ASIC in particular has been criticised as ineffective due to an overly broad remit, insufficient resources and poor governance, leading to a failure to respond to misconduct, a reliance on weak sanctions, and a lack of transparency in enforcement actions. However, APRA, too, has been criticised. The Sydney Morning Herald said in 2019: ‘APRA stands accused of being slow and ponderous in the carriage of its duties; lacking in key skills; and generally being all too cosy with the big end of town.’

The FRAA's purpose is to provide independent, regular assessments and reports on the effectiveness and capability of these financial regulators to the Treasurer and Parliament, with the aim of ensuring enhanced accountability. Pursuant to recommendation 6.14, the FRAA is required to report on the effectiveness and capability of ASIC and APRA every two years. The FRAA commenced on 1 July 2021 and delivered its first reviews in 2022 and 2023.

In the 2023–24 Budget Paper No. 2 (p. 214) the government announced its intention to reduce the frequency of the FRAA review cycle from a biennial basis to a five yearly cycle. The Government stated in July 2023: ‘This will give appropriate time for regulators to embed previous recommendations and ensure future reviews are meaningful and substantive.’

Committee consideration

The measure was included as Schedule 5 in the Better Targeted Superannuation Concessions Bill, which was considered by the Senate Economics Legislation Committee (the Committee). The Committee concluded (at p. 50) ‘that extending the periodic review cycle of ASIC and APRA from every two to every five years will allow the FRAA to conduct more comprehensive and considered reviews of the financial market regulators.’

Key issues and provisions

Issue: Frequency of FRAA reviews reduced

Item 8 in Schedule 3 (proposed subsection 13(1) of the Financial Regulator Assessment Authority Act 2021 (FRAA Act) provides that the FRAA must undertake reviews of ASIC and APRA every five years, rather than every two years as is currently the case.

Several submissions to the Committee criticised the reduction in the frequency of the review cycle. The Governance Institute of Australia (GIA, p. 2) pointed out that the biennial review cycle of ASIC and APRA had only been in force for one cycle. The maximum lengthening of the cycle the GIA considered appropriate would be three years. The Financial Services Council (FSC, p. 2–3) said the reforms were a ‘watering down’ of the Banking Royal Commission’s recommendations and would diminish the Government’s ability to scrutinise the regulators.

Associate Professor Dr Andy Schmulow (p. 4) argued that Treasury’s reasons ‘are wrong-headed and fail to address the overarching purpose of the FRAA: to improve the efficacy – particularly the enforcement efficacy – of our regulators, especially ASIC.’ He stated (p. 5) ‘if reviews are conducted at 5-year intervals, significant gaps in enforcement will remain unidentified for five years.’

The dissenting report by Committee members, Coalition Senators Andrew Bragg and Dean Smith, cited the critics of the amendment and recommended (p. 76) that the amendments to the FRAA not be passed.

Issue: FRAA may have vacancies from time to time

Items 5, 6, 11 and 12 would provide that there is no requirement that the FRAA have members at any particular time, to allow for periods between reviews where there are no members.

The dissenting report by the two Coalition Senators on the Committee questioned the rationale for having vacancies (that the FRAA will conduct less frequent and more thorough reviews):

If Schedule 5 is expected to pass the Parliament this year, and the next review is only expected to commence in 2026, five years after the first review commenced in 2021, and a new FRAA review panel has yet to be appointed and is not expected to be appointed until the lead up to the next review, then the argument that a ‘more thorough inquiry’ will occur is brazenly false. (p. 75)

Policy position of non-government parties/independents

As noted above, Coalition members of the Senate Committee previously opposed these amendments in Schedule 5 of the Better Targeted Superannuation Concessions Bill. The positions of the other non-government parties and independents are not known.

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

Background

As indicated in the Bills Digest for the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (pp. 36–38), the instant asset write-off (IAWO) for small business entities has a long and varied history, including in recent years.

The IAWO is located in section 328-180 of the Income Tax Assessment Act 1997 (ITAA 1997). The IAWO is part of the simplified depreciation regime for small business entities (with an aggregated turnover of less than $10 million) in Subdivision 328-D of the ITAA 1997. For assets that cost less than $1,000, section 328-180 allows the taxpayer to claim an immediate deduction.

