The results of the survey conducted by the doctoral candidate are interesting and point out why businesses are reluctant to put extra effort into being tax compliant. The results are contrary to what our experience is in focusing on a tax risk management process - there are clear benefits to taxpayer businesses.
eJournal of Tax Research (2009) vol. 7, no. 2, pp. 106-133
The Managerial Benefits of Tax Compliance:
Perception by Small Business Taxpayers
Philip Lignier ( Lecturer in Taxation, School of Accountancy, Queensland University of Technology. This paper is derived from my PhD thesis that I completed as a doctoral candidate at Atax, UNSW.
Research undertaken in 2006 – 2007 investigated the perception of managerial benefits of tax compliance by small business taxpayers. Survey data from a sample of 300 small business taxpayers and responses to semi-structured interviews of ownermanagers were examined. The study found that a majority of small business taxpayers recognised that tax compliance
activities led to better record keeping and to an improved knowledge of their financial affairs. However, there seemed to be a general reluctance by respondents to accept the idea that benefits could be derived as a result of complying with tax. The findings of this study are important as it is the first research that systematically investigated managerial benefits and their perception by small business taxpayers in Australia.
TWO QUOTES APPEAR BELOW:
“If we didn’t have tax, keeping records of our debtors would be the only thing
I would do. I would prepare accounts in-house only; […] there would be no
point in having an accountant.” TCE participant A
“If we didn’t have tax, I would probably do it all [the accounting] in house.
But I admit that I would be a bit concerned about the accuracy of the records
as nobody would check the work. At least the accountant does.” TCE