Qantas Accounting Practices and Tax Avoidance
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This assignment analyzes Qantas' historical accounting practices, particularly highlighting their use of normative accounting theories to potentially evade taxes. It examines how the company's focus on maximizing shareholder value through accounting adjustments might have contributed to tax avoidance. The analysis also considers the ethical implications of these practices and their impact on stakeholders.
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Case Analysis of Qantas not paying taxes
Assignment 1
Student Name: Student ID:
Unit Name: Unit ID: ACCT 19082
Date Due: Professor Name:
Page | 1
Assignment 1
Student Name: Student ID:
Unit Name: Unit ID: ACCT 19082
Date Due: Professor Name:
Page | 1
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Executive Summary
Australian government allows various provisions for corporations to get benefits of tax breaks.
Qantas is one such corporate who had not been paying taxes for a long period of time. The scope
of this analysis here undertakes detailed analysis pertaining to IASB normative accounting
theory and positive accounting theory and stakeholder theory. Stakeholder managerial theory and
positive accounting theory has been used to explain ways that these corporations have utilized in
order to get benefits of tax breaks.
Page | 2
Australian government allows various provisions for corporations to get benefits of tax breaks.
Qantas is one such corporate who had not been paying taxes for a long period of time. The scope
of this analysis here undertakes detailed analysis pertaining to IASB normative accounting
theory and positive accounting theory and stakeholder theory. Stakeholder managerial theory and
positive accounting theory has been used to explain ways that these corporations have utilized in
order to get benefits of tax breaks.
Page | 2
Table of Contents
Executive Summary.........................................................................................................................2
1.0 Introduction...........................................................................................................................4
2.0 Analysis.....................................................................................................................................5
2.1 Qantas and tax discussion......................................................................................................5
2.2 Understanding of theories......................................................................................................6
2.3 Literature Review for IASB Normative Accounting Theory.................................................8
2.3.1 Historical Development of IASB....................................................................................8
2.3.2 Benefits of Normative Accounting Theory.....................................................................9
2.3.3 Problems of IASB...........................................................................................................9
2.4 Literature Review of Stakeholder Theory............................................................................10
2.5 Application of selected theory.............................................................................................10
3.0 Conclusion...............................................................................................................................10
4.0 Reference Lists........................................................................................................................11
Page | 3
Executive Summary.........................................................................................................................2
1.0 Introduction...........................................................................................................................4
2.0 Analysis.....................................................................................................................................5
2.1 Qantas and tax discussion......................................................................................................5
2.2 Understanding of theories......................................................................................................6
2.3 Literature Review for IASB Normative Accounting Theory.................................................8
2.3.1 Historical Development of IASB....................................................................................8
2.3.2 Benefits of Normative Accounting Theory.....................................................................9
2.3.3 Problems of IASB...........................................................................................................9
2.4 Literature Review of Stakeholder Theory............................................................................10
2.5 Application of selected theory.............................................................................................10
3.0 Conclusion...............................................................................................................................10
4.0 Reference Lists........................................................................................................................11
Page | 3
1.0 Introduction
Australian press has been recently covering a number of news regarding large corporations that
pay little to no taxes to the Australian Government (Baldvinsdottir, Mitchell & Nørreklit, 2010).
Australian Government provides several tax breaks and provision for depreciation to
corporations for which they need not pay any taxes. Qantas in one such company that has not
paid taxes in spite of reporting continuous profits. Australian Financial Review has a paywall
that provides these provisional breaks to companies. Qantas CEO Alan Joyce is one of the most
prominent supporters for Turnbull Government has proposed business tax cut, due to which he
has not paid any taxes for the last 10 year period. One in five of Australia’s largest companies
have not been paying taxes for past three year period as revealed by ABC. The airline being one
of the leading players within the aviation industry along with Virgin and Tigerair has not paid
taxes (Garvare & Johansson, 2010). The scope of analysis here analyses the situation proposed
here Normative Accounting theory and Stakeholder theory has been incorporated for analysis of
the situation. A brief incorporation of literature review is undertaken for the purpose of
developing deeper insights into the theory.
