The Greens senator Barbara Pocock has accused police of conducting an “inadequate desktop assessment” about whether to investigate PwC’s tax advice scandal further in 2019, as the tax office and police blame each other for inaction.
Pocock made the remark in Senate estimates on Tuesday evening after Australian Taxation Office officials revealed they first alerted the Australian federal police of the suspected breach of confidentiality in 2018.
ATO commissioner Chris Jordan revealed its attempts to investigate tax minimisation schemes were hampered by PwC’s inappropriate claims of legal professional privilege, and the fact the breach of confidentiality was “not a tax offence”. The ATO lacks criminal investigative powers so was not able to investigate further, he said.
In January the Australian Financial Review first reported that PwC’s former head of international tax, Peter Collins, had been deregistered as a tax agent for sharing confidential information about a proposed tightening of tax laws with colleagues.
On Tuesday, Jordan said the ATO became aware in 2016 of a “handful of multinationals suspiciously and quickly seeking to restructure” in response to a new multinational tax avoidance law.
The ATO began audits because it was was concerned by “artificial schemes marketed by PwC” and discovered a matter of “significant concern” regarding Collins, he said.
The ATO referred information to the Australian federal police in 2018 and 2019, and formally referred it to the Tax Practitioners Board in July 2020.
Last week the Treasury referred the matter to the AFP, citing new evidence that had come to light including emails discovered by the tax board and tabled in Senate committee hearings earlier in May.
Jeremy Hirschhorn, the ATO’s second commissioner, said the ATO and AFP made a “joint decision” not to investigate the alleged misuse of confidential information in 2019.
“It is fair to say that the information in our possession was indicative that there may have been an offence but … after a year’s consideration, there was insufficient information to move,” he said.
Jordan then qualified this evidence: “When we say a joint decision, we weren’t in a position to get any further information that the AFP said they needed.
“We acknowledged, I suppose, rather than a joint decision not to do anything, [it was] more that we couldn’t provide information they needed to further their investigation.”
Hirschhorn agreed that the AFP was “aware we could not use our information powers to obtain more information”.
Pocock remarked that it seems “an inadequate desktop assessment” had been made by police.
In a statement, the AFP told Guardian Australia that in 2018 the ATO requested advice from the AFP in relation to the potential misuse of government information by PwC.
“The ATO sought advice on whether there was sufficient information to make a formal referral of the matter to the AFP for investigation,” it said. “A set of representative sample documents were provided to the AFP.
“The AFP assessed, based on the material that the ATO provided, [that] there was insufficient information in the material, to support a formal referral.
“In consultation and agreement with the ATO, the matter was closed in 2019.”
The AFP said the referral from Treasury on 24 May was the first “report of crime” it had received about the matter. “An investigation is under way and no further comment will be made.”
Asked by Greens senator Nick McKim about the AFP claim only “representative samples” were provided, Hirschhorn said it was “unhelpful to do a running commentary through the press”.
Hirschhorn said the ATO’s notices had produced an “extraordinary amount of information” about multiple tax schemes.
“Some information we received indicated we had concerns Mr Collins had breached the confidential Treasury process.
“We provided information to the AFP – I don’t want to get into more than that.”
Hirschhorn took on notice if the ATO had provided all information in relation to Collins. Jordan said when the AFP sought additional information it was provided but “we couldn’t use our taxation powers” to investigate.
Earlier, ATO officials said that Australia stood to lose $180m annually if restructures by multinational companies had been enacted.
But Jordan said the ATO had “stopped any tax loss from this egregious behaviour”.
Hirschhorn explained this was because the three companies which had restructured reversed those actions, and other companies decided against it.
Jordan said those companies were “all PwC clients” it has taken court action against: AB InBev, the owner of Carlton & United breweries; miner Glencore; and JBS, the Brazilian meat processing company.
