Source: Australian Tax Forum Journal Article
Published Date: 1 Apr 2016
Facilitation payments to foreign public officials are legal and tax deductible in Australia and New Zealand, within certain parameters. In light of increasing corruption in both countries, this study questions the reasonableness of allowing tax deductions for payments that are classified as bribes by many international bodies.
There are multiple issues with allowing facilitation payments to foreign public officials to be tax deductible. First, if the value of the benefits must be small or minor, as required by legislation, the primary argument in support of the retention of their tax deductible status " that they are necessary to ensure businesses remain competitive " becomes questionable. Denying tax deductions for small payments is unlikely to have a significant impact on the competitiveness of an entity. Second, there is a lack of clarity in relation to what is permissible in making the facilitation payment.
Words and phrases such as ensure or expedite, or wholly or mainly allow for broad interpretation of the legislation. Third, and perhaps most importantly, in New Zealand there is no need for the expenditure to have a nexus with the income earning process in order to claim a deduction for a facilitation payment. There appears to be no valid policy reason for why this expenditure is not required to meet the general test for deductibility.
More by Lisa Marriott
Indigenous perspectives on and in tax research policy - Journal 01 Oct 2022
Tax as a solution for irrigation water scarcity, quality and sustainability: case studies in Australia and New Zealand - Journal 01 Oct 2021
Water taxes: a systematic literature review with application to Australia and New Zealand - Journal 01 Dec 2020
Income equalisation: Is all fair in primary production and tax law? - Journal 01 Jul 2019
Book review - Comparative taxation: Why tax systems differ - Journal 01 Dec 2018
Sugar taxes viewed through the lens of the New Zealand Treasury Living Standards Framework - Journal 01 Sep 2018
Retirement savings and gender: An Australasian comparison - Journal 01 Dec 2013
New Zealand retirement saving and taxation: Lessons from Australia - Journal 01 Apr 2010
Taxation of retirement savings: New Zealand - the extreme social experiment - Journal 01 Jan 2007
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags