tax avoidance

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Tax Avoidance

The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income.

Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal Income Tax, gift tax, or estate tax. An individual may, for example, avoid federal income tax by investing a large sum of money in municipal bonds, since the interest on such bonds is not considered taxable income on which federal tax is due. Interest on the same amount of money placed in a savings account must be included as taxable income.

Tax avoidance must be distinguished from Tax Evasion, which is the employment of unlawful methods to circumvent the payment of taxes. Tax evasion is a crime; tax avoidance is not.

tax avoidance

legally reducing tax liability. Tax planning is the activity by which a taxpayer seeks to arrange his affairs so that his tax liability is minimized; avoidance of tax within the limits of tax law is perfectly legitimate. Some forms of avoidance are merely tax planning by using reliefs or exemptions, for example, by choosing tax-efficient investments. Others are convoluted and rather artificial. See TAX EVASION.
References in periodicals archive ?
explicitly provide for the avoidance of tax by granting relief in order
Its intention is that HMRC will be able to challenge arrangements whose main purpose is the avoidance of tax.
The initial PBR statement, however, specifies a fixed charge of pounds 30,000 (similar in concept to the earlier proposal from the Tories) for those non-doms who avoid UK tax by not bringing offshore income or gains into the UK (the so-called "remittance basis" of taxation), and also talks about "reducing the scope" for the avoidance of tax through offshore structures.
It is possible to replace any existing share options with EMI options if the new grant is for the purpose of recruiting or retaining staff and provided one of the main purposes is not the avoidance of tax.
These will be paid for from three main sources: tax payments by oil companies will be accelerated, avoidance of tax by companies and wealthy individuals will be targeted more robustly, and stamp duty relief on commercial property in disadvantaged areas will be abolished.
33) This rule is intended to prevent avoidance of tax on SPOCI or ICI that is attributable to such U.
Avoidance of tax increases in recent years continues to assist provincial efforts to attract new business investments.
Contract notice: Open procedure for the award of contracts for service management assessment of evasion and / or avoidance of tax revenue ici-imutasi-tarsu-tares-tari, as well as the process of forcible collection of tax revenues and assets of the organization.
Topics covered include considerations when choosing between traditional and Roth accounts; contributions, conversions, and recharacterizations; investment strategies and rollover rules; and avoidance of tax and penalties when taking money out of a retirement account.
The avoidance of tax on interest on cash using stock lending arrangements or noncommercial terms.
Clearly a principal purpose of these transactions is not the avoidance of tax.
We confine our comments here to urging the conferees to reject the proposed broadening of the definition of a tax shelter to include any entity, plan, arrangement, or transaction a significant purpose of which is the avoidance of tax.