Major warning for tax advisers who help clients avoid Australian law: Regulator promises hard crackdown after PWC fallout

Tax advisers who help their clients avoid Australian laws could be subject to fines of more than $780million as part of the biggest crackdown on misconduct in the nation’s history.

Strengthening regulator powers and integrity in the tax system will also be part of a Commonwealth push to restore public confidence, Labor senator Deborah O’Neill said on Sunday.

A scandal involving confidential federal tax briefings being leaked by a former PwC partner Peter Collins cast a shadow over private consultancy work for governments at all levels.

Police are investigating allegations Mr Collins illegally shared tax policy information which he had access to under a federal government contract.

The Albanese government will introduce sweeping reforms to crack down on multinational tax avoidance.

Tax advisers who help their clients avoid Australian laws could be subject to fines of more than $780million as part of the biggest crackdown on misconduct in the nation’s history, Labor senator Deborah O’Neill (pictured) said on Sunday

Maximum penalties will be increased from $7.8million to more than $780million for advisers and firms who promote tax exploitation schemes.

The larger penalties are aimed at reducing incentives for firms to use confidential government information to help their clients.

Ms O’Neill said the changes were a signal to big consultancy firms that old ways of doing business belonged to the past.

‘Sadly, it seems that in the audit and assurance world, providers of this dodgy tax information have decided that a small fine or negotiation might just be the cost of doing business,’ she told reporters in Canberra. ‘Those days are done.’ 

The changes will also expand penalty laws and make it easier for Australia’s tax regulator to apply them to advisers and firms who promote tax avoidance.

Australia’s tax regulator will have an increased time frame of six years to bring on Federal Court proceedings after the conduct occurred, up from the current four year limit.

Proposed reforms will also seek to remove limitations in existing tax secrecy laws which were a barrier to regulators acting in response to the PwC breach.

Police are investigating allegations former PwC partner Peter Collins (pictured) illegally shared tax policy information which he had access to under a federal government contract

The Australian Taxation Office and Tax Practitioners Board will be able to refer ethical misconduct for disciplinary action.

Whistleblowers who provide evidence of misconduct will have more protections and the board will also be given up to 24 months to complete complex investigations.

Ms O’Neill said the government’s announcement marked a significant moment in tax system integrity for Australia.

‘Some people have operated out of a model in the past where they thought they were not only beyond the scrutiny of regulators but that they were above the law of the land,’ she said.

‘It’s time now (for companies) to work with the government, with national and international audit bodies and standards to lift their sights beyond pure profit making and personal gain and undertake their professional responsibilities ethically and properly in the national interest.’

A scandal involving confidential federal tax briefings being leaked by a former PwC (logo pictured) partner Peter Collins cast a shadow over private consultancy work for governments at all levels

While treasury is coordinating the government’s response to systemic issues raised by the PwC scandal, the attorney-general’s department will also review the use of legal professional privilege which can obstruct investigations.

The finance department will review confidentiality arrangements across all government agencies to ensure they are fit for purpose, legally binding and enforceable.

This review will also identify ways to strengthen how conflicts of interest are managed.

The NSW government is already considering law changes which would result in million-dollar penalties for private consultants who leak confidential tax information or cover up breaches by their colleagues.