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
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
Privacy Act – $30,000 2
Offences after 28 December 2012
SPAM Act – 10,000 penalty units multiplied by $170 =
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!
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
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.
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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