An Ethical Framework for Tax Decision Making by Corporations in Australia

Business ethics 1
Business Ethics and Social Responsibility
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Business ethics 2
Outline
1. Introduction.
2. Summary Of The Issues Raised From An Ethical Perspective.
3. How Individual Ethical Judgements Are Made And How They May Vary.
4. References
5. Appendix

Business ethics 3
Introduction
The title of the article is “An Ethical Framework for Tax Decision Making by
Corporations in Australia”. According to Appendix A, Catriona Lavermicocca and Michael
Quilter published the article on 12th of April 2018. The article talks about ethical decision
making in the management of large corporations in Australia whereby companies evade taxes
due to the current culture and structure of tax collection. The article articulates how this kind of
practices shows the lack of ethical decision making in the leadership of these companies
(Appendix A). It as well outlines why manager’s moral standards are also of significance in the
management of corporates as well as the companies themselves embracing the need to have core
values incorporated in the company’s code of conduct. The article finally illustrates how a
company with good values cannot benefit from a manager who does not have high standards of
ethics and professionalism.
Summary of the issues raised from an ethical perspective.
From the article, several issues are raised. First, how companies that have a substantial
presence in Australia should be ethical when it comes to tax payment and compliance. The
companies either pay little tax or evade tax altogether. Therefore, this means that the government
has to come up with complex tax structures and systems to keep up with the tax evaders, which
comes at a cost regarding acquiring and administration (Appendix A). Therefore, the whole issue
of tax evasion and non-compliance places an ethical obligation on the corporate’s leadership and
decision makers. The article goes on to suggest that nowadays most companies operate with the
conservative approach to corporate ethics whereby the companies are based on profit and
revenue generation, and no much concern is placed on their social responsibility and obligations

Business ethics 4
in which the society demands them to be held accountable. This tax avoidance when viewed in a
social responsibility perspective, transfers the tax burden to other people in the community.
Therefore, the article suggests that there should be an ethical framework for tax risk management
that guides the decision making in the corporate world which can be embedded in the company’s
code of ethics (Appendix A). This framework will help the companies eliminate the uncertainties
and complexities that arise in law application, therefore, dictating where the company sits
regarding the acceptable level of tax risks.
Key Ethical Issues Raised in the Article
Registered companies in Australia are supposed to act responsibly and ethically
according to the principles as well as recommendations of the corporate governance council. For
instance, the third principle outlines that just being ethical and responsible in meeting tax
obligations is not enough; it also includes being an exemplary corporate citizen (Szerletics,
2015). It again adds that registered company’s core values must be included in the code of
conduct utilised in company’s decision making. Therefore, the company’s decision makers
require proper governing principles and values that instils principled reasoning in that legal and
ethical principles are established at the board level and demonstrated through the organisational
structure (SHAH, 2014).
On the other hand, it is quite a difficult task doing away with the current ethical culture
and introducing a new one more particularly in connection with tax non-compliance and
decision-making. In most large Australian companies, tax managers and chief financial officers
are the ones responsible with decision making on matters concerning task risk therefore apart
from the company’s ethics, principles and code of conduct, individual ethics are also of utmost
importance (In Nucci, In Narváez, & In Krettenauer, 2014). Generally, most if not all chief