Tax office denies trying to avert board probe into PwC

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The Australian Tax Office has denied pressuring the Tax Practitioners Board to call off an investigation into PwC breaches of confidential Treasury data, as Treasury officials were described as “sleeping at the wheel”.

A Senate inquiry into the use of consulting firms was told on Wednesday of a heated meeting between the ATO and the Tax Practitioners Board on September 1, 2021, after The Australian Financial Review reported the tax office had pressured the board to call off the investigation into former PwC partner Peter Collins’ use of confidential information after being contacted by US tech giants.

Tax commissioner Chris Jordan accused the Tax Practitioners Board of unlawfully seeking confidentially settlements between the tax office and multinational companies. Credit: Alex Ellinghausen

“We did not tell them to back off … In fact, we were very keen that they did a review on Mr Collins and PwC,” the ATO’s second commissioner, Jeremy Hirschhorn, told a Senate committee on Wednesday.

But he did concede that the tax office warned the Tax Practitioners Board about seeking confidential tax agreements it had made with tech companies.

“Our ability to do confidential settlements is a really important part of the conduct of the tax system,” Hirschhorn said. By seeking confidential settlements from taxpayers, the board could have put at risk “the sense the confidence” taxpayers have that their information would remain confidential.

Tax Practitioners Board chairman Peter de Cure told the committee he was surprised at the ATO’s approach.

De Cure said the tax office offered “clear and unmistakable views on how we were investigating the matter”, but confirmed that the ATO withdrew its concerns after receiving advice the board was acting lawfully and within its powers to investigate.

“I don’t think we felt pressure not to investigate,” he said. “Nothing turned on that discussion.”

Treasury officials said they became aware of a possible breach in September 2018, several months after Mr Collins signed a new confidentiality agreement. The Senate committee was told Treasury had very little information on the possible breach at the time, and they passed that on to the Australian Tax Office for its investigation.

But Greens senator Barbara Pocock said further precautions should have been taken.

“A possible breach of something with a criminal consequence comes to you and you don’t have alarm bells go off? I am shocked,” Pocock said. “That is inappropriate. That is sleeping at the wheel in my view, this is a very important matter with millions and millions of dollars.”

Treasury deputy secretary Roxanne Kelley told the inquiry that a review of secrecy provisions would prevent a repeat of information not being able to be shared between the department and the ATO.

Also on Wednesday, Facebook owner Meta confirmed the Financial Review’s report that it was one of the tech giants using PwC for tax advice on the Multinational Anti-Avoidance Law, but denied it knew the firm’s advice was based on illegally obtained information.

“Facebook had no knowledge that any of the advice provided by PwC in regard to the MAAL [Multinational Anti-Avoidance Law] was based upon improperly obtained information,” a Meta spokesman said.

“Facebook did not seek advice from PwC on how to comply with the MAAL until after Treasury issued the draft legislation, which is why we were surprised to learn of PwC’s alleged conduct.

Facebook co-operated with the TPB [Tax Practitioners Board] investigation and our external legal advisers responded directly, as we would for any regulatory inquiry.”

Microsoft, meanwhile, said PwC did not advise it on tax matters related to the scandal. The tax was labelled the “Google tax” – highlighting the tech giant’s reputation as an aggressive tax avoider.

Google was approached for comment.

With Tim Biggs and AAP

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