Question

The purpose of the task is for you to demonstrate high-level critical reflection and analytical reasoning skills in the context of the application of Australian taxation law and taxation law policy. You must undertake academic research which demonstrates the following:
1. An in-depth your understanding of how the specific tax law applies,
2. The policy context of the law and if relevant how other jurisdictions deal with similar issues,
3. Critical reflection as to whether the law achieves its stated purpose aligns with principles of good tax policy or could be improved/amended. These critical reflections should be supported by the research you have undertaken as well as your own independent thought.

Topic:

International Tax Avoidance – The avoidance and/or minimization of tax by large multi-national corporations are of great concern to Governments and tax administrators. Identify and discuss at least one common method multi-national corporations might use to avoid tax in Australia. Then identify and critically evaluate at least one current strategy implemented by the Government and/or the ATO that is used to prevent this.

Answer 1

There has been many tricks the big companies follows to avoid taxes in Australia.

Below are some of the ways this is done.

1. Investing in the TAX heaven countries.

These countries are called as tax heaven because these countries do not leak out any information to another countries about the money that has been invested by the foreign countries in these countries.

Hence the companies that are In the Australia send money to the tax heaven countries and manages to save a lot in the taxes.

2. Skull companies

This is another command way of saving a lot of taxes in Australia. The companies’ opens a subsidiary that is actually is a skull company.

This means that such companies do not have any employee and are just opened to transfer some of the income from the parent company to the subsidiary company and the taxes are saved.

Methods to control tax evasion.

1. Tax evasion form.

The ATO has issued a new form that is called “Tax evasion form”. This form is used to report some other person activity that has been seemed to be of money laundering or tax evasion.

This form is submitted to the ATO by another person and then ATO take care of the information and begins with the investigation.

2. Check of shell companies

In resent year shell companies has increased many times, this is hence seen by the government that such companies are closed as they are just created to take the tex benefit.