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Report On Paying Of No Corporate Tax

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Question: Discuss about the Paying Of No Corporate Tax.     Answer: Statement of the problem: The main problem regarding this report is to find out the problems and issue relating to the non-payment of corporate tax by many companies. In order to state any clear statement on the topic, it is important to evaluate the norms of paying taxes and the aspects of non-payment of corporate taxes to this effect (Dyreng, Hoopes and Wilde 2016). Corporate tax is a direct tax that has been imposed on the corporate sectors regarding their income and capital wealth. This tax can be referred as income tax or capital tax. In general, such taxes are imposed on the company if the following terms are fulfilled: The company has been incorporated within the territorial jurisdiction of the country; The company is earning profit within the territorial jurisdiction of the country; Any foreign companies that are professing business permanently from the country; Any company deemed as resident of the country. Taxes are imposed on net profit and the rate of tax is depending on the territorial capacity of each country. in Australia, corporate taxes owe a greater significance as a major portion of the country’s taxes are derived from corporate tax (Christensen et al. 2015). However, it has been observed that most of the big companies are avoiding these tax criteria. According to a report published by the ABC news, a major portion of the aviation industry and large corporate tycoons has not paid corporate taxes. It has been observed from the report that the liberal approach of the Australian government has enabled the companies to get relief from historical losses they have sustained in the recent past (Cen et al. 2017). Further, the tax system of Australia allows the companies to make certain offset against their future profits. These techniques helped them to be a part of the zero corporate tax liabilities. the main problem that has been arisen in this case is that the airlines industry are quite expensive in nature and huge risks are involved in it. the airlines industry is falling under the purview of highly competitive industry and losses are quite frequent in this industry and the capital investment is quite huge (Aronson, Lambert and Tremblay 2016). It has been observed that the tax rate in Australia is imposing on the corporations in a disproportionate manner.   Legislation: The main governing Act regarding the levy of corporate tax in Australia is Income Tax Assessment Act 1986 and Income Tax Assessment Act 1997. Corporate taxes are depending on the profits of the company. A sum up of 30% has been imposed on the net profits of the companies; however, the said tax rate has been reduced by 25% in the year 2016 by the Australian government. However, according to the Act, rate of the tax is depending on the rate of profit a company has been earned (Armstrong et al. 2015). Dilemma arose in case where the companies are running in losses. It has been observed that the companies had to face serious loss in the last financial year in Australia and the aviation industry had to consume serious damage due to this. According to section 165 of the Income Tax Assessment Act 1997, the corporate tax will be levied on annual earning of the companies. The companies are under an obligation to pay taxes to the government. The companies should have to face trouble in case of non-payment of corporate tax (Richardson, Taylor and Lanis 2015). However, problem arises when the companies have to face troubles due to financial downturn and the taxation policies of the government have become quite liberal due to the same. It has been reported that many companies had not paid any taxes since 2013 and the tax burden in Australia become high. Further, it has been observed that many companies are running with profits at the present condition and still are not paying taxes. It has been mentioned by the amendment provision of Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 that the rate of lower corporate tax limit should be limited. According to this Bill, the small business entities can enjoy the tax rate of 27.5%.     Facts of the case: Allegations have been made against Qantas regarding evasion of taxes. It has been observed that many airlines companies including Qantas do not pay corporate taxes on regular basis. Many reporters have analyzed the facts and stated that the Australian government has allowed the aviation industries not to pay corporate tax because the industry was running in loss. It has been observed that Qantas has delivered 18% net profit and the amount of the same has been reached $607 million. It has been stated by the corporate heads of the aviation industries that losses are quite frequent in case of aviation industry and many airlines companies are running into loss (Richardson 2015). No corporate tax liabilities will give certain relief to the companies as the rate of tax is depended on the net capital of the company and it is true that huge capitals are invested in airlines companies. If the tax burdens are imposed on the companies mandatorily, they will face great difficulties due to this. Therefore, the governmental policies regarding the tax imposition on the airlines companies are quite liberal in nature. further, it has been contended by Chief Executive of Qantas, Alan Joyce that the company had to face serious financial trouble during the past decades. ABC has analyzed the payment of no taxes as the tax evasion and it has been found that the reporters have failed to consider the losses that the company has to face during the financial crisis. Further, ABC has failed to evaluate the principle of the tax system (Armstrong, Glaeser and Kepler 2016). It has been mentioned that the tax system is attempt to make an offset regarding the tax liabilities. in addition to this, it can be stated that the rate of taxes will depend on the profits; therefore, th
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