Australian Banks Defend Their Corporate Tax Affairs, Essay Example

Taxation Essay Assignment 2015

The taxation system of Australia has been consistently scrutinized by its taxpayers as there are many pitfalls that give the means that are equitable to the government to increase revenue. Australia is the country that is envied by many countries that are underdeveloped. This is because of their abundant transport, healthcare and public service as well as the lifestyle that is carefree. Many Australians have become accustomed to this too. The main shortcomings of the system of Australia is the lack of neutrality, with relation to earners of high income and owners of small business, it is lobbying constantly towards the generation of baby boomer.[1] The present ageing population is in crisis and there is a negative gearing of properties of investment. There are many reforms that are sweeping and have been advised to correct these issues. However, it seems that nothing have been implemented in the taxation system of Australia to tackle this issue.[2]

There are many people who have vested their interests on Australian tax system. These rent seekers in present society for the taxation system of Australia thinks to be neutral. In my opinion the Australian taxation system favors small business and high income earners. In relation to the negative gearing, there are unfair deductible expenses and discretionary family trusts. The term negative gearing is that when there is a rental property purchase by the investor, but the total rental revenue is not enough to cope up with the interest on the borrowed money. High income earners are favored by this negative gearing because of the fact that when tax rate is higher than the tax rate is calculated on the taxable income.[3] So, there is more advantage if negative gearing. In regards to the family trusts, I think that is it unfair for the present policy of tax that allows high profit generators (with increased tax rates) to avoid tax by the way of considerable concessions. As these can be made available by the use of a family trust that is discretionary. On the other hand, if assets are ties up in a trust, the high income earner (the trustee) is able to distribute the money to family member of low income.[4]

As the Australian economy is growing, there is an increased pressure to control specific sectors on all levels of government whilst holding those factor to lag behind. The most effective measure to control this growth is with the help of tax implementation. This critique of investigation with the Fiscal and Taxation policies of Australian economy puts pressure on all governmental levels to control those factors that are lagging behind.[5] The main aim of taxation in any country is the redistribution of wealth. The basic principle of taxation which is to finance the expenditure of the government and to gather funds to use this money for the betterment and welfare of the country. With the help of taxation system, the Australian government aims to achieve macroeconomic stability and objectives. These are price stability, external balance, low unemployment, equal wealth distribution. The system of Australian tax is less developed when compared with the world. The taxation system of Australia comprises of 32% of the GDP it only acknowledges the taxes payable that are basic.[6]

The taxation system of Australia was inherited from British colonial era. It is a complex and convoluted taxation structure. As the Australian economy has become more productive, efficient and dynamic over the past decades, the taxation system hasn’t come up with the speed at which Austrian economy is developing. It has changed slowly and this is the reason that Australia’s personal tax rates are high.[7] Since, 1991 the government of Australia is struggling to find the perfect taxation system for them.[8] There are two main types of income taxation system. One is the system of progressive tax which is the Australian Income tax system. The Australian Income tax system hasn’t produced any desirable results. In 2007, we can see that Australian tax collection was derived from 10 taxes types. Around 10% of the tax revenue of tax was contributed by the 115 remaining taxes.

In short, the taxation system of Australia is very complex. One reason is that it has a good to service tax rate of 10%. The taxation structure of Australia is tiered it means the more the earnings the more will be the tax. This system comprises of the payments from various kinds like businesses and individuals that maybe required in the country to pay these tax charges to all levels of government i.e. state, federal and local. The main reason for the collection of tax in Australia is to facilitate the financial wealth redistribution. The most crucial of these taxes is the income tax system of Australia as it is collected by the Federal government thought the office of Australian Taxation. This acts an important facet for the economy of Australia, it has attracted the views that are divergent from many sectors of the society. On the other hand, the system of Australian tax has attracted negative views since the system is regarded as a political technique that is used by political parties to fulfil this agenda.