2.0 Analysis
2.1 Qantas and tax discussion
Qantas Airways is a flagship carrier of Australia. It is one the largest airline in terms of fleet size
and international destination coverage and is the third oldest airlines in the world. The company
was founded in the year 1920 and has its hubs based in various locations of Brisbane Airports,
Sydney airports and Melbourne Airports. The Company is highly profitable and has a large fleet
Page | 4
Australian press has been recently covering a number of news regarding large corporations that
pay little to no taxes to the Australian Government (Baldvinsdottir, Mitchell & Nørreklit, 2010).
Australian Government provides several tax breaks and provision for depreciation to
corporations for which they need not pay any taxes. Qantas in one such company that has not
paid taxes in spite of reporting continuous profits. Australian Financial Review has a paywall
that provides these provisional breaks to companies. Qantas CEO Alan Joyce is one of the most
prominent supporters for Turnbull Government has proposed business tax cut, due to which he
has not paid any taxes for the last 10 year period. One in five of Australia’s largest companies
have not been paying taxes for past three year period as revealed by ABC. The airline being one
of the leading players within the aviation industry along with Virgin and Tigerair has not paid
taxes (Garvare & Johansson, 2010). The scope of analysis here analyses the situation proposed
here Normative Accounting theory and Stakeholder theory has been incorporated for analysis of
the situation. A brief incorporation of literature review is undertaken for the purpose of
developing deeper insights into the theory.
2.0 Analysis
2.1 Qantas and tax discussion
Qantas Airways is a flagship carrier of Australia. It is one the largest airline in terms of fleet size
and international destination coverage and is the third oldest airlines in the world. The company
was founded in the year 1920 and has its hubs based in various locations of Brisbane Airports,
Sydney airports and Melbourne Airports. The Company is highly profitable and has a large fleet
Page | 4
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size of 124 flights and covers almost 85 destinations globally. There are various profitable
subsidiaries of the airlines as well that operates across shorter destinations. The Company sells
billions of dollars’ worth tickets in Australia itself. The Company has been posting historical
losses in order to make them eligible for using Australian tax laws. They offset historical losses
against future profits indefinitely. They however continued to pay departure taxes, alcohol and
fuel excise, payroll tax, FBT and GST. The airlines operate within highly competitive industry in
which losses are more frequent with capital investment being expensive. Political scenario of
Australia is debating over corporate tax cut rates as Australia is highly dependent on personal
income taxes. Corporate taxes are collected from very few large Australian companies (Coetsee,
2010). Amongst 50 companies operating in Australia almost 17 companies had not paid
corporate taxes. Thus, majority of tax burden fell on 33 companies, raising taxes to only $20
billion. Taxes have been collected from four giant banks and two miners and retailers
Wesfarmers and Woolworths.
According to legislation that was passed in the year 2013, the Australian Tax Office currently
publishes annual records of total revenues collected, taxes payable as well as taxable incomes for
2,000 Australian companies that have turnover more than $100 million. Qantas has been ranked
as the biggest tax avoider in Australia according to Tax Office transparency data. The company
had ranked in Brobdingnadian with $46 billion in total income that resulted in $264 million as
taxable income, however there has been no taxes paid by the company. It has effectively built up
enormous amounts of tax losses and was offset against huge profits that were made. The airlines
were considered to be cyclical in making losses for various years prior to making huge profits.
The airlines had shown $3 billion as tax losses in lean years when jet fuel prices were high.
Though at that time they were making heroic revenues yet they had not been paying any sort of
Page | 5
subsidiaries of the airlines as well that operates across shorter destinations. The Company sells
billions of dollars’ worth tickets in Australia itself. The Company has been posting historical
losses in order to make them eligible for using Australian tax laws. They offset historical losses
against future profits indefinitely. They however continued to pay departure taxes, alcohol and
fuel excise, payroll tax, FBT and GST. The airlines operate within highly competitive industry in
which losses are more frequent with capital investment being expensive. Political scenario of
Australia is debating over corporate tax cut rates as Australia is highly dependent on personal
income taxes. Corporate taxes are collected from very few large Australian companies (Coetsee,
2010). Amongst 50 companies operating in Australia almost 17 companies had not paid
corporate taxes. Thus, majority of tax burden fell on 33 companies, raising taxes to only $20
billion. Taxes have been collected from four giant banks and two miners and retailers
Wesfarmers and Woolworths.
