The Albanese government is taking decisive action against tax avoidance by reviewing tax promoter penalty laws in light of the PwC scandal.
The Albanese government, through the Ministers of Treasury, is intensifying efforts to combat unethical tax avoidance practices by reviewing the tax promoter penalty laws as the government's response to the PwC tax scandal.
In 2015, PwC Australia's former tax chief shared confidential government information on upcoming tax laws with colleagues. This breach allowed PwC to advise US companies on navigating new laws, earning $2.5 million. The scandal expanded to PwC's UK and US branches, leading to accusations of deception and calls for a criminal investigation, severely damaging PwC's reputation and raising concerns about ethics in the accounting industry.
Stephen Jones MP, assistant treasurer and minister for Financial Services, said that while promoter penalty laws are intended to target tax agents promoting illegal schemes to help clients reduce their taxes, the PwC scandal revealed significant gaps in these regulations. He noted that these laws failed to address the serious misconduct of those involved in promoting illegal tax avoidance schemes to multinational corporations, highlighting the need for further reforms.
"The government responded quickly to close the obvious loopholes, and this consultation builds on the legislation passed in May 2024, which significantly increased the maximum civil penalties for promoters of tax exploitation schemes," said Jones in a statement released to the media on Oct. 4.
The consultation is assessing whether the amended regime effectively addresses current promoter activities and sufficiently protects taxpayers from illegal tax exploitation schemes.
"The government is committed to ensuring the ATO has the tools to address tax exploitation schemes and closing gaps identified during the PwC matter," Jones added.
The Treasury is encouraging stakeholders to provide their feedback by Nov. 1.
"The PwC scandal exposed severe shortcomings in our regulatory frameworks that were largely ignored by the Coalition, and we’re taking significant steps to clean up the mess," said Jones in the media statement.
"We’re cracking down on misconduct to rebuild people’s faith in the systems and structures that keep our tax system and capital markets strong."
Your insights are crucial for ensuring accountability and protecting taxpayers. For further information regarding the consultation process, visit the Treasury website today.
