Tax risk management and the application of ethics by large Australian companies

This article reviews tax risk management practices of large Australian companies
to ascertain whether ethical considerations are presently, and if not, should be,
an element of those practices. An ethical framework, reflecting an agreed ethical
philosophy, does not appear to be applied by large Australian companies in setting a standard for consideration and deliberation on acceptable tax risk. This research considers whether a “socially responsible” company would be expected to embed an ethical framework in its tax risk management system, possibly one which would require tax decisions that comply with the “spirit of the tax law” rather than the “letter of the tax law”. It is proposed that a focus on compliance with the “spirit of the tax law” by large companies in making decisions about acceptable tax risk would discourage aggressive tax decision‑making and demonstrate a low tax risk appetite.