According to legislation that was passed in the year 2013, the Australian Tax Office currently
publishes annual records of total revenues collected, taxes payable as well as taxable incomes for
2,000 Australian companies that have turnover more than $100 million. Qantas has been ranked
as the biggest tax avoider in Australia according to Tax Office transparency data. The company
had ranked in Brobdingnadian with $46 billion in total income that resulted in $264 million as
taxable income, however there has been no taxes paid by the company. It has effectively built up
enormous amounts of tax losses and was offset against huge profits that were made. The airlines
were considered to be cyclical in making losses for various years prior to making huge profits.
The airlines had shown $3 billion as tax losses in lean years when jet fuel prices were high.
Though at that time they were making heroic revenues yet they had not been paying any sort of
Page | 5
taxes. When financial statements of Qantas was analysed for the years 2016-2017, there were
found two items that had been ‘Adjusted for Temporary Differences’. Mostly Qantas had
adjusted its Property Plant and Equipment and Intangible Assets from $18 million in 2016 to $92
million in 2017. Another adjustment that was undertaken by the company was Revenue Received
in Advance which was -$64 million to become $16 million. The company had made effective use
of timings in order evade maximum taxes loss for the company. Profits that were deemed to be
$1.424 billion had gone down to become $1.376 billion as tax losses for zero tax position. In
2017, there was profitability to the amount of $1.181 billion that became $523 million.
2.2 Understanding of theories
Accounting theories presents a framework for understanding of treatment of accounting heads
(Parmar et al., 2010). Every corporation need to follow a type of accounting theory such as to
able to complete its book of accounts. It provides fundamental and basic ideas along with
assumptions for understanding practices of financial accounting. The IASB Conceptual
Framework provides a normative accounting theory. According to this framework a recognition
and measurement system is developed within a consistent framework (Freeman et al, 2010). It
accommodates qualitative features that financial information should ideally include. There are
eight phases in which IASB accommodates its conceptual framework, by way of their qualitative
features, defining of its elements, measuring, and reporting and entity concepts and so on. It
assumes normative accounting framework according to which resources that are owned by
corporations are from past events and they are expected to provide economic returns in the
future. As per this framework in an accounting period there is bound to be decrease in economic
Page | 6
found two items that had been ‘Adjusted for Temporary Differences’. Mostly Qantas had
adjusted its Property Plant and Equipment and Intangible Assets from $18 million in 2016 to $92
million in 2017. Another adjustment that was undertaken by the company was Revenue Received
in Advance which was -$64 million to become $16 million. The company had made effective use
of timings in order evade maximum taxes loss for the company. Profits that were deemed to be
$1.424 billion had gone down to become $1.376 billion as tax losses for zero tax position. In
2017, there was profitability to the amount of $1.181 billion that became $523 million.
2.2 Understanding of theories
Accounting theories presents a framework for understanding of treatment of accounting heads
(Parmar et al., 2010). Every corporation need to follow a type of accounting theory such as to
able to complete its book of accounts. It provides fundamental and basic ideas along with
assumptions for understanding practices of financial accounting. The IASB Conceptual
Framework provides a normative accounting theory. According to this framework a recognition
and measurement system is developed within a consistent framework (Freeman et al, 2010). It
accommodates qualitative features that financial information should ideally include. There are
eight phases in which IASB accommodates its conceptual framework, by way of their qualitative
features, defining of its elements, measuring, and reporting and entity concepts and so on. It
assumes normative accounting framework according to which resources that are owned by
corporations are from past events and they are expected to provide economic returns in the
future. As per this framework in an accounting period there is bound to be decrease in economic
Page | 6
benefits from depletion of assets. Therefore, asset depreciation can be treated as a loss or as a
negative economic activity and need to be depicted in books of accounts.
Positive Accounting theory (PAT) is connected with explaining of accounting practices that are
prevalent. It is a branch of academic accounting research that aims at explaining accounting
practices (Godfrey et al, 2010). It is against normative accounting principle that aims at optimal
accounting standards. It provides a contractual view of the organization, with having various
contracts together. Accounting in this theory is regarded as a method that provides making of
contracts and then following their execution as well. The theory has not been deemed effective as
it is unable to diagnose true value of the firm’s several contracts. The theory is selected by
certain managers for making true representation of a firm’s performance.
