Important warning to tax advisors helping clients circumvent Australian law: regulator vows crackdown after PWC outage

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

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

A scandal in which confidential federal tax briefings were leaked by former PwC partner Peter Collins cast a shadow over private advisory work for governments at all levels.

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

The Albanian government will implement major reforms to tackle multinational tax avoidance.

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

The higher penalties are designed to reduce incentives for companies to use confidential government information to help their customers.

Ms O’Neill said the changes were a signal to major consulting firms that old ways of doing business were a thing of the past.

“Unfortunately, it seems that in the auditing and assurance world providers of this unreliable tax information have decided that a small fine or negotiation may well be the cost of doing business,” she told reporters in Canberra. “Those days are over.”

The amendments will also expand the fines laws and make it easier for the Australian tax regulator to apply them to advisers and companies promoting tax avoidance.

Australia’s tax regulator will be given an additional six years to initiate proceedings in the Federal Court after the conduct has taken place, instead of the current four-year limit.

The proposed reforms also seek to remove restrictions in existing tax secrecy laws that have hindered regulators from responding to the PwC breach.

The Australian Revenue Service and the Tax Practitioners Board may refer ethical misconduct for disciplinary action.

Whistleblowers who demonstrate misconduct will receive increased 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 an important moment for the integrity of Australia’s tax system.

“Some people in the past have operated under a model where they thought they were not only beyond the control of regulators, but that they were above the law of the land,” she said.

It is now time (for companies) to work with the government, with (inter)national control bodies and standards to look beyond pure profit and personal gain and to fulfill their professional responsibilities ethically and properly in the national interest.’

While the Treasury is coordinating the government’s response to systemic issues raised by the PwC scandal, the Attorney General’s Department will also review the lawyer’s use of professional secrecy, which could hamper investigations.

The Finance Department will review the confidentiality arrangements of all government agencies to ensure they are fit for purpose, legally binding and enforceable.

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

The NSW government is already considering legislative changes that would lead to multimillion-dollar fines for private advisers who leak confidential tax information or cover up breaches by their peers.