The former and present Governments have legislated a number of temporary increases to the IAWO threshold via amendments to the Income Tax (Transitional Provisions) Act 1997 (ITTP Act). For the 2023–24 and 2024–25 income years the relevant limit amount is $20,000.

Most recently, the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 included the extension of the $20,000 threshold for assets first used or installed ready for use between 1 July 2024 and 30 June 2025.

Schedule 7 proposes amending the ITTP Act to extend the $20,000 instant asset write off by 12 months until 30 June 2026. The $20,000 asset threshold applies to the cost of eligible depreciating assets, eligible amounts included in the second element of the cost of a depreciating asset (cost additions), and general small business pools, until 30 June 2026. Unless further extended, the asset threshold would revert to the ongoing legislated threshold of $1,000 from 1 July 2026.

Committee consideration of previous extension

The IAWO measure in the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 was considered by the Senate Economics Legislation Committee.

Key issues and provisions

Issue: Temporary increase in the IAWO threshold

Item 3 would amend paragraph 328-180(4)(d) of the ITTP Act to extend the $20,000 threshold by 12 months until 30 June 2026.

The IAWO threshold applies per asset, allowing small business entities to potentially deduct the full cost of multiple assets throughout the year, provided each asset's cost is less than $20,000. 

When the measure for the 2024–25 income year was considered by the Senate Economics Legislation Committee, CPA Australia (p. 3), the Australian Chamber of Commerce and Industry (ACCI) (p. 3), the Mortgage and Finance Association of Australia (MFAA) (p. 2), and the Tax Institute (TIA) (p. 6) all welcomed the temporary increase to the IAWO threshold for that year. However, they also submitted that the temporary increase on a yearly basis should be made permanent to give businesses certainty in their investments. If the increase to the IAWO threshold could not be permanent, some (such as CPA Australia, p. 3) suggested that the government should allow the measure to operate for a longer period (such as a 5-year period with a sunset clause).

Chartered Accountants ANZ (CA ANZ) said in April 2025 that the extension of the IAWO does not go far enough. CA ANZ has been advocating for small business cash-flow certainty by making the IAWO, and the associated threshold, permanent. CA ANZ said permanency would reduce red tape for business, government and tax agents.

As at 30 May 2024, the Tax Institute (TIA) (p. 7) continued to advocate for a permanent increased IAWO for businesses with an aggregated turnover of less than $50 million for assets costing less than $30,000. The TIA has been concerned about the IAWO only being legislated shortly before the end of the financial year, leaving little time for taxpayers to take advantage of it.

While the majority of the Senate Economics Legislation Committee (p. 59) supported the 12‑month extension of the IAWO and leaving the threshold at $20,000, Coalition senators (p. 71) recommended ‘that the instant asset write-off threshold be increased to $30,000 and be made permanent, to restore the business investment incentive policy to 2019–20 levels.’

Issue: Deferral of five year ‘lock-out’ rule

Under normal circumstances, the so-called 'lock out' rule prevents small businesses from re‑entering the simplified depreciation system for 5 years if they had elected to apply the rules for an income year and then opted out. Recently, the lock-out rules have been suspended to allow small business entities that have chosen to stop using the simplified depreciation rules to take advantage of the IAWO. This was permitted for financial years (known as ‘increased access years’) between 12 May 2015 and 30 June 2025 (Explanatory Memorandum, paragraph 7.21).

Item 2 of Schedule 7 would amend paragraph (b) of the definition of ‘increased access year’ in subsection 328-180(1) of the ITTP Act to suspend the operation of the lock-out for a further 12 months until 30 June 2026.

Policy position of non-government parties/independents

When the IAWO measure in the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 was being debated, Liberal Senator Jane Hume moved an amendment to increase the threshold to $30,000 – this amendment was not supported. Prior to the 2025 federal election, the Coalition indicated it would increase the asset threshold to $30,000 and make it permanent for businesses with an annual turnover up to $10 million.

Position of major interest groups

As noted earlier, Schedule 7 of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, which dealt with the IAWO, was considered by the Senate Economics Legislation Committee. All submitters who addressed the IAWO measure expressed strong support for making the $20,000 IAWO for small business permanent. Several submitters expressed support for increasing the scope and scale of the measure, including by increasing the threshold and expanding the eligibility criteria.