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Tax advisers who promote exploitation schemes to face $780 million penalty


An extensive federal government crackdown on misconduct will increase maximum penalties for advisers and firms promoting tax exploitation schemes from the present A$7.8 million to more than $780 million.

Sparked by the PwC scandal, which involved the consultancy’s use of confidential government information for commercial gain, the planned measures will also expand tax promoter penalty laws to make it easier for the Australian Taxation Office to apply them to advisers and firms who promote tax avoidance.

The time limit for the tax office to bring court action on promoter penalties will be increased from four to six years.

Announcing the measures on Sunday, the government said the present tax promoter penalty laws had remained largely untouched since being created in the 2000s and had only been applied half a dozen times.

Independent, free and evidence-based.

It described its initiatives, involving multiple ministers, as the “biggest crackdown on tax adviser misconduct in Australian history”.

The reforms are designed to strengthen the integrity of the tax system, boost the powers of the regulators, and make the regulatory arrangements “fit for purpose”.

The government said the PwC scandal had exposed “severe shortcomings” in the regulatory framework, and it wanted to “rebuild people’s faith in the systems and structures that keep our tax system and capital markets strong”.

The legislation will be introduced this year, with consultations starting soon.

The changes will remove limitations in the tax secrecy laws that were a barrier to regulators responding to the PwC affair.

They will enable the tax office and the Tax Practitioners Board to refer ethical misconduct by advisers to professional associations for disciplinary action.

Whistleblowers will get protection when they report tax agent misconduct to the Tax Practitioners Board.

The board will have more time – up to two years – to complete complex investigations. Its public register of practitioners will be improved to give more transparency to misconduct by firms and agents.

The government is also homing in on the governance obligations of large consulting, accounting and auditing firms.

Treasury will co-ordinate a whole-of-government response to the PwC affair and the systemic issues raised. Options will be delivered to the government progressively over the coming two years. Consultations will begin in coming months.



This article first appeared in The Conversation. It is republished with permission

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