Bibliography

Farrell, Paul. 2015. ‘Australian Banks Defend Their Corporate Tax Affairs After Swiss HSBC Revelations’. The Guardian. http://www.theguardian.com/australia-news/2015/feb/10/australian-banks-defend-their-corporate-tax-affairs-after-swiss-hsbc-revelations.

Farrell, Paul. 2015. ‘Australian Tax Office Has Not Prosecuted Any HSBC Swiss Account Holders’. The Guardian. http://www.theguardian.com/news/2015/feb/12/australian-tax-office-has-not-prosecuted-any-hsbc-swiss-account-holders.

Hurst, Daniel. 2015. ‘Labor Spells Out Tax Avoidance Package Targeting Multinationals’. The Guardian. http://www.theguardian.com/australia-news/2015/mar/02/labor-spells-out-tax-avoidance-package-targeting-multinationals.

Lane, Rachael, and Rachael Lane. 2015. ‘Professors Dale Pinto And Kerrie Sadiq Join Australian Tax Review’. Sites.Thomsonreuters.Com.Au. http://sites.thomsonreuters.com.au/journals/2015/02/06/professors-dale-pinto-and-kerrie-sadiq-join-australian-tax-review/.

Reuters,. 2015. ‘Global Tech Giants Say ‘Under Review’ By Australia Tax Office’. http://www.reuters.com/article/2015/04/08/australia-tax-idUSL3N0X502620150408.

Taxreporter.com.au,. 2015. ‘Australian Taxation Reporter’. http://www.taxreporter.com.au/articles/featured-articles/myefo.

Taylor, Lenore. 2015. ‘Corporate Tax Chiefs Who Defend Level Of Compliance Are Linked To Legal Disputes’. The Guardian. http://www.theguardian.com/australia-news/2015/apr/08/corporate-tax-chiefs-who-defend-level-of-compliance-are-linked-to-legal-disputes.

Taylor, Lenore. 2015. ‘Joe Hockey: Australia Is ‘Losing Control Of Our Destiny’ Because Of Tax ‘Holes”. The Guardian. http://www.theguardian.com/australia-news/2015/mar/30/joe-hockey-australia-is-losing-control-of-our-destiny-because-of-tax-holes.

The Guardian,. 2015. ‘Tax Haven Amnesty Possible, Says Australian Taxation Office’. http://www.theguardian.com/world/2014/jan/20/tax-haven-amnesty-possible-says-australian-taxation-office.

TheAustralian,. 2015. ‘Apple Says It Pays All The Taxes It Owes’. http://www.theaustralian.com.au/business/technology/apple-says-it-pays-all-the-taxes-it-owes/story-e6frgakx-1227295656324.

[1] the Guardian,. 2015. ‘Tax Haven Amnesty Possible, Says Australian Taxation Office’.

[2] Taylor, Lenore. 2015. ‘Joe Hockey: Australia Is ‘Losing Control Of Our Destiny’ Because Of Tax ‘Holes”. The Guardian.

[3] Taylor, Lenore. 2015. ‘Corporate Tax Chiefs Who Defend Level Of Compliance Are Linked To Legal Disputes’. The Guardian.

[4] Reuters,. 2015. ‘Global Tech Giants Say ‘Under Review’ By Australia Tax Office’.

[5] Lane, Rachael, and Rachael Lane. 2015. ‘Professors Dale Pinto And Kerrie Sadiq Join Australian Tax Review’. Sites.Thomsonreuters.Com.Au.

[6] Farrell, Paul. 2015. ‘Australian Banks Defend Their Corporate Tax Affairs After Swiss HSBC Revelations’. The Guardian.

[7] Hurst, Daniel. 2015. ‘Labor Spells Out Tax Avoidance Package Targeting Multinationals’. The Guardian.

[8] Farrell, Paul. 2015. ‘Australian Tax Office Has Not Prosecuted Any HSBC Swiss Account Holders’. The Guardian.