In connection with a scandal involving the disclosure of secret information about the government's plans to target multinational tax avoidance to the firm's clients, a former partner at PwC has been barred from acting as a tax agent in Australia for two years.
Peter-John Collins, the head of international tax for PwC's Australian office, was a member of an advisory group engaged in confidential conversations with Australia's Treasury department about enacting legislation that would target multinational tax avoidance and impose a tax on diverted earnings.
Despite signing strict confidentiality agreements over the Treasury discussions in 2013, 2016, and 2018, Collins, a 30-year industry veteran who won the Tax Institute of Australia's corporate tax adviser of the year award in 2016, shared information about the proposed laws with other PwC employees in Australia and abroad.
According to the Tax Practitioners Board, the industry watchdog, some of the material was subsequently revealed to PwC clients and potential clients. On Monday, Collins' registration as a tax agent in the country was suspended for two years.
Additionally, the TPB gave PwC a directive to enhance its procedures and training regarding potential conflicts of interest.
With regulations adopted in 2016, Australia has asserted in recent years that it is "leading the global fight against multinational tax avoidance." However, the Australian Tax Office has been hindered in its efforts to combat multinational tax avoidance and by the purported protection provided to their customers by accounting companies from the law.
Collins, who could not be immediately contacted, left PwC in October of last year.
The TPB's decision, according to Max Bruce, a lecturer in accounting at Australian National University, is a sign that there are issues with the "cosy relationship" between Canberra and the Big Four consulting firms, who provided the government with advice on the tax evasion rules, Bruce said. He said that the Labor party government of Prime Minister Anthony Albanese, which was elected in May, had taken steps to lessen its reliance on consultants.
Bruce continued by stating that sanctioning a former senior PwC partner had hurt the industry's credibility. "It doesn’t reflect well on the industry at all," he continued.
According to a PwC representative, the company admitted that Collins had broken confidentiality agreements with the Treasury and that specific conflict management measures ought to have been in place to avoid it.
The company stated that it "deeply regrets this occurred" and that "in each case, this failed the standards we set for PwC."
According to the ATO, "Clients and the community expect tax practitioners to provide high-quality advice, and to hold themselves to high professional and ethical standards of behaviour. Most tax practitioners do the right thing. However, it is important that those practitioners who fail to meet their ethical or professional obligations are held to account."
The ATO highlighted that the Big Four, along with the ATO and TPB, embraced a new governance standard known as the big market tax adviser principles in August.
"Tax practitioners who breach this confidence will not be tolerated. Rules to manage conflicts of interest are equally important in protecting client interests, especially in a large firm," according to TPB Chair Ian Klug.
According to Klug, disclosing details of private negotiations about law reform "might be seen to elevate personal and commercial profit, breaching public interest, legal and ethical obligations."
By fLEXI tEAM