The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023, if passed, will introduce new rules that prohibit schemes designed to avoid the application of a product intervention order (in relation to a credit facility) made under Part 7.9A of the Corporations Act.
The Bill supplements the Financial Sector Reform Act 2022 which contained a number of anti-avoidance measures to encourage compliance with the Credit Act. Those measures were
designed to minimise financial and other harm to consumers and disincentivise businesses from undertaking avoidance practices. Background.
Failure to comply with any of the new prohibitions attracts a civil penalty in accordance with the Corporations Act.
For an individual, the maximum pecuniary penalty is the greater of:
• 5,000 penalty units (currently $275 each); and
• if the Court can determine the benefit derived and detriment avoided because of the contravention – that amount multiplied by 3.
For a body corporate, the maximum pecuniary penalty is the greatest of:
• 50,000 penalty units;
• if the Court can determine the benefit derived and detriment avoided because of the contravention – that amount multiplied by 3; and
• Either:
‒ 10% of the annual turnover of the body corporate for the 12-month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision; or
‒ if the amount worked out above is greater than an amount equal to 2.5 million penalty units – 2.5 million penalty units.
A contravention of any of the prohibitions also constitutes the commission of an offence, with a financial penalty of up to 100 penalty units if fault is proven in respect of the offence for an individual, and 1,000 penalty units for a body corporate.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
