Individuals and organisations promoting tax avoidance schemes could be fined up to $780 million and the powers of regulators enhanced as part of a federal government crackdown on tax advisers following the PwC confidentiality breach scandal.
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As the fallout from the scandal continues to overshadow dealings between the government and consultants, Treasurer Jim Chalmers has announced new laws to toughen the oversight of the tax advice industry will be introduced to parliament on Thursday.
The legislation will improve the ability of the Australian Taxation Office and the Tax Practitioners Board to investigate and refer tax advisers who engage in misconduct by scrapping secrecy provisions that hamper information sharing, allowing referrals for disciplinary action, protecting whistleblowers, ensuring more time for investigations and substantially increasing the penalties miscreants face.
![Treasurer Jim Chalmers says new laws will prevent the 'terrible misconduct exposed by the PwC scandal from ever happening again'. Picture by Elesa Kurtz Treasurer Jim Chalmers says new laws will prevent the 'terrible misconduct exposed by the PwC scandal from ever happening again'. Picture by Elesa Kurtz](/images/transform/v1/crop/frm/202296158/1adf96e5-5aae-40ea-b3a0-bc2e05e56b0d.jpg/r0_218_4256_2611_w1200_h678_fmax.jpg)
"Our crackdown on misconduct in the tax advice industry is all about preventing the kind of terrible misconduct exposed by the PwC scandal from ever happening again," Dr Chalmers said.
Assistant Treasurer Stephen Jones said PwC's behaviour had exposed "severe shortcomings" in regulatory frameworks and the government's bill was aimed at strengthening accountability within the tax system.
"We are introducing the biggest government crackdown on tax adviser misconduct in Australian history," Mr Jones said.
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The PwC scandal erupted early this year when it was revealed that former PwC partner Peter-John Collins shared with other members of the firm confidential information about the government's plan to crack down on multinational tax avoidance.
The revelations prompted a federal police investigation, an internal inquiry led by former Telstra boss Ziggy Switkowski, the removal of former chief executive Tom Seymour and several senior partners and the divestiture of its government services division for just $1.
The scandal triggered a broader senate inquiry into government use and oversight of consultants and has underlined the government's policy to cut the use of external contractors and consultants and bring more expertise in-house.
Among the regulatory shortcomings highlighted were tax secrecy provisions that prevented the TPB sharing information about suspected breaches of ethical standards with other oversight bodies and time restrictions on investigations and referrals.
The government is also introducing legislation aimed at increasing the revenue raised by the Petroleum Resource Rent Tax by imposing a 90 per cent limit on the proportion of PRRT assessable income that can be offset by deductions.
The government expects the change will raise an extra $2.4 billion over four years.