Tax Avoidance by Qantas Airways: An Analysis of Legitimacy Theory and Stakeholder Theory

Running head: FINANCIAL ACCOUNTING THEORY
Financial Accounting Theory
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FINANCIAL ACCOUNTING THEORY
Executive Summary
The paper reviews the incidence of tax avoidance by large corporations in Australia with
special reference to the operations of Qantas Airways. This evasion of tax is owing to liberal
concessions of tax in Australia, provisions of depreciation and ability to offset losses of the
firms against past as well as future income. This study also selects legitimacy theory as well
as stakeholder theory for explaining this current incidence of tax evasion and comprehending
CSR issues. Furthermore, the current paper also throws light on the history of the theories
along with its advantages/disadvantages and the application in the area under deliberation.

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FINANCIAL ACCOUNTING THEORY
Table of Contents
Introduction................................................................................................................................3
Qantas and tax discussion..........................................................................................................3
Identification of two chosen theories with justification.............................................................4
Literature reviews for each theory.............................................................................................7
Application of the chosen theory.............................................................................................11
Conclusion................................................................................................................................14
References................................................................................................................................15

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FINANCIAL ACCOUNTING THEORY
Introduction
The study at hand elucidates in detail the case of avoidance of tax by the airline company
Qantas Airways. In essence, the study explicate illustratively about the uproar in the media
regarding incidence of avoidance of tax by other large corporations. Moving further, the
study identifies the appropriate theories that can be linked to the incidence of tax evasion.
The two different theories identified include stakeholder theory and the legitimacy theory
with justification for selection of these specific theories. Furthermore, the study also performs
a review of literature that necessarily covers the entire history of the theory, along with
advantages of the specific theory along with the issues associated to using the same. Moving
further, this study also illustrates the application of these two theories in the current area
under consideration.
Qantas and tax discussion
Qantas is one of the largest Australian corporations that have paid no tax for at least the last
five years. In essence, the CEO of the business enterprise Qantas, Alan Joyce is one of the
most prominent supporters of the proposed tax cut by the Turnbull Government. In essence,
Alan Joyce is a chief executive officer that presides over a corporation that has not paid
corporate tax for approximately 10 years. In spite of generating earnings of around $106.4
billion, the company has averted payment of tax on that specific bounty since the time period
of 2009. This is primarily due to the generous concessions of tax in Australia, provisions of
depreciation and capability to offset losses of the business concern against past as well as
future earnings. Evaluation of the incidence of tax avoidance reveals that this behaviour of
tax by the corporation can be considered to be consistent with other large business concerns
(Scott, 2015). Corporate tax transparency data confirmed in different email exchanges with