John Peterson was a minority shareholder in Big Ltd. where Barry Savage was a director. John felt the company was heading in the wrong direction and had written to Barry without receiving so much as a response. John was becoming agitated, and this only worsened when he discovered that Barry was on a salary of $1,000,000 and was not even a shareholder of Big Ltd. He argued that Barry was only interested in his fat salary and had no interest in his company. John's concern about the taxation situation elevated when he noticed that Big Ltd. was dealing with a company in Vanuatu which he knew was a tax-free nation. In John's research, he discovered that Barry was part owner of a company in Vanuatu and was concerned that profits from Big Ltd. were being steered there because of Barry's personal interests. John's most recent letter was very forceful and raised all the issue he had with Barry.

Barry started his response to John which is as follows.

John, thank you for your continued interest in Big Ltd. We are trying our best to take all our shareholder's interest in mind when we manage your company. The ATO encourages the Boards of Directors to continually evaluate company tax policies and review their tax compliance. It is important for Directors to take this responsibility seriously because there arelegislative requirements relevant to the preparation of tax documentation for legal entities. In addition to this I am aware of the agency issue at play here in that you are the legal owner of the business and yet I am charged with the responsibility of running the company in your best interest. For this reason, I not only abide by all the laws but I also act in an ethical way. Please take comfort from the fact that I am a member of a professional body and we must abide by their ethical rules. I also have a high level of personal integrity.

Barry has asked you to research the following areas so he can include it into his response.

1. Outline thelegislative requirements relevant to the preparation of tax documentation for legal entities.
2. Detail the professional ethical guidelines from a professional body you have researched that relate to this situation. Ensure you detail the ethical code you are using and include the specific sections in your answer.