The Federal Government is launching a crackdown on tax adviser misbehaviour.

A new initiative has been launched as a direct response to the recent PwC tax leak scandal, which exposed significant flaws in the regulatory framework.

The centrepiece of the change is a radical overhaul of penalties. 

Advisers and firms found promoting tax exploitation schemes, once subjected to penalties of $7.8 million, will now face fines exceeding $780 million.

The new fines should substantially diminish incentives for using confidential government information to aid clients in tax avoidance strategies, as PwC did. 

Treasurer Jim Chalmers, together with the finance minister, attorney-general, and assistant treasurer, says public trust in the financial system must be rebuilt. 

The reforms also extend the Australian Taxation Office's window for pursuing legal action against suspected misconduct from four to six years. 

Additionally, constraints stemming from tax secrecy laws will be removed, equipping regulators with more effective tools to counteract incidents similar to the PwC breach.

In addition to imposing hefty penalties, the reforms intend to fortify whistleblower protections. 

Individuals providing evidence of misconduct will enjoy enhanced safeguards. The Tax Practitioners Board will also gain an extended two-year period to conduct complex investigations. 

To increase transparency surrounding misbehaviour by firms and agents, the public register of practitioners will be upgraded.

Also, the Treasury department will embark on a comprehensive two-year review of regulations applicable to large consulting, accounting, and auditing firms.