Australia to lift tax avoidance penalties after PwC scandal

The news: The federal government will ramp up penalties and boost regulatory powers against tax avoidance in response to the fallout from the PwC scandal.

The numbers: Tax advisors who help clients avoid Australian laws could face maximum fines of over $780 million — a 100-fold increase over the existing limit — under the proposed changes. The Australian Taxation Office will also have an increased time frame of six years after the conduct occurs to bring on Federal Court proceedings, up from the current four-year limit.

The context: The government crackdown comes weeks after parliamentary hearings revealed misconduct by PwC partners, who are alleged to have illegally shared confidential government briefings with clients to help them avoid tax in Australia. The proposed reforms include removing limitations in existing tax secrecy laws, which have proven to be a barrier for regulators with regard to the PwC breach, and allowing the ATO and and Tax Practitioners Board to refer ethical misconduct for disciplinary action.