The Black's Law Dictionary defines a tax as a charge,
usually monetary, imposed by the government on persons, entities,
transactions, or property to yield public revenue. Most broadly,
the term embraces all governmental impositions on persons,
property, privileges, occupation, and enjoyment of the people, and
includes duties, imposts, and excises.
On the other hand, a levy in this context is defined by the
Webster Dictionary as an amount of money that must be paid and that
is collected by a government or other authority.
If the above broad definitions are anything to go by, then one
can erroneously conclude that a levy is a tax and a tax is a levy.
However, the truth is that this may not always be the case. But you
may ask – how does it matter? Well it matters
especially from a tax accounting and reporting perspective. The
distinction will impact on how and when to recognise a liability,
contingent or otherwise, to pay a levy.