Legitimacy theory of accounting states that every business is bound by social contracts. It means
that a firm has agreed to provide performance according to multiple social contracts that they
need to abide by. In return the firm receives certain rewards and approval for its objectives for its
existence (Harrison & Wicks, 2013). The theory clearly states that any form operating within the
market need to abide by all social contracts that it has agreed to perform; therefore its existence
is dependent on its capability to perform towards various contracts. This theory totally
disapproves in case a firm evades taxes that it needs to pay towards its social existence.
Stakeholder theory (the managerial branch) is a widely used theory for managers. The theory
states that managers have legitimate interests in all appropriate stakeholders, hence balancing of
stakeholder’s interests is crucial for a firm. A manger operates within the framework of an entity
and the entity has received funds from several stakeholders’ group, now it is in the best interests
of the managers to provide maximum possible benefits to all stakeholder groups.
Page | 7
negative economic activity and need to be depicted in books of accounts.
Positive Accounting theory (PAT) is connected with explaining of accounting practices that are
prevalent. It is a branch of academic accounting research that aims at explaining accounting
practices (Godfrey et al, 2010). It is against normative accounting principle that aims at optimal
accounting standards. It provides a contractual view of the organization, with having various
contracts together. Accounting in this theory is regarded as a method that provides making of
contracts and then following their execution as well. The theory has not been deemed effective as
it is unable to diagnose true value of the firm’s several contracts. The theory is selected by
certain managers for making true representation of a firm’s performance.
Legitimacy theory of accounting states that every business is bound by social contracts. It means
that a firm has agreed to provide performance according to multiple social contracts that they
need to abide by. In return the firm receives certain rewards and approval for its objectives for its
existence (Harrison & Wicks, 2013). The theory clearly states that any form operating within the
market need to abide by all social contracts that it has agreed to perform; therefore its existence
is dependent on its capability to perform towards various contracts. This theory totally
disapproves in case a firm evades taxes that it needs to pay towards its social existence.
Stakeholder theory (the managerial branch) is a widely used theory for managers. The theory
states that managers have legitimate interests in all appropriate stakeholders, hence balancing of
stakeholder’s interests is crucial for a firm. A manger operates within the framework of an entity
and the entity has received funds from several stakeholders’ group, now it is in the best interests
of the managers to provide maximum possible benefits to all stakeholder groups.
Page | 7
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2.3 Literature Review for IASB Normative Accounting Theory
2.3.1 Historical Development of IASB
Traditional approaches of development of accounting theory were done according to
authoritarian or pragmatic approach. The approaches could be categorised as inductive,
deductive, ethical, sociological, electric and economical in nature. The normative accounting t
theory was developed by MacNeal (1939), Paton and Littleton (1940), Littleton (1953),
chambers (1966) and Ijiri (1975). Advocates of normative accounting theory were focused on
recognizing and measuring in accountancy. Initially there have been various disagreements over
hypothesis of these theories leading to different proposal which later was established as it is
known currently. The International Accounting Standards Board (IASB) was formed in the year
2001 in order to replace International Accounting Standard Committee. IASB is an independent
private sector body responsible for developing and approving of International Financial
Reporting Standards (IFRS). The IASB framework was built primarily on the economic
approach where economic welfare was considered to be off primary importance. IASB provides
a relatively new approach by merging all requirements that posed challenge in the last approach
for resolving difficulties. Baldvinsdottir, Mitchell and Nørreklit (2010) identified IASB to
incorporate good practices that allows inductively deriving from principles. The IASB
framework of normative principles applies to all financial statements of commercial, industrial
and business reporting entities in private or public sector.
