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Crackdown on dodgy tax advisors after PwC scandal

Diego Fedele, Joel Carrett, Dan Himbrechts/AAP PHOTOS

Renegade tax advisors are in the treasurer's sights with new laws set to boost the integrity of the system.

Treasurer Jim Chalmers has released draft legislation designed to give regulators greater power after the damaging PwC scandal exposed shortcomings in the system.

The consultancy firm came under fire after revelations staff shared confidential tax information from the Treasury department to drum up new business.

The misconduct crackdown would work to prevent a repeat of the scandal and regulators would be given the power to hold parties to account, Dr Chalmers said.

"This will help rebuild confidence in the industry and the vast majority of advisers who do the right thing," he said.

The legislation will increase the maximum penalty for advisors and firms found to be promoting tax avoidance schemes from $7.8 million to over $780 million and expand the laws so they are easier to apply.

They will also remove secrecy laws that prevent regulators acting and enable the Australian Tax Office and Tax Practitioners Board to refer ethical misconduct by advisors to professional associations so they can face disciplinary action.

The board will also be given more time to complete complex investigations and whistleblowers will receive greater protections.

Submissions on the draft legislation close on September 29 and more reforms are expected within months.