Thursday, November 16, 2023

Huge new fines for PwC tax leak-type breaches

 Today we introduce the second raft of reforms in response to the PWC tax scandal. These new laws focus on the promotion of tax avoidance schemes and will include a tenfold increase in penalties.

~ Stephen Jones

Huge new fines for PwC tax leak-type breaches

Tom McIlroyPolitical correspondent

Companies found to be undermining tax laws will face tough new fines of as much as $780 million under a Labor overhaul of corporate privacy rules which initially stopped the PwC leaks scandal becoming public.

The government will introduce new legislation to prevent a repeat of the breaches by former PwC Australia partner Peter Collins, which sparked a reckoning for the big four firms and the sale of the big four firm’s public sector consulting practice.
Assistant Treasurer Stephen Jones said the government was determined to stop similar breaches. Natalie Boog
Under the changes, confidentiality rules which prevented the Tax Practitioners Board and the Australian Taxation Office from sharing information about Mr Collins’ activities will be removed.
Assistant Treasurer Stephen Jones will tell parliament on Thursday the rules meant the federal government was kept in the dark about the scale of PwC’s breaches of Treasury confidentiality rules.
The misconduct occurred in 2014 and was investigated by the ATO in 2017, but was kept from the federal government until December 2022. The breaches were revealed by The Australian Financial Review earlier this year.
Under the changes, tax promoter penalties will be extended to large multinational firms and the maximum fine for breaches will be increased from $7.8 million to as much as $780 million.
ATO officials will have greater discretion to apply promoter penalty laws and whistleblowers will get additional protection.
The TPB will also get new powers to make public information about investigations and decisions, and will have up to two years to complete complex investigations.
Officials will also be allowed to share protected information with prescribed professional disciplinary bodies if they suspect actions may constitute a breach of the relevant professional codes or ethical standards.
Mr Jones said the government was determined not to allow private firms to undermine trust and confidence in the tax system ever again.
“The PwC scandal exposed severe shortcomings in Australia’s regulatory
frameworks, and that undermines community confidence in our tax system,” he said.
“It showed that it is not only the multinational companies, but also their tax advisers, that need to be held accountable for their actions.
“This bill will crack down on tax practitioner misconduct and rebuild public confidence in the systems and structures that keep our tax system and capital markets strong.”
Parliament will also pass laws to stop partners and executives with financial links to the big four firms from being appointed to the TPB.
Further amendments will implement a cap on the use of deductions under the Petroleum Resource Rent Tax, levied on offshore gas and petroleum producers.
The proportion of PRRT assessable income that can be offset by deductions will be limited to 90 per cent from July 2023, as flagged in the federal budget.
Treasurer Jim Chalmers said the changes would ensure offshore LNG producers paid about $2.4 billion more in tax over the four-year forward estimates.
“These reforms deliver Australians a fairer return from the nation’s natural resources, provide certainty to industry and ensure Australia remains a reliable trade and investment partner,” Dr Chalmers said.
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Tom McIlroy is the Financial Review's political correspondent, reporting from the federal press gallery at Parliament House. Connect with Tom on Twitter.Email Tom at