Page | 8
2.3.1 Historical Development of IASB
Traditional approaches of development of accounting theory were done according to
authoritarian or pragmatic approach. The approaches could be categorised as inductive,
deductive, ethical, sociological, electric and economical in nature. The normative accounting t
theory was developed by MacNeal (1939), Paton and Littleton (1940), Littleton (1953),
chambers (1966) and Ijiri (1975). Advocates of normative accounting theory were focused on
recognizing and measuring in accountancy. Initially there have been various disagreements over
hypothesis of these theories leading to different proposal which later was established as it is
known currently. The International Accounting Standards Board (IASB) was formed in the year
2001 in order to replace International Accounting Standard Committee. IASB is an independent
private sector body responsible for developing and approving of International Financial
Reporting Standards (IFRS). The IASB framework was built primarily on the economic
approach where economic welfare was considered to be off primary importance. IASB provides
a relatively new approach by merging all requirements that posed challenge in the last approach
for resolving difficulties. Baldvinsdottir, Mitchell and Nørreklit (2010) identified IASB to
incorporate good practices that allows inductively deriving from principles. The IASB
framework of normative principles applies to all financial statements of commercial, industrial
and business reporting entities in private or public sector.
Page | 8
2.3.2 Benefits of Normative Accounting Theory
There are several identified benefits associated with normative accounting theory as proposed by
IASB most integral being in their fundamental approach. Scott, W. R. (2015) identifies that
normative accounting theory allows accountant policy makers to make decisions based on
theoretical principles. It is a more deductive process which allows arriving at specific policies.
Setyorini and Ishak (2012) propose that major drive in accounting policy can be done with
principles not by prevailing accounting treatment. In many cases application of normative theory
of accounting allows creation of provision for profits that would otherwise not have been
possible in their absence.
2.3.3 Problems of IASB
The normative accounting theory provides with a number of benefits to accountants to treat their
assets and other accounts. However there are certain challenges associated with normative
accounting theory as well. According to Kabir (2011) normative accounting theory does not
guide accountants for using specific accounting principle. Every situation needs discrete
evaluation for application of the same across a firm.
2.4 Literature Review of Stakeholder Theory
2.4.1 History of Stakeholder Theory
The stakeholder theory was detailed by Mitroff in the year 1983. According to this theory
stakeholder group of a business entity is important as they encompass owners, employees,
suppliers, financiers, communities. Stakeholder view encompasses strategy that includes market
Page | 9
There are several identified benefits associated with normative accounting theory as proposed by
IASB most integral being in their fundamental approach. Scott, W. R. (2015) identifies that
normative accounting theory allows accountant policy makers to make decisions based on
theoretical principles. It is a more deductive process which allows arriving at specific policies.
Setyorini and Ishak (2012) propose that major drive in accounting policy can be done with
principles not by prevailing accounting treatment. In many cases application of normative theory
of accounting allows creation of provision for profits that would otherwise not have been
possible in their absence.
2.3.3 Problems of IASB
The normative accounting theory provides with a number of benefits to accountants to treat their
assets and other accounts. However there are certain challenges associated with normative
accounting theory as well. According to Kabir (2011) normative accounting theory does not
guide accountants for using specific accounting principle. Every situation needs discrete
evaluation for application of the same across a firm.
2.4 Literature Review of Stakeholder Theory
2.4.1 History of Stakeholder Theory
The stakeholder theory was detailed by Mitroff in the year 1983. According to this theory
stakeholder group of a business entity is important as they encompass owners, employees,
suppliers, financiers, communities. Stakeholder view encompasses strategy that includes market
Page | 9
based view and resource based views. Crane and Ruebottom (2011) proposes that stakeholder
view of accounting according to managerial perspectives aims at highlighting stakeholders of the
company and then arriving at conditions that are used to treat them. The stakeholder theory had
been discussed by various scholars mostly by Freeman. Most scholars highlighted that interests
of stakeholders plays a relevant role in this theory. Internal stakeholder plays a critical role in
diagnosing important areas that are relevant towards generating their maximum benefits.
2.4.2 Benefits of Stakeholder Theory
Stakeholder theory has several advantages which allow it to be applied across multiple
organizations. Internal stakeholders are said to have vested interests in financial wellbeing of the
company. External stakeholders do not share similar interests but has concerns ways in which
business operations will affect the community in general. Garvare and Johansson (2010)
identified that catering to stakeholder’s interests is primary to businesses. Only in case a business
is capable of effectively catering to the interests of its internal stakeholder group greater will be
capabilities of stakeholders be vested in the company. Stakeholders offer mentoring advices to
the business allowing the business to grow and prosper in a proper manner to avoid making
costly mistakes. Accounts prepared according to this theory takes into consideration interests of
such stakeholder group. This allows the business to reap maximum possible benefits from it.
