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Plan to “unmask” beneficial owners a lose/lose overreach

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An article in yesterday's AFR cites a submission made to Treasury by Arnold Bloch Leibler in which we describe the government’s proposal to create a publicly accessible register of the “beneficial owners” of more than 3 million private companies as a “sledgehammer approach”.

The AFR reports that: “Arnold Bloch Leibler, which has a large high net worth client base, says the proposed register conflicts with the rights of law-abiding people to structure their businesses and financial affairs in a private manner. The personal information that would be made public by the register presented a significant risk to individuals, and identity verification plans in the scheme were an unnecessary cybersecurity threat.”

ABL has told Treasury that the proposal is unlikely to do anything to achieve its stated aim of ensuring multinational enterprises pay a fairer share of tax. There are many other measures that have recently been introduced to address that objective but, in our view, this proposal will impose a disproportionate regulatory burden on smaller entities that correctly pay little or no tax - a “sledgehammer to crack a nut” approach.

The Law Council of Australia is quoted in the AFR blasting the proposal as “an enormous overreach in the absence of a compelling rationale”, pointing to a decision by the European Court of Justice in November that said putting full beneficial ownership information on a public register was incompatible with the European Union right to protection of personal data.

Similarly, the Tax Institute says release of personal information as contemplated by the proposal “significantly increases the likelihood of it being abused and could potentially result in individuals being the target of identity theft, fraud, financial and personal crimes”.

While the Assistant Minister for Charities, Competition and Treasury, Andrew Leigh, told the AFR that Labor had an election mandate to implement a beneficial ownership register, Treasury has not yet announced a timetable for responding to submissions received during last year’s consultation process.

To read the AFR article, click here.

To read ABL’s submission, click here.

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