Dob in a dodgy tax adviser or face jail: New laws to stop another PwC scandal

Tax advisers will have to dob in their colleagues’ wrongdoing or potentially face jail time, while big-four executives will be banned from membership of the regulating Tax Practitioner Board in a major overhaul of the system that enabled the PwC tax leak scandal.

The Greens have secured a bundle of amendments to treasury laws to go before the Senate on Wednesday to cast greater transparency over the dealings of major accounting firms following the misuse of confidential government information to help clients avoid paying taxes.

Tax advisers must dob in colleagues and confess to their own misconduct under a major legal overhaul.Credit: Aresna Villanueva

“We’re kicking the foxes out of the hen house,” said Greens’ finance spokesperson Barbara Pocock. “Through this amendment, we’re fixing the loophole that allowed big consultants to regulate themselves.”

In January, former PwC partner Peter Collins was banned by the Tax Practitioners Board for leaking confidential government tax plans, including new rules to combat corporate tax avoidance, to other staff and partners at the firm.

The TPB also sanctioned PwC for failing to regulate conflicts of interest by partners and staff who knew the confidential information would be used to help clients sidestep the new tax laws and to attract new clients.

But the makeup of the TPB itself has come under scrutiny due to the presence of former big-four executives at the regulator, which Pocock said could give rise to perceptions of a conflict of interest.

Greens senator Barbara Pocock has been one of PwC’s fiercest critics.Credit: Martin Ollman

She said an amendment agreed to by Assistant Treasurer Stephen Jones will ban any senior executives or partners currently working at a tax firm with more than 100 employees, or with ongoing financial links to large tax firms, from becoming a member of the TPB.

“Never again will we have members of the Tax Practitioner Board financially tied to those same large tax agents they are regulating,” she said.

The practitioners’ code of conduct will be updated to ensure advisers keep sensitive government information confidential, and not use that confidential information for personal or corporate advantage.

The Treasury amendments will also force tax agents to both confess to the TPB if they break the rules, and report other professionals who have breached the code.

“This is to prevent partners protecting other partners and turning a blind eye to unethical behaviour,” Pocock said.

The penalty would be up to $15,650, or potentially jail in really serious circumstances.

Jones said the government was pleased to have the Greens on board with the reforms.

“We’re always happy to look at areas for improvement. Our number one objective is to build the capacity of the public service so we are less reliant on consultants.”

The government previously announced it would remove limitations in the tax secrecy laws that were a barrier to regulators’ response to PwC’s breach of confidence.

The Australian Federal Police is investigating PwC’s conduct and several senior partners have left the firm.

A report commissioned by the company and released in September found PwC Australia oversaw a culture that tolerated the poor behaviour of partners if they were making the firm a lot of money, and fostered a “whatever it takes” approach.

Treasurer Jim Chalmers said in August the government would double down on tax adviser misconduct and ensure multinationals paid their fair share of tax in Australia, lifting the maximum penalty for advisers and firms that promote tax exploitation schemes from $7.8 million to more than $780 million.

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