Stakeholders anticipate various things that can go wrong in a business, from their rich experience
that they come from. They are able to provide various retained benefits for the business such that
they are able to operate in an effective manner.
Page | 10
view of accounting according to managerial perspectives aims at highlighting stakeholders of the
company and then arriving at conditions that are used to treat them. The stakeholder theory had
been discussed by various scholars mostly by Freeman. Most scholars highlighted that interests
of stakeholders plays a relevant role in this theory. Internal stakeholder plays a critical role in
diagnosing important areas that are relevant towards generating their maximum benefits.
2.4.2 Benefits of Stakeholder Theory
Stakeholder theory has several advantages which allow it to be applied across multiple
organizations. Internal stakeholders are said to have vested interests in financial wellbeing of the
company. External stakeholders do not share similar interests but has concerns ways in which
business operations will affect the community in general. Garvare and Johansson (2010)
identified that catering to stakeholder’s interests is primary to businesses. Only in case a business
is capable of effectively catering to the interests of its internal stakeholder group greater will be
capabilities of stakeholders be vested in the company. Stakeholders offer mentoring advices to
the business allowing the business to grow and prosper in a proper manner to avoid making
costly mistakes. Accounts prepared according to this theory takes into consideration interests of
such stakeholder group. This allows the business to reap maximum possible benefits from it.
Stakeholders anticipate various things that can go wrong in a business, from their rich experience
that they come from. They are able to provide various retained benefits for the business such that
they are able to operate in an effective manner.
Page | 10
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2.4.3 Problems of Stakeholder Theory
Though stakeholder’s theory has several advantages, there are certain disadvantages as well of
the theory. Most of the times it has been criticized that stakeholder’s focus on their self-interests.
Especially in case of external stakeholders this can be applied as community groups or political
persons generally might not act in best interests of the company. Wagner Mainardes, Alves and
Raposo (2011) highlights that internal investors might also face threat from fear of losing money
hence can opt for his self-benefits and needs. It has often been noticed that disadvantage of
stakeholder theory is personal interests of stakeholder group. Business owners for the purpose of
their self-interests might often block business permissions or take other steps that might act in
the negative interests of the corporation.
2.5 Application of selected theory
The business case of Qantas has been analysed and in order to obtain a suitable justification for
the tax treatment accounting theory has been evaluated. The most applicable theory for this
business case is IASB normative accounting theory and stakeholder’s theory from managerial
perspectives. As per normative theory, the treatment of various heads has been considered
distinctly. Lukka (2010) identified that treating separate heads distinctly will allow generating
greater benefits for the firm. They have treating corporate income tax losses of $3 billion from
earlier years. The Group had earlier complained that it had not been furnished any guidance
regarding ways to prepare its financial statements hence it had prepared it as per their best
knowledge. Therefore, they applied normative theory and stakeholder’s theory for better
understanding related to the same. In recent years of paying taxes, the group claims that they
Page | 11
Though stakeholder’s theory has several advantages, there are certain disadvantages as well of
the theory. Most of the times it has been criticized that stakeholder’s focus on their self-interests.
Especially in case of external stakeholders this can be applied as community groups or political
persons generally might not act in best interests of the company. Wagner Mainardes, Alves and
Raposo (2011) highlights that internal investors might also face threat from fear of losing money
hence can opt for his self-benefits and needs. It has often been noticed that disadvantage of
stakeholder theory is personal interests of stakeholder group. Business owners for the purpose of
their self-interests might often block business permissions or take other steps that might act in
the negative interests of the corporation.
2.5 Application of selected theory
The business case of Qantas has been analysed and in order to obtain a suitable justification for
the tax treatment accounting theory has been evaluated. The most applicable theory for this
business case is IASB normative accounting theory and stakeholder’s theory from managerial
perspectives. As per normative theory, the treatment of various heads has been considered
distinctly. Lukka (2010) identified that treating separate heads distinctly will allow generating
greater benefits for the firm. They have treating corporate income tax losses of $3 billion from
earlier years. The Group had earlier complained that it had not been furnished any guidance
regarding ways to prepare its financial statements hence it had prepared it as per their best
knowledge. Therefore, they applied normative theory and stakeholder’s theory for better
understanding related to the same. In recent years of paying taxes, the group claims that they
Page | 11
have not changed their accounting practices. Moreover as per the usage of theories, the firm has
made use of varied rates of depreciation in relation to property, plant and equipment and aircraft.
