Monday, May 29, 2023

What the Senate needs to ask ATO, Treasury on PwC tax scandal

 Why PwC’s latest grand apology falls flat

What the Senate needs to ask ATO, Treasury on PwC tax scandal

Battle lines at estimates go way beyond those redacted names – there’s mystery dates, games of pass the parcel. And what about the other 1000 pages of emails?

Neil ChenowethSenior writer

Two different sets of negotiations will be playing out when Treasury and the Tax Office front up to Senate estimates on Tuesday.

The first is the political theatre which marks the moment when a controversy turns supernova and achieves true public outrage status, as the PwC tax leaks scandal clearly has.

That outrage is centred on a simple issue – the entirely justified demand to release the names of PwC partners and their US tech company clients which were redacted when the Tax Practitioners Board provided 144 pages of internal PwC emails to the Senate on May 2.

Tax Commissioner Chris Jordan is unlikely to be releasing any PwC names. Alex Ellinghausen

The prime minister added his voice to this on Monday, saying that all the names should become public “at the appropriate time” while immediately raising concerns it might interfere with investigations the government had just opened. That reads like a yeah, but no.

Senators will ask Tax Commissioner Chris Jordan for the names and he will say he is legally proscribed from releasing taxpayer details. If the full Senate votes to demand that the names be released then the real negotiations start – whether the ATO or Tax Practitioners Board (appearing Wednesday) provides the names ‘in camera’ or some other way that keeps them out of public view. Which will just keep the issue alive.

The other negotiation at estimates will be about eking out more details of the whole PwC leaks saga from Treasury and the ATO.

ATO’s timeline

In February Labor Senator Deborah O’Neill and Greens Nick McKim put a string of questions on notice to the Tax Office about what happened in the five years after it obtained PwC internal emails showing how the firm tried to profit from confidential Treasury information obtained by former partner Peter Collins. The ATO gave them nothing – not one single line – citing secrecy laws.

This time Commissioner Jordan has a timeline to fill in some of the blanks for those five years. But questions will remain.

Like what steps did Treasury take after the ATO said that it was investigating a possible breach of confidentiality in September 2018? With the benefit of hindsight one might question the wisdom of appointing PwC partner Pete Calleja(now on home leave after being named as a recipient of the Collins emails) to the black economy advisory board, which advised on how to crack down on hyper aggressive tax advisers, five months after the ATO alerted Treasury to the Collins investigation.

It was Treasury’s confidentiality that was breached. So why didn’t the ATO make a formal referral to Treasury?

The ATO’s job is to investigate tax misbehaviour, not possible criminal breaches. Eventually in July 2020 the ATO referred the case to the Tax Practitioners Board, but tax office sources say this was after trying to refer it to other agencies. So which agencies passed the parcel? Was it the Director of Public Prosecutions? Was it the Federal Police (surely not, this would make last week’s referral truly a deja vu moment)?

And what contacts did tax officers have with PwC over this matter? It’s standard procedure when the ATO finds particularly egregious behaviour by tax advisers, for a senior tax officer to go to the firm and say, “Do you realise what these guys are doing?”

The other 1000 emails

Such conversations are generally followed by partner departures. So what happened? A couple of partners in the emails did leave PwC around this time, with no suggestion of a cloud, but Collins remained until shortly before the TPB cancelled his registration as a tax agent last November.

Can the Senate get answers to these and the thousand other queries? It’s a negotiation. One that might start by asking for the rest of the emails.

The redacted emails that the TPB supplied to the Senate ran to 144 pages. That sounds a lot – until you realise there are more than 1000 pages in the file. As an opening shot to break the ice, why not ask for the rest of them?

Read more on the PwC tax leaks scandal

Neil Chenoweth is an investigative reporter for The Australian Financial Review. He is based in Sydney and has won multiple Walkley Awards. Connect with Neilon Twitter. Email Neil at