Anyone caught trying to exploit the Aussie taxation system will get hit with a seriously major fine.
In the wake of the PwC tax scandal - in which the firm's former taxation partner Peter Collins leaked sensitive and confidential government information to fellow partners and clients - Treasurer Jim Chalmers announced new eye watering penalties.
“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,” Chalmers said.
“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.”
Under the changes, advisers and firms who promote tax exploitation schemes would now face fines of over $780 million - equivalent to a 10,000 per cent increase on the current penalty of $7.8 million.
As part of the changes, red tape surrounding regulatory actions would also be slashed with the Australian Taxation Office (ATO) and Tax Practitioners Board (TPB) given new powers to refer ethical misconduct for disciplinary action.
“The current tax promoter penalty laws have remained largely untouched since their creation in the 2000s and have only been applied six times,” Chalmers said.
“Bigger penalties will reduce incentives to use confidential government information to help clients avoid tax.”
Chalmers said the PwC scandal showed some regulatory frameworks were “not fit for purpose” and raised questions about the regulations currently in place.
“This includes whether there are appropriate governance obligations on these firms in areas such as transparency, executive responsibility, management of conflicts of interest and dealing with misconduct,” Chalmers said.