There is an argument that amount of depreciation for both accounting and taxation is expensed
and has not been altered (Jensen, 2010). Legitimate theory and positive theory of accounting is
contrasted to the belief proposed in this financial accounting system that is been accommodated
for the current scope of business. They would have led to different kind of result hence they have
not been considered over stakeholder’s theory or normative theory of accounting.
3.0 Conclusion
Evaluation of relevant theories of accounting allowed arriving at necessary decision related to
tax evasion. Accounting heads and managers in Qantas had been making use of extensive use of
normative theories of accounting for each and every case. Moreover, effective accountants
present in the company are able to organize books of accounts and heads of accounts to depict
financial losses for the company. Therefore, by making effective usage of normative accounting
theories, the firm had been able to gain considerable advantages to evade taxes. Secondly
accounting managers within the company were focused to gain greater benefits for their
stakeholder group, meaning shareholders, investors, employees as well. In order to provide
greater benefits to stakeholder group they had made maximum possible adjustments in their
accounts to retain profitability for the company. Though Qantas has started to corporate taxes,
yet it has not bridged the gap that it had created through its earlier years.
Page | 12
made use of varied rates of depreciation in relation to property, plant and equipment and aircraft.
There is an argument that amount of depreciation for both accounting and taxation is expensed
and has not been altered (Jensen, 2010). Legitimate theory and positive theory of accounting is
contrasted to the belief proposed in this financial accounting system that is been accommodated
for the current scope of business. They would have led to different kind of result hence they have
not been considered over stakeholder’s theory or normative theory of accounting.
3.0 Conclusion
Evaluation of relevant theories of accounting allowed arriving at necessary decision related to
tax evasion. Accounting heads and managers in Qantas had been making use of extensive use of
normative theories of accounting for each and every case. Moreover, effective accountants
present in the company are able to organize books of accounts and heads of accounts to depict
financial losses for the company. Therefore, by making effective usage of normative accounting
theories, the firm had been able to gain considerable advantages to evade taxes. Secondly
accounting managers within the company were focused to gain greater benefits for their
stakeholder group, meaning shareholders, investors, employees as well. In order to provide
greater benefits to stakeholder group they had made maximum possible adjustments in their
accounts to retain profitability for the company. Though Qantas has started to corporate taxes,
yet it has not bridged the gap that it had created through its earlier years.
Page | 12
4.0 Reference Lists
Baldvinsdottir, G., Mitchell, F., & Nørreklit, H. (2010). Issues in the relationship between theory
and practice in management accounting. Management Accounting Research, 21(2), 79-
82.
Crane, A., & Ruebottom, T. (2011). Stakeholder theory and social identity: Rethinking
stakeholder identification. Journal of business ethics, 102(1), 77-87.
Coetsee, D. (2010). The role of accounting theory in the development of accounting
principles. Meditari Accountancy Research, 18(1), 1-16.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., & De Colle, S. (2010). Stakeholder
theory: The state of the art. Cambridge University Press.
Garvare, R., & Johansson, P. (2010). Management for sustainability–a stakeholder theory. Total
quality management, 21(7), 737-744.
Godfrey, J., Hodgson, A., Tarca, A., Hamilton, J., & Holmes, S. (2010). Accounting theory.
Harrison, J. S., & Wicks, A. C. (2013). Stakeholder theory, value, and firm
performance. Business ethics quarterly, 23(1), 97-124.
Jensen, M. C. (2010). Value maximization, stakeholder theory, and the corporate objective
function. Journal of applied corporate finance, 22(1), 32-42.
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Lukka, K. (2010). The roles and effects of paradigms in accounting research. Management
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Wagner Mainardes, E., Alves, H., & Raposo, M. (2011). Stakeholder theory: issues to
resolve. Management decision, 49(2), 226-252.
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resolve. Management decision, 49(2), 226-252.
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