Australia: Penalty Unit Hike: Cost of Offending Soars

Last Updated: 17 February 2013
Article by Michael Grosser and Christie Green
Most Read Contributor in Australia, September 2016

New legislation with the purpose of improving Commonwealth criminal justice arrangements (ie, drug and identity crime offences) has significantly affected the size of potential fines applicable for offences committed under federal corporate, information technology and employment laws (among others).

Numerous pecuniary penalties under legislation administered by federal Government agencies are calculated using 'penalty units' as opposed to dollar amounts. The amount of a penalty unit is regulated by section 4AA(1) of the Crimes Act 1914 (Cth).

On 28 December 2012, the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Act 2012 (Cth) (Act) came into effect. This Act amended the Crimes Act 1914 (Cth) such that one penalty unit has increased from $110 to $170. The rationale for the 'adjustment' is to accommodate increases in the Consumer Price Index.

The increased penalty unit amount will apply to offences which occur after 28 December 2012. The penalty unit amount for offences or current proceedings for offences which occurred before this date will remain at $110.

This increase has significant financial implications for corporations and individuals who are found guilty of committing certain offences under a wide range of Federal laws including:

  • Corporations Act 2001;
  • The Fair Work Act 2009;
  • Competition and Consumer Act 2010;
  • National Consumer Credit Protection Act 2009;
  • SPAM Act 2003;
  • Telecommunications Act 1997; and
  • Do Not Call Register Act 2006.

The impact of the significant increase of $60 per unit is illustrated in the following example.

Table 1: Directors Duties Offence

A director of a company is found guilty of being intentionally dishonest and fails to exercise his/her powers and discharge his/her duties in good faith in the best interests of the corporation under section 184 of the Corporations Act 2001 (Cth). Schedule 3 at Item 30 to that Act provides the penalty payable is 2,000 penalty units or 5 years imprisonment or both.

Offence before 28 December 2012

2,000 penalty units multiplied by $110 = $220,000

Offence after 28 December 2012

2,000 penalty units multiplied by $170 = $340,000

That's $120,000 more!

It gets worse for SPAM and Privacy offences

Greater financial hardship will arise under the SPAM Act and also the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Privacy Amendment Act) (which will amend certain provisions of the Privacy Act 1988 and is expected to come into effect in March 2014). The impact of the Act with respect to the maximum penalty payable under the SPAM Act and the Privacy Amendment Act by a body corporate is also set out below.

Table 2: SPAM and Privacy Offences

Offences before 28 December 2012

SPAM Act - 10,000 penalty units multiplied by $110 = $1.1m 1

Privacy Act – $30,000 2

Offences after 28 December 2012

SPAM Act – 10,000 penalty units multiplied by $170 = $1.7m

After amendment of the Privacy Act in 2014:

Privacy Act – 10,000 penalty units (2,000 penalty units multiplied by 5) x $170 = $1.7m 3

That's between $600,000 and $1.67m more!

Regular Review

The Act also inserted a new provision dealing with regular reviews of the penalty unit amount. To this end, the Attorney-General must cause a review of the amount of a penalty unit every three years. Therefore the amount of the penalty unit should remain unchanged until at least early 2016.

Impact on existing Civil Penalty Provisions

These changes will also affect some civil penalties applicable under certain federal legislation, such as, for instance the SPAM Act 2003 (Cth). However, not all maximum civil penalties will be affected as in certain cases the relevant legislation specifies a maximum civil penalty without making reference to a 'penalty unit'.

For example, section 181 of the Corporations Act 2001 (Cth) (which deals with the duty of 'good faith' of a director) provides that subsection is a 'civil penalty provision'. The maximum civil penalty payable for a breach of duty is set out in section 1317G and is an amount of $200,000 for an individual.

Similarly, offences dealing with contracts containing cartel provisions or corporations that give effect to such provisions under the Competition and Consumer Act 2010 (Cth) are also civil penalty provisions. The maximum civil penalty payable is set out in section 44ZZRF(3) of that Act.

How we can we help you

Compliance with the federal laws listed above is paramount, in order to prevent the potential increase in the size of penalties adversely affecting your bottom line.


1 Section 25(5)(b)(i).

2 Section 18T.

3 Sections 80W(5)(c) and 13G.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael Grosser
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