Tax Liability Essay Example
Taxation is a crucial exercise that the government dictates through its legal institutions. Therefore, individuals should become tax compliant as required by the law. Similarly, company owners should ensure that it contributes its taxes and those of its workers and shareholders. Failure of the company or individual to abide by the tax regulations leads to a legal action with varying penalties. The government monitors taxation through the Australian Tax office where there are records of all tax-compliant individual and companies and also defaulters. In companies, employees pay their taxes through a check-off system where the management deducts the required amount of money from their income and forward the total amount to the office of the state Revenue. The government entrusts the company management to undertake the responsibility of promoting tax compliance (Australia and Owens 23). Consequently, when a case of tax evasion reaches the court, the government through its tax office argue that the liability is on directors of the company.
The case of James and Megan illustrates the experiences that the company directors encounter when the tax authorities report cases of tax evasion. The question of whether they are liable or not lies with the responsibilities of the directors and the laws that relate to the issue. Ordinarily, a company management deducts the required rates from the income of its employees and dividends from its shareholders before forwarding to the tax office. Legally, ignorance of the law does not exempt individuals from the consequences of its violation. In that case, James and Megan are guilty of violating the law despite the fact that the latter is not an expert in business with little knowledge on the corporations acts related to management. Evidently, the directors failed to exercise diligence and care in their execution of their duties resulting in the conflict between the tax office and the company. The tax assessment act renders the two directors liable because they have the duty of governing all major activities in the business (Australia and Owens 26).
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Australia, & Owens, J. (2012). Advisory report on the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013.
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