1. 30-10(5) - You must have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities that you undertake in the capacity of a registered tax agent or BAS agent

On 16 November 2022, after completing an investigation, the Tax Practitioners Board (the TPB) decided to impose an Order on PricewaterhouseCoopers (PwC) under section 30-20 of the Tax Agent Services Act 2009 (TASA).

The TPB found that PwC had breached subsection 30-10(5) of the Code of Professional Conduct in that PwC had failed to have in place adequate arrangements to manage conflicts of interest that arose in relation to its activities as a registered tax agent in the following circumstances:

1. Some of PwC’s partners and personnel, some who were registered tax agents and nominated as supervising registered tax agents for PwC, were engaged by Treasury due to their position as partners of PwC, in confidential consultations on proposed Australian tax legislation and policy positions intended to give effect to the Organisation for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) provisions, including the Multinational Anti-Avoidance Law (MAAL), Diverted Profit Tax (DPT) and Hybrid mismatch rules.

2. As a result of these consultations, these partners and personnel were privy to confidential information including how the proposed legislation and policy may impact the tax position of PwC’s existing clients as well as potential clients. This put PwC in a position of conflict due to the potential market advantage of having knowledge of this confidential information and the fact that it could be utilised to advance the position of its existing taxation clients as well as marketing its services to attract new clients.

3. Additionally, internal communications within PwC indicated an awareness amongst the internal PwC recipients, including PwC taxation partners, that the confidential knowledge gained from the consultations with Treasury would be leveraged to market PwC to a new client base and influence the structures of existing clients in a manner that may be perceived to circumvent the intent of the proposed legislation regarding the OECD BEPS provisions.

4. Despite the existence of signed CAs and secondment agreements by particular PwC partners and personnel specifying that the information could not be shared without prior approval from Treasury and the communications from Treasury being clear that the information was being disclosed on a confidential basis, some of the confidential information was shared with other PwC personnel who had not been authorised to receive the information and had not signed CAs. This extended to sharing the information with existing clients and potential clients of PwC.

5. In the circumstances, PwC would have, or should have been, aware of the perceived and actual conflict of interest which existed in relation to its duties and activities as a tax agent and it failed to ensure that there were adequate arrangements in place to manage these conflicts.

In consideration of the nature of the breach, the Board determined that an Order under section 30-20 of the TASA should be imposed on PwC requiring it to take the following actions during the 2023 and 2024 calendar years:

1. ensure that appropriate training is provided on a 6-monthly basis to relevant partners and staff on compliance with s 30-10(5) of the Code of Professional Conduct in the TASA and PwC’s policies on conflicts of interest, particularly including PwC’s policy for managing
conflicts of interest arising from engagements of partners and staff by Treasury, the Board of Taxation and/or other Australian Government agencies.

2. ensure that the Head of Regulatory Affairs (or their delegate) takes all reasonable steps to maintain the central register of confidentiality agreements, including regular status-checks with relevant partners and staff on the register.

3. ensure that the Chief Strategy, Risk and Reputation Officer (or their delegate) report every 6 months to the Executive on the management of the participation of relevant partners and staff in confidential tax consultations with Treasury, the Board of Taxation and/or other Australian Government agencies.

4. provide a compliance statement to the Tax Practitioners Board every 6 months from the date of this Order confirming:

a. that PwC has complied with the requirements detailed in (1), (2) and (3) above

b. the names of all relevant partners and staff who attended the training outlined in (1) above

c. the content of the training provided under (1) above.