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PwC faces penalties, including possible jail time

  • Written by Michael Adams, Professor of Corporate Law & Head UNE Law School, University of New England
PwC faces penalties, including possible jail time

What penalties does the consulting giant PricewaterhouseCoopers face for sharing confidential government tax policy information and (in its words) betraying the public’s trust[1]?

At most, there’s possible jail time for the PwC partners who the company says shared the confidential information. There’s also the possibility of fines. But there’s also the possibility of nothing happening. Part of the problem is that what happened involves two different pieces of government legislation.

Read more: Consultants like PwC are loyal to profit, not the public. Governments should cut back on using them[2]

Tax office suspicions

The PwC saga has its roots in decisions made when Joe Hockey was treasurer in late 2013 and wanted to stop tax avoidance by multinational companies. The Treasury engaged consultants under contract to help draft the laws that would plug loopholes, each signing a confidentiality agreement.

One of the consultants was then-PwC Australia tax partner, Peter Collins, who shared information with PwC personnel at a time when (again in the words of PwC itself) it had a culture of aggressive marketing in its tax business.

The Tax Office grew suspicious when a number of multinational firms reorganised their affairs very quickly after the tax changes were announced in the May 2015 budget to escape the provisions.

It wanted to alert the Treasury, with whom Collins had signed the agreement, but was (ironically) stymied by the confidentiality provisions of its own act.

Section 355-25[3] of the Taxation Administration Act makes it an offence to disclose information relating to an individual’s tax affairs to another entity.

The penalty for the tax officer who discloses the information is two years in jail.

Read more: Grattan on Friday: the PwC scandal should be ripe for the National Anti-Corruption Commission's attention[4]

The limited powers of the legislation

An alternative might have been to commence a prosecution itself under Section 8ZJ[5] of the Taxation Administration Act, but that section only relates to tax offences, and breaching confidentiality is not a tax offence.

Had the Treasury known what the Tax Office knew, it could have sought an injunction to enforce its confidentially clause through the courts, but it didn’t know at the time, and (as it happened) entered into a second and third confidentiality agreement with Collins in 2016 and 2018.

When the Tax Office sought information from the big four accounting firms – Deloitte, Ernst & Young (EY), KPMG and PwC – about their involvement in the marketing of the new avoidance schemes, only one of them, PwC, invoked legal privilege in order not to comply on the ground that its documents were privileged legal documents.

Pen and calculator lying on desk
PwC used legal privilege to stop release of its legal documents. Shutterstock[6]

The Tax Office then sought communications between PwC partners not protected by legal privilege. The trove of documents subsequently tabled in parliament suggest (in PwC’s words[7]) that Collins

breached confidentiality in connection with tax consultations with the Department of Treasury and the Board of Tax.

In 2018, the Tax Office referred the matter to the Australian Federal Police, who were unable to take the matter further because of lack of evidence. In 2020, the Tax Office referred it to the Australian Tax Practitioners Board, which deregistered Collins for two years for “integrity breaches[8]”.

Last month, the Treasury referred the matter to the Australian Federal Police again to consider commencing a criminal investigation[9].

What might come of it?

Section 122.4[10] of the Criminal Code makes it an offence to communicate information if the person obtained the information by having been a Commonwealth officer or engaged to perform work for a Commonwealth entity and the person is under a duty not to disclose the information.

The penalty is imprisonment for two years.

On Monday, PwC provided a Senate committee with the names of four partners[11] it said were involved in the confidentiality breaches, as well as the names of partners it had directed to go on leave pending the outcome of its own investigation.

It also provided the names of an extra 63 current or former partners and staff it said received at least one email containing the confidential information.

More may well come to light. Whatever the penalties turn out to be, it is becoming clear that cutting corners and breaching confidentiality can have huge consequences. It is dangerous to be a servant to two masters.


  1. ^ betraying the public’s trust (
  2. ^ Consultants like PwC are loyal to profit, not the public. Governments should cut back on using them (
  3. ^ Section 355-25 (
  4. ^ Grattan on Friday: the PwC scandal should be ripe for the National Anti-Corruption Commission's attention (
  5. ^ Section 8ZJ (
  6. ^ Shutterstock (
  7. ^ PwC’s words (
  8. ^ integrity breaches (
  9. ^ a criminal investigation (
  10. ^ Section 122.4 (
  11. ^ four partners (

Authors: Michael Adams, Professor of Corporate Law & Head UNE Law School, University of New England

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