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Reforms include an increase in penalties and greater protection for whistleblowers.
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Law shoots for ‘biggest crackdown’ on tax adviser misconduct
17 November 2023
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Assistant Treasurer Stephen Jones has introduced a bill into parliament to respond to the PwC tax scandal with the “biggest crackdown on tax adviser misconduct in Australian history”.
The Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023 makes a raft of amendments to the promoter penalty provisions and strengthens whistleblower protections.
“The PwC scandal exposed several shortcomings in Australia's regulatory frameworks and that undermines community confidence in our tax system,” said Mr Jones in parliament.
“It showed that it is not only the multinational companies, but also the tax advisers that need to be held accountable for their actions.”
“This bill will crack down on tax practitioner misconduct and rebuild public confidence in the systems and structures that keep our tax system and capital markets strong.”
Schedule 1 of the bill amends the promoter penalty provisions to increase the time the ATO has to bring an application for civil penalty proceedings to the Federal Court. It also increases the maximum penalty applicable and expands the application of the promoter penalty laws.
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“This will improve the ability of the ATO to target promoters of tax exploitation schemes and seek the application of civil penalties,” the explanatory memorandum said.
Under the amended promoter penalty laws, the maximum penalty will be the greatest of:
- 5,000 penalty units (for an entity other than a body corporate or significant global entity).
- 50,000 penalty units (for a body corporate or significant global entity).
- Three times the benefits received or receivable (directly or indirectly) by the entity and associates of the entity in respect of the scheme.
- For a body corporate, partner in a partnership that is a significant global entity or trustee of a trust that is a significant global entity, 10 per cent of the aggregated turnover of the entity for the most recent income year to end before the entity engaged, or began to engage, in conduct that contravenes the promoter penalty laws, capped at 2.5 million penalty units.
Schedule 1 of the bill also amends the definition of tax exploitation scheme to ensure it includes schemes that are subject to the multinational anti-avoidance law (MAAL) or diverted profits tax (DPT) due to the operation of section 177DA or section 177J of the ITAA 1936.
It extends the scope of the promoter penalty laws to apply to all ATO rulings, specifically public, private and oral rulings.
“This ensures the promoter penalty laws prohibit an entity from promoting a scheme on the basis of conformity with a public ruling, private ruling or oral ruling where the scheme is materially different from the scheme described in the ruling,” the explanatory memorandum said.
The bill will widen the whistleblower protections available to eligible whistleblowers who make disclosures to the TPB, as well as disclosures to certain other entities who may offer support or assistance.
The government has also introduced Superannuation (Objective) Bill 2023, which enshrines the objective of super.
The bill states that the objective of superannuation “is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Treasurer Jim Chalmers said this was a “simple and straightforward objective that will serve as a guide for future governments, regulators, industry, and the wider community, instilling greater confidence in the system”.
In the past 10 years superannuation policy had been “confused and chaotic” with around $36 billion in super savings removed during the pandemic.
“Legislating an objective of super will help prevent this sort of short-sightedness ever happening,” he said.
“The objective will help ensure super delivers on its foundational promise of providing a dignified retirement for more Australians. It will secure super’s future by embedding its purpose into law. This will ensure that any future changes to the superannuation system will support its objective, not supplant or undermine it.”
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