Stephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today I am proud to introduce the biggest government crackdown on tax adviser misconduct in Australian history.

The government is appalled by the outrageous behaviour by PwC and the allegations about other firms in the consultancy sector more broadly.

Through the misuse of confidential government information, large multinational organisations had a head start on how to sidestep and avoid Australia's tax laws—a head start that put $180 million a year of money that should have been flowing for the use of Australian taxpayers at risk.

The Tax Practitioners Board's investigation exposed a tax advisory firm that had betrayed trust for personal gain, rather than ensuring tax was fairly paid in Australia.

This government has a clear agenda on multinational tax.

New laws, currently before the parliament, will tighten multinational tax loopholes, increase transparency and ensure multinationals pay their fair share of tax in Australia and for Australians.

This government has a very clear agenda on multinational tax. I'm pleased to have in the chamber alongside me today the assistant minister who has been leading the government's reform agenda in relation to multinational tax.

New laws currently before the parliament will tighten multinational tax loopholes, increase transparency and ensure that multinationals pay their fair share of tax in Australia.

We cannot let tax adviser misconduct undo all of that good work or undermine that important agenda.

The PwC scandal exposed several shortcomings in Australia's regulatory frameworks, and that undermines community confidence in our tax system.

It showed that it is not only the multinational companies but also their 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 will expand tax promoter penalty laws to ensure that promoters of tax exploitation schemes face significant consequences for their actions.

Penalties will be extended to significant global entities, to ensure that both corporate entities, and non-corporate entities like partnerships, are captured by these laws.

The maximum penalties for these entities will increase 100-fold from the current $7.8 million to as much as $780 million.

We will also make it easier for the Australian Taxation Office to apply the promoter penalty laws by broadening the scope of important definitions and providing an additional two years for the tax office to gather information and evidence.

The message from government is clear: Do not promote schemes that sidestep our tax laws. You will be caught, and you will be punished.

Schedule 2 is about whistleblower protection. It extends existing tax protections to whistleblowers who disclose information to the Tax Practitioners Board.

Those who become aware of misconduct within the tax agent profession should be protected when they bring that information to the appropriate regulator, without fear of recriminations or punishment.

This measure responds to a key recommendation of the independent review into the TPB and the Tax Agent Services Act 2009.

It protects tax whistleblowers from detrimental conduct, such as termination or litigation, in response to a disclosure. If detriment is suffered, it will allow whistleblowers to seek compensation—important stuff.

Schedule 3 will allow the Tax Practitioners Board to publish more details of its investigations and its decisions publicly, and it will require them to keep those details published for up to five years.

The schedule will also increase the investigation time frame from six months, as it currently stands, to two years, enabling the Tax Practitioners Board to investigate a wider scope of issues raised by a potential breach.

Schedule 4 will remove limitations on information sharing that were a barrier to regulators acting in response to the PwC breach of confidence.

We know that it took too long for the government to be advised of the PwC's actions.

On that occasion, the misconduct first occurred in 2014, and it was discovered by the Australian tax office in 2017, but it was not until December 2022 that the government was made aware. I'll repeat that. It first occurred in 2014, it was discovered in 2017, but the government itself was not made aware until December 2022. That's not good enough.

The measures in schedule 4 will enable our tax regulators to share protected information with Treasury about confidentiality breaches by those engaging with the Commonwealth. Treasury can then take the necessary action to properly and quickly respond to the breach, including by disclosing information to other agencies and certain ministers, in order to deliver the appropriate response.

The Australian tax office and the Tax Practitioners Board will also be able to share protected information with prescribed professional disciplinary bodies where they suspect actions may constitute a breach of the relevant professional codes or standards.

This will ensure all professionals, no matter the framework that they're regulated under, will be held to account.

These four schedules reflect the government's decisive next step—the second of three steps—in better regulating tax practitioners and strengthening accountability within the tax system.

They're not our first step, and they won't be our last.

Further areas of reform have been foreshadowed. These will follow reviews which have been separately announced, and these will deliver options to government progressively over the next two years. We'll soon commence consultation on the first of which, stronger sanction powers for the Tax Practitioners Board.

Together, our immediate and longer-term measures will drive better behaviour, deter misconduct and strengthen the resilience of our regulatory frameworks.

This bill also delivers on the Albanese government's 2023-24 budget commitment to implement a cap on the use of deductions under the petroleum resource rent tax. This is the first element of the government's response to the petroleum resource rent tax gas transfer pricing review.

Schedule 5 will limit the proportion of petroleum resource rent tax assessable income that can be offset to a maximum deduction of 90 per cent.

These changes will mean that the offshore liquefied natural gas industry pays more tax sooner, contributing to an expected increase in tax receipts of $2.4 billion over the forward estimates.

Under the current law, most of the LNG projects are not expected to pay any significant PRRT until the 2030s. These reforms address this issue. These sensible changes will deliver a fairer return to the Australian taxpayer from the resources that they own, providing certainty to industry and investors to allow the sufficient supply of domestic gas, and ensure that Australia remains a reliable trade and investment partner.

Consultation on further measures to deliver the government's petroleum resource rent tax reforms will follow the introduction of this bill.

Full details of the bill are contained in the explanatory memorandum.

Debate adjourned.