Tax agents and their companies will face tougher penalties if they breach confidentiality rules when dealing with the federal government under new laws aimed at strengthening the agency charged with overseeing the accountancy and tax advice sector.
Treasurer Jim Chalmers will this week introduce a suite of proposals to improve the operation of the Tax Practitioners Board while also paving the way for an overhaul of possible sanctions available to the organisation.
Treasurer Jim Chalmers has put the tax profession on notice that tougher penalties are coming for those who breach confidentiality agreements with the government.Credit:Alex Ellinghausen
It follows revelations earlier this year the board had deregistered as a tax agent a former PricewaterhouseCoopers tax partner, Peter Collins, who was participating in confidential consultation with the federal Treasury to improve tax laws but was found to have made unauthorised disclosures of the information to partners and staff of PwC.
Collins was a member of a regular consultation panel created by Treasury and the Board of Taxation to provide confidential advice to the government on matters that included its measures to combat international tax avoidance.
PwC was ordered to ensure appropriate training is provided on a six-monthly basis to relevant partners and staff on complying with the code of professional conduct and PwC’s policies on conflicts of interest.
The revelations prompted anger from the government, both at the breach of confidentiality and the extent of penalties available to the tax board.
Chalmers said the legislation this week was based on the findings of an independent review of the tax board that reported to the former government in 2019.
The laws to be introduced to parliament this week will put in place five recommendations that the former government had failed to act on.
They include financial support to the tax board which received $30 million in extra funding in the October budget, the end of a loophole that enabled disqualified tax practitioners to work for a qualified tax agent, and a move to annual registration periods for tax agents.
But Chalmers said the government would go much further with more changes in the near future.
“In addition to the legislation we’re introducing this week, we’re also looking closely at additional recommendations including strengthening TPB powers and tougher sanctions for those who breach their responsibilities,” he said.
Governments have for many years tapped the expertise of the private sector when drafting major changes to tax law.
Chalmers said this would continue, but there had to be penalties in place for those who breached those confidential dealings.
“We want to be consultative where that’s possible and appropriate and that means we need to improve how that’s done. Often more collaboration leads to better outcomes but the process can’t be compromised, it needs to be best practice,” he said.
“Breaches in confidentiality completely undermine our efforts to bring people together to tackle the big issues facing Australians.”
Assistant Treasurer Stephen Jones said there would be consultation with the tax sector about improving the tax system, but that could not be done if information was used for commercial benefit.
“We’ve put the industry on notice, there can’t be a repeat of the Peter Collins scandal,” he said.
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