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The decision not to blacklist PricewaterhouseCoopers (PwC) Australia came following an independent investigation into the data breach. However, the Australian Tax Office (ATO) will take any future involvement in confidential consultations very seriously.
Senators from the Green Party have demanded that PwC be disqualified from receiving government contracts after it was discovered that Peter Collins, the firm’s former international tax adviser, had leaked private information about the government’s multilateral anti-avoidance plans. The national Tax Practitioners Board has suspended Collins for two years.
According to ATO, if PwC had successfully implemented a tax-avoidance strategy it developed using secret government briefings, millions of dollars in annual tax income may have been lost.
The ATO testified at a Senate estimates committee that when the new laws were enacted in 2016, an avoidance scheme was being sold to overseas PwC customers to get around the new rules “within weeks.”
According to ATO commissioner Chris Jordan, it was observed at the time how swiftly the plan had been put together.
“Normally, it would take a while for people to look at how it all fits together,” he said.
Multinational corporations that report sales made to Australian consumers through their offshore organisations and do so to evade paying Australian taxes were the target of the law.
At the hearing, Jeremy Hirschhorn from the ATO said that the tax office was upset about how easily the new laws might be violated.
“We were particularly exercised by people trying to avoid an anti-avoidance provision,” he said.
Following the new regulations, forty-four multinational corporations reorganised their operations to record Australian sales domestically.
When asked if PwC will be considered for future contracts with the ATO, particularly those containing secret information, ATO representatives noted that PwC continues to be on a “panel” of suggested consultants kept by the Department of Finance.
The investigation into PwC’s data breach has highlighted the need for more robust cybersecurity measures and better processes for handling confidential information.
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