Consultation begins on new laws to improve tax integrity

The Albanese Government is taking a strong stance against blatant misconduct in our tax advice industry and has today released draft legislation designed to strengthen our tax system and give greater powers to our regulators.

The PwC scandal exposed severe shortcomings in our regulatory frameworks that were largely ignored by the Coalition and we continue to take significant steps to clean up the mess.

Our crack down on misconduct in the industry will help to prevent this from happening again and will ensure that if it does, our regulators have what they need to hold parties to account.

This will help rebuild confidence in the industry and the vast majority of advisers who do the right thing.

The government has already introduced legislation to strengthen the Tax Practitioners Board (TPB) earlier this year, provided a $30 million funding boost to the Board in the October 2022-23 Budget and strengthened Commonwealth procurement frameworks.

The four sets of draft legislation released for public consultation today focus on the first two of three priority areas announced on 6 August.

1. Strengthening the integrity of the tax system
2. Increasing the powers of our regulators
3. Strengthening regulatory arrangements to ensure they are fit for purpose

The draft legislation will:

Strengthen the integrity of the tax system

• Enhance the tax promoter penalties to deter and punish advisers and firms promoting tax avoidance by:
  • Increasing maximum penalties for advisers and firms that promote tax avoidance schemes from $7.8 million to over $780 million.
  • Expanding tax promoter penalty laws so they’re easier for the ATO to apply to advisers and firms that promote tax avoidance.
  • Increasing the time limit for the ATO to bring Federal Court proceedings on promoter penalties from four years to six years after the conduct occurred.

Increase the power of our regulators

• Modernise tax secrecy rules by:
  • Removing limitations in tax secrecy laws that were a barrier to regulators acting in response to PwC’s breach of confidence.
  • Enabling the ATO and Tax Practitioners Board to refer ethical misconduct by advisers (including but not limited to confidentiality breaches) to professional associations for disciplinary action.
• Protect whistle blowers when they provide the Tax Practitioners Board with evidence of tax agent misconduct.
• Strengthen the Tax Practitioners Board’s investigations and transparency by:
  • Giving the Tax Practitioners Board more time – up to 24 months – to complete complex investigations.
  • Improving the Tax Practitioners Board’s public register of practitioners, so that people have more transparency over agent and firm misconduct.

Interested stakeholders are encouraged to provide feedback on the draft legislation before 4 October.

The reforms we’re progressing today are the beginning of a comprehensive process the government is undertaking to rebuild community confidence in the systems and structures that keep our tax system and capital markets strong.

Consultation on reforms to further strengthen our regulatory arrangements will begin in coming months.

The draft legislation is available on the Treasury website:

• Tax promoter penalty reforms
• Tax secrecy reforms
• Whistleblower reforms
• Tax Practitioners Board reforms

Further details about the Government’s package of reforms are set out in the fact sheet [PDF 325KB].