The Australian Taxation Office and consultancy giant PwC Australia have reached a settlement over “false legal professional privilege claims in response to formal notices”, separate to a scandal involving the misuse of confidential government tax plans.
PwC first revealed the confidential settlement to a New South Wales parliamentary inquiry on Wednesday but did not disclose any details, leading the NSW Greens to warn the company may have secured “a sweetheart deal” with the ATO before the full scale of a scandal involving the misuse of government data was revealed.
An ATO spokesperson would not reveal what matter the “false legal professional privilege claim” related to, but Senate hearings have heard the claims are sometimes used to frustrate or delay official government inquiries about tax matters.
“The ATO’s settlement with PwC, as disclosed yesterday to the NSW parliament, was not related to the Collins breach of confidentiality in a Treasury process,” the ATO spokesperson said.
“As previously mentioned, the ATO referred the Collins matter to the Tax Practitioners Board and has at no stage attempted to frustrate their investigation.”
The ATO spokesperson said that while all settlements are confidential, it wanted to be as transparent as possible.
“Settlements are an important element of the administration of the tax system because they provide a cost-effective and fair way to resolve disputes and lock in future compliance. The ATO cannot litigate all disputes,” the spokesperson said.
“Significant settlements are reviewed by an ex-judge as part of the Independent Assurance of Settlement process to ensure they are fair and reasonable for the Australian community.”
PwC’s chief risk and ethics leader, Jan McCahey, confirmed the settlement in response to questions on notice from Greens MLC Abigail Boyd, who is a member of the NSW parliamentary committee examining consultants.
“There was a settlement between PwC and the ATO in March 2023. We are legally unable to disclose the details of this settlement,” McCahey wrote.
Boyd said PwC’s “disclosure raises more questions than it answers” and called for further transparency.
The settlement was not disclosed by PwC’s acting chief executive, Kristin Stubbins, during a hearing of the NSW parliamentary inquiry last month, although she was not directly asked about any deals.
It was also not disclosed by senior ATO officials at Senate estimates hearings in May, although second commissioner Jeremy Hirschhorn acknowledged the agreements.
“Our ability to do confidential settlements is a really important part of the conduct of the tax system,” Hirschhorn told the May hearing.
PwC’s latest communication with the NSW inquiry reveals an internal investigation, conducted by former Telstra chief executive Ziggy Switkowski, may be delayed.
“Dr Switkowski is targeting providing his report to us by 18 August,” McCahey wrote. “However, there is a prospect Dr Switkowski will require additional time to complete the report and we will not receive it until a later date.
“PwC will release the report in September once we have had an opportunity to consider it and formulate our initial response to Dr Switkowski’s recommendations.”
