The Albanese Government continues its crack down on unethical tax avoidance behaviour with a consultation paper released today to review the tax promoter penalty laws. This forms the next part of the government’s steadfast response to the PwC tax scandal.
The promoter penalty laws are designed to capture tax agents who promote illegal and fraudulent schemes to clients to reduce their taxes. However, the PwC scandal exposed gaps in these laws, which did not capture the heinous activity of those involved in the promotion of illegal tax dodging schemes to multinational corporations.
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.
This consultation is considering whether the regime, as amended in response to the scandal, is fit for purpose, adequately addresses current types of promoter activity, and effectively safeguards taxpayers from being enticed into 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.
The government seeks feedback on:
- The effectiveness of the current regime in deterring and addressing the promotion of tax exploitation schemes
- Operation of the framework, including whether existing exemptions provide appropriate safeguards to tax practitioners providing genuine advice
- How other existing, comparable regimes effectively deter misconduct.
The Albanese Labor Government is overseeing the biggest crackdown on tax adviser misconduct in Australian history.
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.
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.
Interested stakeholders are encouraged to provide their feedback by 1 November 2024.
Further information regarding the consultation process is available on the Treasury website.
This is the fifth of eight Treasury‑led reviews announced by the Government in its PwC response.