Former PwC chief confirms tax strategy partnerships from leaked reports were considered high risk

Former PwC Australia chief Tom Seymour says partnerships formed on advice sold to many of the firm’s American tech clients by a former tax practice ‘rover’ were identified as high risk.

Former PwC chief executive Tom Seymour being questioned by a parliamentary committee.

Former PwC Australia chief executive Tom Seymour says the firm identified “partnership” structures being touted by former tax practice “rover” Neil Fuller as high risk in a 2016 review, after the firm sold the strategy to a number of clients.

In response to questions on notice, Mr Seymour said Mr Fuller, a former senior partner in the firm’s tax practice, gave advice to a number of clients in regards to new tax laws that took effect in 2016.

Mr Fuller, a rover of PwC’s Australian business, sold tax advice to many of the firm’s American tech clients in a bid to grow the business.

Several PwC clients implemented partnership structures in 2016 in response to Australia’s introduction of the Multinational Anti-Avoidance Law, aimed at stopping multinationals offshoring profits through aggressive tax minimisation schemes. This came after PwC’s former head of international tax, Peter Collins, leaked confidential government tax briefings to members of the firm, breaching several confidentiality deeds signed as part of a consultation process over the new laws.

Mr Seymour, who previously ran PwC’s tax practice, said Mr Fuller gave advice throughout 2015 and 2016 in regards to the partnership structures, noting the advice “would have been fact specific depending on each taxpayer’s circumstances”.

“To my knowledge and recollection, in limited circumstances, advice provided included a “partnership structure” which the ATO took a particular objection to,” Mr Seymour said in his responses.

These structures triggered concern within the Australian Taxation Office, with former ATO deputy commissioner Mark Konza notably launching into a tirade after discovering PwC’s aggressive partnership strategy in the wake of the new tax laws.

Mr Seymour said PwC also identified the partnership structures as “high risk” after internal reviews by the firm’s risk team.

“As a result, one of the actions taken by PwC was a proactive disclosure to the ATO,” he said.

“My understanding is that no tax returns were ultimately lodged which included the partnership structure.”

Former PwC boss Luke Sayers fronts a Senate inquiry. Picture: Martin Ollman

However, in his response to the parliamentary inquiry, former PwC chief executive Luke Sayers, who ran the firm from 2012 to 2020, reiterated he “did not know of the breach of confidentiality agreements in PwC’s tax business until 2023”.

Mr Sayers said PwC did not discover Mr Collins had breached his confidentiality agreements until 2021, “well after I had left the firm”. He pointed to evidence given by the ATO and PwC’s response to other questions, noting the tax office had been precluded from revealing the breaches.

Mr Sayers said the ATO “spread breadcrumbs-like clues to hint at a confidentiality problem, without ever being direct”, noting this “may explain why I don’t recollect it”.

This comes after PwC’s former general counsel Meredith Beattie told parliament Mr Sayers had called her in a panic after a meeting with ATO second commissioner Jeremy Hirschhorn.

Mr Hirschhorn claims he told Mr Sayers to read a bundle of emails that showed Mr Collins’ breach of confidentiality.

“The ATO’s evidence relating to those ‘clues’ has evolved and changed over time, from claiming it expected that I would know about the breach, to being advised to read unnamed emails which numbered in the tens of thousands to having emails read directly to me,” Mr Sayers said.

“The only email ever provided to the Senate to support this evidence was one complaining about the conduct of the ATO.”

Mr Sayers told parliament the ATO “did not send any formal letter or notice to PwC, prior to my departure. in relation to a breach of confidence by Peter Collins”.

“The ATO’s file note provided in an answer to a Question on Notice listing the agenda items for our 2019 meeting, produced after almost two years and multiple committee attendances, concludes with the point that minimal specific further action was required and provides no close-out date for a response.”

But Mr Sayers provided limited answers to several other questions posed by the parliamentary committee, noting he lacked records from his time at PwC and referring to earlier statements given by the former CEO.

“I am unable to provide responses on behalf of Mr Hirschhorn or PwC,” Mr Sayers said.

The latest responses to the parliamentary committee come as the inquiry prepares to hand down its findings ahead of a December reporting deadline.

Originally published as Former PwC chief confirms tax strategy partnerships from leaked reports were considered high risk