Australia’s government is requesting feedback on proposals to expand the penalty laws for promoters of tax exploitation schemes.
The Treasury released the public consultation document on 4 October 2024, and interested stakeholders are encouraged to provide feedback by 1 November 2024.
This follows as the Albanese Government continues its crackdown on unethical tax avoidance behaviour. This forms the next part of the government’s steadfast response to the PwC tax scandal.
Established in 2006, tax promoter penalty laws are designed to deter the promotion of tax avoidance and evasion. These 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.
