Government floats loosening ATO secrecy on money-laundering, takeovers
The Tax Office will be able to share previously secret taxpayer information with regulators, professional disciplinary bodies and government agencies, under new Treasury proposals.
The wide-ranging reform plans were made in a Treasury review of the secrecy provisionsgoverning the ATO and the Tax Practitioners Board, which regulates registered tax agents, commissioned as part of the government’s response to the PwC tax leaks scandal.
ATO boss Rob Heferen would be empowered to share taxpayer information more broadly, under new Treasury proposals. Alex Ellinghausen
It emerged in the aftermath of the PwC scandal that the ATO had been aware of breaches of government confidentiality by tax partner Peter Collins, but was unable to pass on the information to Treasury because of strict obligations on the sharing of tax information.
Legislative amendments last year loosened some of the secrecy provisions, but a consultation paper released late last month proposes a range of changes that go well beyond the initial limited exceptions for law enforcement and specific disciplinary bodies.
They include enabling the ATO to share information with the Sanctions Office and AUSTRAC where the agency has information that may point to an individual entity involved in sanctions avoidance or money-laundering,
Among the 16 other proposals, Treasury also submitted that the ATO and TPB should be permitted to disclose information where Commonwealth employees are suspected of participating in fraudulent schemes, such as the $1.6 billion GST fraud uncovered in 2023.
Other proposals include enabling information sharing with superannuation funds to assist in the prevention of fraud, and with the Treasury secretary and APRA to inform decision-making on whether takeover proposals raise issues about tax compliance.
The secrecy provisions are intended to prompt compliance and confidence in the tax system by individuals and entities, who can be confident the ATO will “maintain the privacy, integrity and confidentiality” of their information.
But the wide-ranging nature of the provisions has caused frustration within the ATO, especially following the PwC tax leaks scandal.
Last year, then-ATO commissioner Chris Jordan told The Australian Financial Review he supported changes to the regime.
“It’s a difficult and fine line to walk, but I believe there are very sound reasons to change the secrecy provisions to provide better opportunities for the tax office to share information, particularly with other government departments,” he said.
Treasury has also floated a broader secrecy exemption for exceptional circumstances such as in the PwC case where, for a limited time, the disclosure of taxpayer information outweighs the presumption of secrecy.
“The PwC tax scandal demonstrated the difficulties of anticipating exceptional circumstances in which it may be necessary, appropriate and in the public interest to disclose taxpayer information in a time-critical manner,” the consultation paper says.
“[The scandal] has highlighted that there are genuine circumstances where taxpayer information may need to be shared immediately to protect the tax and superannuation system, or the public more broadly.”
The review is the sixth launched by Treasury in response to the PwC issue, and comes after reforms to the tax practitioners’ code of conduct, strengthened sanction powers for the TPB and an ongoing review into the use of legal professional privilege in Commonwealth investigations.
Other proposals floated in the consultation paper include enabling the ATO to disclose information to the Fair Work Ombudsman to assist in resolving unpaid superannuation claims, and to the National Disability Insurance Agency for use in detecting fraud.
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Government to relax ATO, TPB rules on sharing taxpayer information
A proposed overhaul of tax secrecy laws aims to improve regulatory oversight and prevent fraud following the PwC scandal.
The ATO and TPB will be able to share protected taxpayer information to other regulators more readily under a proposal to loosen secrecy laws in the wake of the PwC scandal.
The information would be used to investigate ethical breaches, prevent fraud and for other government purposes including administering the R&D tax incentive and NDIS, according to a recent Treasury consultation paper.
The paper said the PwC scandal exposed limitations in the regulatory framework, including issues with existing tax secrecy laws.
“The PwC matter highlighted that the tax secrecy framework may, in some circumstances, prevent the ATO and TPB from disclosing suspected serious misconduct to relevant agencies to take appropriate action,” it said.
It is the sixth Treasury review launched as part of the government’s PwC response and follows reforms to the code of conduct, laws around prompter penalties and disqualified entities, and strengthening the TPB's sanction powers.
Assistant Treasurer Stephen Jones said the latest proposal showed the government was “continuing to strengthen trust and integrity in our tax system”.
“Immediately following the PwC tax scandal, the government removed limitations in the tax secrecy laws that prevented the ATO from providing information to Treasury about PwC’s misuse of the department’s confidential information.”
“This consultation paper will explore whether there are any additional instances where it may be appropriate for the ATO or TPB to disclose protected tax information in the public interest.”
Currently, tax authorities are prohibited from disclosing “protected information” that identifies, or is reasonably capable of being used to identify, a taxpayer.
The consultation paper sought feedback on several proposed new exceptions where it might be appropriate for the ATO or TPB to share information, including to support to prevent, identify and respond to fraud.
The paper also sought feedback on disclosing protected information to investigate professional integrity breaches by tax agents and Commonwealth employees.
The threshold proposed was where there was a “reasonable suspicion of breach of a serious crime (relating to fraud or dishonesty)” or “a serious breach of a Commonwealth code of conduct has been committed”, it said.
The paper also proposed allowing the ATO to use or disclose protected information with other government agencies for legislated purposes, including administering the R&D tax incentive and the NDIS scheme.
Other issues for consideration included giving the Governor-General the power to temporarily declare an urgent circumstance in which the ATO and TPB could disclose protected information in the public interest.
“This would enable information to be disclosed appropriately in limited unforeseen and exceptional circumstances that are not contemplated by the existing tax secrecy framework,” it said.
The paper also sought feedback on changes to the tax secrecy regime to address gender-based violence and give financial advisers access to client information.
Consultation on the proposals is open until 28 February.