The NSW government says it will introduce multi-million dollar fines for consultants who disclose confidential tax information, as the sector reels in the wake of the PwC scandal.

It comes after Treasury secretary Steven Kennedy announced on Wednesday that the federal government has referred the PwC matter to the AFP for consideration of criminal charges.

PwC’s former head of international tax, Peter Collins, improperly used confidential Commonwealth information, Dr Kennedy said in a statement on Wednesday.

Dr Kennedy also said emails form the Tax Practitioners Board tabled in parliament earlier this month showed “the significant extent of the unauthorised disclosure of confidential Commonwealth information and the wide range of individuals within PwC who were directly and indirectly privy to the confidential information”.

“In light of these recent revelations and the seriousness of this misconduct, the Treasury has referred the matter to the Australian Federal Police to consider commencement of a criminal investigation.”

Minister threatens ‘severe penalties’

NSW Finance minister Courtney Houssos said the state also consults with industry bodies on tax policy and legislation as a way of getting expert input into changes in the tax regime.

These bodies include the NSW Law Society, the Tax Institute, Chartered Accountants Australasia and New Zealand, CPA Australia and the Property Council.

Ms Houssos said rogue operators will not be tolerated.

She said she is working with Chief Commissioner of State Revenue Scott Johnston to make sure advisors and organisations who share confidential tax information for commercial advantage will face severe penalties.

“We are developing a range of measures that will impose significant penalties for individuals and entities that unlawfully use or disclose sensitive or confidential tax information provided by the government,” she said in a statement.

“We are going to pursue these changes swiftly and introduce penalties in the order of millions of dollars.

“These proposed multi-million-dollar penalties should serve as a firm warning for organisations and businesses that we expect confidentiality arrangements to be honoured.”

Mr Johnston has already been in touch with chairs of liaison groups in relation to the matter, the minister said.

Update: On May 29 CEO Kristin Stubbins apologised on behalf of PwC for breaching the trust placed in the company.

In an open letter published in the AFR Ms Stubbins said PwC Australia has directed nine partners to go on leave, effective immediately, pending the outcome of ongoing investigations, including members of the firm’s executive board and governance board.

CEO Tom Seymour stood down as CEO on May 8.