The officer who fired the shots from a police car passenger seat, known only as Officer D, gave evidence about what happened during the second day of the inquest.
Officer D told the coroner's court Taylor had a look of "rage" on his face when they locked eyes and was becoming "increasingly agitated".
Officer D had decided to arm himself with a Glock pistol when leaving the station as he determined the incident had the potential to end in grievous bodily harm or death.
The pistol had rounds in the magazine but not the chamber and on the way to the scene Officer D reviewed the rules outlining the lawful reasons to use a firearm and conditions to be met before using one, he said.
In evidence, Officer D said before this point he had attended "hundreds of domestic violence incidents" which had all ended peacefully.
"But these are emotionally charged events with a high degree of uncertainty."
He said he saw using the gun as "a last resort".
As Officer D arrived in a vehicle driven by Officer E they went over the crest of a hill and saw Taylor about 10m away carrying a 40cm machete and a sickle. They stopped and so did he.
"He appeared very aggressive and the impression I got from his body language was he was not happy we were there," Officer D told the court.
"The look on his face was of pure anger - I would use the term rage. He began shouting at me the moment we locked eyes.
"I could hear him shouting to us to f*** off and to get the f*** out of here ... [Taylor] appeared to be getting increasingly agitated."
Officer D said he believed Taylor would harm the police so drew his Glock and challenged Taylor through the closed car window telling him to put the weapons down.
He did not believe pepper spray or a Taser were viable options as they would require him to get out of the vehicle and expose himself to Taylor.
Officer D said he turned his back as Taylor threw the machete at the vehicle. When he turned back around Taylor was standing right outside the car door.
"[Taylor] was about to swing what I believe was the sickle ... I remember thinking 'I'm f***ed'.
"I believe he intended to kill me with the sickle."
Officer D heard Officer E yelling at him but did not know he was saying "Shoot, shoot".
Officer D recalled firing three shots at Taylor and he stumbled away. Evidence shows four shots were fired.
The officers got out of the vehicle and asked Taylor to lie down but he did not respond.
They managed to handcuff him and then found and removed numerous knives from Taylor before removing the handcuffs, assessing his injuries and administering first aid until ambulance staff arrived 15 to 25 minutes later and declared him dead.
Officer D had holstered his weapon and told the court none of the wounds were "bleeding profusely" but Taylor "began to show signs of a lower level of consciousness and became very pale".
In response to questioning by Taylor family lawyer Adam Couchman, Officer D agreed the police were approaching the matter with a "high degree of seriousness".
He agreed that "in hindsight, sitting in this sterile environment five years later" they should have kept driving over the hill after seeing Taylor in order to put distance between them.
But Officer D said he believed another person in his position would have made the same decision to fire the shots.
Couchman said evidence showed Taylor had been shot in the back and questioned why.
Officer D said he would not have fired the third shot knowing Taylor had turned around but was confident he had made the right decision as he could not tell which direction Taylor was facing through the bullet hole in the car window.
"My threat assessment was the same as when I fired the first two shots.
"I pulled the trigger because I was protecting myself and I thought I would die."
Officer D said he wanted Taylor to live when administering first aid.
"I wanted nothing more than for that man to live but I knew from my experience that was unlikely."
The lawyer for Taylor's immediate family, Louis Wilkins, told Officer D Taylor's mother did not blame him or hold any ill will.
"The real question here is not what you did it's how you got put in that position."
Wilkins questioned the decision to stop the car and Officer D said in hindsight they should have continued up the driveway but whether that would have changed the result was unknown.
"I don't accept the decision to stop was a declaration of war with Mr Taylor, his actions played a large part in what happened that day," he said.
The senior officer at the shooting, known as Officer C, also gave evidence during today's hearing.
Officer C was driving the other police car.
He said he knew Michael Taylor and his partner, Natalie Avery, through previous dealings with them. He was a senior officer and had been with the police for more than 20 years at the time.
Officer C said initially the job was no different to any other domestic violence incident he had been to in his more than two-decade career.
He explained he had been to the property before about disputes around a paper road running through the property but had never been past the gate. Taylor had a history of threatening his neighbours.
"I knew he was always aggressive and verbally abusive towards others and it never went any further."
Officer C's vehicle was roughly 10m to 15m behind the other vehicle which came to a stop at the top of the hill.
He described seeing Taylor running towards the vehicle holding what Officer C thought was machetes.
"He was flailing them around in a circular motion. His intention was to harm the police ... He went directly to the car slashing in a flailing motion.
"The next thing I remember was that window blowing out."
Officer C radioed there had been a shooting and got out of his vehicle as Officers E and D got out of theirs.
He said Taylor was "slouched down on the ground" but resisted being handcuffed. Officer C realised Taylor had been shot when he saw a bullet hole in the cellphone in his breast pocket, uncuffed him and helped administer first aid.
Coroner Peter Ryan previously told those at the inquest - including Taylor's family - the hearing was not to attribute blame.
The inquest had heard Taylor had more than 40 previous convictions between 1976 and 2013 for drugs, dishonesty, violence and threatening behaviour. He had served prison time for aggravated assault.
It also heard Taylor had previously been involved in a number of threats and intimidation-related incidents with members of the public.
The inquest continues.
