Labor is putting forward a proposal to increase the penalties for tax avoidance scheme promoters, as the Australian Taxation Office faces legal battles over its latest crackdown on multinationals.

Speaking later today at the Melbourne Institute Conference, shadow assistant treasurer Andrew Leigh will announce a planned doubling of penalties for those promoting tax avoidance schemes should Labor take office.

"Some of the most egregious forms of tax avoidance are available to those who can enlist a brain behind the operation — a promoter," he told ABC News.

"This aggressive tax planning for hire drains away revenue and erodes public confidence in the tax system.

"At the moment, the maximum penalties for promoting tax avoidance schemes are just over $1 million for an individual, and $5.25 million for a corporation.

"A Shorten Labor government would increase the promoter penalty regime to allow the Federal Court to fine the higher of $2.1 million (an individual) or $10.5 million (for a body corporate), or three times the consideration received or receivable, directly or indirectly, by the entity or its associates in respect of the scheme."

Dr Leigh will argue that the current sanctions do not match up to penalties in other areas of the law.

"Tax avoidance has severe consequences for growth and equity in Australia," he added.

"When individuals or companies siphon tax away from the Government, they are increasing the tax burden on honest individuals and businesses and undermining the vital services that support us all."

A question of privilege

The Opposition is also planning to ask the Australian Taxation Office whether it needs greater powers to access privileged information that it suspects could be enabling tax avoidance, as it faces a High Court battle with mining giant Glencore on what could be a landmark case on legal professional privilege.

The ATO is trawling through emails detailing tax schemes that came to light in the Paradise Papers, 13.4 million leaked confidential documents from Bermudian law firm Appleby, showing how major corporations took advantage of offshore tax havens.

Labor will use the ATO's appearance at Senate Estimates later this month to ask whether it wants to see further reforms, after reports the agency is examining whether tax promoter penalties can be applied to the big four accounting firms — PwC, Deloitte, EY and KPMG — that can potentially exploit legal professional privilege to keep secret the advice they give to clients.

"Labor will use Senate Estimates to ask the ATO to elaborate on their recent comments on professional legal privilege, including what reforms, if any, including legislative changes, the ATO believes are necessary," Dr Leigh told the ABC.

A spokesman for Assistant Treasurer Stuart Robert said the ATO will respond to the Glencore proceedings against it.

"The ATO believes it is not only able, but compelled, to use information it obtains through sources such as the Paradise Papers and Panama Papers," the minister's spokesman said.

"Ordinary Australians would also naturally expect the ATO to use such information."

Glencore challenges ATO access to Paradise Papers

Swiss-based mining giant Glencore has launched a High Court bid to force the ATO to return its copies of the Appleby files.

The files detail how Glencore moved billions of dollars of global assets into offshore tax structures, and Glencore wants Australia's tax commissioner to be forced to return documents it claims were obtained illegally in last year's Paradise Papers leak.

Glencore is arguing the documents are subject to legal professional privilege and were obtained through a "cyberbreach" and shared with the ATO.

An initial directions hearing is currently set for October 30.

The impact, if an injunction is upheld by the court, would be that tax commissioner Chris Jordan would be unable to use these documents in determining whether to hit the company with tax bills.

Glencore said it had written to the ATO on "multiple occasions" asserting privilege and seeking the return of the documents.

"Legal professional privilege is a fundamental right that protects legal advice provided between lawyer and client," the company said in a statement.

"We, like anybody else, have the right to seek legal advice from our lawyers and for that advice to remain between lawyer and client."

Glencore said it complied with all relevant tax legislation in Australia and in other jurisdictions.

"Glencore has developed, in part, from a series of historical acquisitions, which led to a complex corporate structure," it responded.

"Over time we have sought to simplify our business and have engaged with the Australian Taxation Office on many occasions throughout this process."

ATO claims $5.6b in extra tax from anti-avoidance provisions

The more detailed scrutiny of multinational tax affairs follows the ATO's Tax Avoidance Taskforce saying it will collect $5.6 billion in extra tax in just two years under tougher anti-avoidance laws introduced by the Federal Government.

Deputy commissioner Mark Konza said in a statement the ATO was "running a fine-toothed comb over two-thirds of all corporate tax paid in any given year", with 71 audits covering 67 multinationals currently underway.

The ATO was also focusing on wealthy individuals and associated groups, including trusts and aggressive tax planning.

This includes reviewing or auditing 700 taxpayers, he added.

Under legislation brought in a decade ago during the Operation Wickenby project, corporate entities who promote a tax avoidance scheme can face fines of up to $4.5 million, and individuals also face significant penalties.

The ATO has had success imposing promoter penalties in the courts in recent years, but the question now is whether the laws could be used against companies if the ATO suspects that tax advice given under legal professional privilege is being abused.

Dr Leigh said Labor wanted to ensure the laws were working effectively.

"Labor applauds the ATO's recent successful court actions on promoter penalties, and supports efforts to ensure the laws works as intended," he said.

Big four accounting firms resist changes to privilege

But some big four tax partners have cautioned against any watering down of legal professional privilege for tax advice.

EY tax policy leader Alf Capito said legal professional privilege was fundamental to the proper functioning of the tax and legal system.

"Every person should have the right to speak openly to their advisers without fear that this communication can be used against them," he said.

"That's a longstanding principle, and without it, the proper functioning of the tax system is seriously impaired."

Mr Capito said, while he supported having tax promoter penalties for mass-marketed tax avoidance schemes, "there's a clear distinction" to be made between this and tax or legal advice.

"In fact the promoter penalties legislation itself makes it clear that tax advice on its own cannot be evidence of promoting tax schemes," he said.

Mr Capito noted that, in the Glencore court case, the ATO could use facts it needed to determine if there had been tax avoidance, but what the mining giant was arguing was that it could not use technical advice.

"The ATO is saying, 'we need to get access to the technical advice to get the facts'," Mr Capito said.

"They [the ATO] want to overturn a longstanding principle to get something factual, which the existing law already enables them to access.

"It appears that they don't like the fact that [legal professional] privilege is being used to withhold the advice. But that advice should not prevent them from resolving the [tax] dispute."

He said it was a case with major implications and that "the courts may well provide a solution".

A spokesman for Deloitte said if there was legislative change, the firm would "work within laws set by government and rules set by regulators".