Any adviser or consultancy firm found guilty of promoting tax avoidance schemes could be slapped with a radically increased maximum penalty of just over $780 million, under proposed tax integrity changes.
It all blew up in January when PwC's then-international tax head, Peter Collins, was revealed to have allegedly shared privileged multinational tax avoidance information from the Tax Office to others in the firm.
Pointing to "severe shortcomings" in Australia's regulatory frameworks, Treasurer Jim Chalmers will on Wednesday release four sets of draft legislation for public consultation designed to prevent such a scandal from happening again, and "if it does, our regulators have what they need to hold parties to account."
"This will help rebuild confidence in the industry and the vast majority of advisers who do the right thing," Dr Chalmers said in a statement.
Under the draft legislation, the maximum penalties for advisers and firms that promote tax avoidance schemes would be increased from $7.8 million to over $780 million.
Tax promoter penalty laws - to deter the promotion of tax avoidance and tax evasion schemes - would also be expanded to apply to advisers and firms, while the time limit for the Tax Office to take promoter penalty cases before the Federal Court is being increased from four years to six years after the conduct occurred.
The government is also proposing to open up tax secrecy laws that were a barrier to regulators acting in response to PwC's breach of confidence and assist the Tax Office and Tax Practitioners Board to refer ethical misconduct to professional associations for disciplinary action.
There is also greater proposed protection for whistleblowers who have evidence of tax agent misconduct and are taking it to the Tax Practitioners Board.
The board itself, under the proposed changes, will be further strengthened by getting up to 24 months to complete complex investigations, while its public register of practitioners would be improved.
The new legislation adds to earlier legislative work to strengthen the Tax Practitioners Board, a $30 million funding boost to the board, and changes to commonwealth procurement frameworks.
Feedback on the draft legislation is being sought before September 29.
An independent report into the scandal, headed by former Telstra boss Ziggy Switkowski, into PwC's governance, accountability and culture is due to be released this month.
In a statement, PwC said it would not hesitate to take the recommended actions, "including, where appropriate, exiting further people and partners from the firm."
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