Government to give watchdog greater power to investigate, punish dodgy tax agents

Treasurer Jim Chalmers said the government was "looking closely" at measures to increase the powers of the Independent Tax Practitioners Board (ITPB) and impose stiffer sanctions on those in breach of their professional obligations.

The government is expected to introduce legislation this week to implement an initial set of recommendations from a review of the board initiated by the Morrison government in 2019 and undertaken by Keith James.

But it is understood the government will soon begin consultations on a further tranche of reforms following a brazen confidentiality breach by a PwC tax agent.

The agent, Peter-John Collins, has had his registration terminated and been banned from reapplying for two years after being found to have shared with PwC colleagues information about prospective tax changes obtained during confidential consultations with Treasury.

The case follows the recent jailing of two former tax agents, Alana Hodge and Peter Lines, in two separate cases involving more than $1 million of fraudulent tax claims.

Following the deregistration of Mr Collins, Dr Chalmers said he was "absolutely furious, absolutely ropeable" about the breach of trust.

"We want to be able to consult in a meaningful way when changes to the tax system are in prospect," Dr Chalmers said.

"As a government that wants to be consultative where we can, this puts that sort of consultation at risk and so it puts the quality of economic decision-making and policy-making at risk as well."

After learning of the Collins breach, Dr Chalmers asked Board of Taxation chair Rosheen Garnon, Commissioner of Taxation Chris Jordan and Treasury to advise on implementing the James review and "any additional steps that we should be taking to protect the integrity of these important processes".

It is understood the government has received advice on ways to strengthen the ITPB's sanction and information gathering powers and enable it to publish more detailed reasons for sanctions and deregistrations.

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The Morrison government received the final report of the James review in October 2019 and publicly released the report and its response in November the following year.

But it held off on implementing the review's recommendations, which languished until the Albanese government provided an additional $30 million for the ITPB strengthen its compliance activities.

The legislation being introduced by the government this week is understood to make the ITPB financially independent of the Australian Taxation Office, ensure it has the scope to hold tax agents to account, close a loophole that allowed disqualified practitioners to work for a registered agent and make it easier for agents to keep up to date with registration requirements.