Tax Avoidance and the Shadow Economy

Running Head: TAXATION LAW AND PRACTICE
Taxation Law and Practice
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TAXATION LAW AND PRACTICE
Table of Contents
Answer to Question A.....................................................................................................................3
The Black Economy:...................................................................................................................3
Shared Economy:.........................................................................................................................3
Answer to Question B......................................................................................................................4
Answer to Question C......................................................................................................................9
Reference.......................................................................................................................................12

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TAXATION LAW AND PRACTICE
Answer to Question A
The Black Economy:
The Black economy refers to that part of the economy that prospers at the expense of the
Government of a country. The part of the economy that is accounted for can be referred to as the
white economy as it falls within the ambit country rules, regulations and tax net. Exactly
opposite of this segment of the economy is known as black economy. The economic activities of
a country that are outside the purview of the country’s rules, regulations are known as black
economy (Schneider & Enste, 2013). These economic activities are conducted without following
the rules and regulations of commerce of the country and are not accounted for taxation
purposes. However, it is important to note that such activities need not be illegal thus, there can
be legal activities too, which are part of black economy of a country. The characteristics of goods
and services of a transaction would determine whether these are legal or illegal activities. For
example a worker who is involved in construction work if paid under the table, the payment
under the table will be part of black economy however, the construction work though legal. The
fact that the payment has been made to the worker under the table to avoid payment of tax, both
the person who has paid for construction work and the worker have flouted the rules and
regulations to avoid payment of taxes (Guttentag, 2015).
Shared Economy:
In an economic system in which the assets as well services can be shared between private
individuals of the country in exchange of fees or free of cost is known as a shred economy. To
put it other way the individuals in a shared economy have the ability to borrow or rent assets
owned by other individuals of the country. This system of shared economy has been in use since

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TAXATION LAW AND PRACTICEthe advent of society. Over the years the ways of sharing have only changed but the objectives
have more or less been the same, i.e. to enrich the lives of people of a country. In modern day
and age of internet the sharing have become easier and happening at larger level than ever
before. Under used assets are used by individuals and groups to make money in a shared
economy thus, there are numerous possibilities in a shared economy which is not available in
closed economy (Schneider, 2015).
Answer to Question B
A closer look at the Australian economy will help us to understand the importance of
business organizations operating in accordance with the concept of shared economy. Though in
general most of the top business houses in the country follows the more traditional method of
doing business however, the contribution to the overall development of the Australian Economy
made by business organizations and firms operating under shared economy concept cannot be
denied. Airbnb, Snapgoods, Dog Vacay, Relay Rides, Task Rabbit, Getaround Liquid are few of
the well-known names in the shared economy in the country that have showed other
organizations a way different from traditional concept of doing business. Thus, these
organizations and businesses can be termed as the pioneers of shared economy concept in the
country (Dunleavy, 2015).
TaskRabbit works as a bridge between service seekers and service providers through its
online portal and mobile market place. With its online and mobile market place it attracts the
freelance labors and workers to engage their efforts in a concerted manners towards satisfying
the demands of services and different types of works in the market place. The main objective
with which the organization had come into force was to match the freelance labor with the
demands in the local market. As the concept prevails in shared economy, it is about sharing the