"Tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable by means that are within the law."
Tax planning involves creating a plan that will help individuals and businesses save money on taxes. Tax planning includes strategies to reduce taxable income, increase deductions, and take advantage of available tax credits.
Taxable income: The portion of income that is subject to taxation, and how to calculate it.
Tax deductions: Expenses that reduce the amount of taxable income and how to claim them.
Tax credits: Credits that reduce tax liability directly and how to leverage them.
Tax rates: The different tax rates for different types of income and how to apply them.
Tax liabilities: The amount of tax owed after taking into account deductions and credits.
Tax brackets: The different income ranges that are subject to different tax rates.
Tax evasion: Illegal techniques for avoiding paying taxes.
Tax avoidance: Legal techniques for minimizing the amount of tax paid.
Capital gains tax: Tax on income from the sale of a capital asset.
Gift tax: Tax on gifts that exceed a certain value.
Estate tax: Tax on the transfer of property upon death.
Foreign income reporting: Reporting any income earned outside of the country of residence.
Self-employment tax: Tax on income earned from self-employment.
Tax audits: Examination of tax returns by the IRS.
Tax planning strategies: Long-term planning to minimize tax liability.
Income shifting: Transferring income from a high tax bracket to a low tax bracket by using various tax-saving strategies like income splitting with family members or deferring income to future years.
Deduction planning: Utilizing all available and relevant tax deductions to reduce one’s taxable income and lower the overall tax liability.
Capital gains planning: Strategizing to recognize capital gains and/or losses in a manner that reduces the total tax liability of an individual or a corporation.
Tax deferral planning: Postponing payment of taxes for future years by delaying recognition of the income and/or gains until a later time and taking advantage of retirement funds or other tax-deferred accounts.
Legislative advocacy: Lobbying for tax laws that are favorable to a particular industry or individual tax situation.
International tax planning: Planning for the optimum utilization of international tax laws to reduce taxes for companies operating globally or for individuals living abroad.
Corporate tax planning: Strategizing to minimize the tax liabilities of a corporation by taking advantage of tax laws and using legally permissible structures and methods.
Estate tax planning: Strategizing to minimize estate taxes and ensure maximum assets transfer to beneficiaries after the death of the estate owner.
Risk management tax planning: Insurance planning to protect against taxes and other related risks that organizations and individuals can face.
Mergers and acquisitions tax planning: Planning for the tax implications arising from the acquisition, merger, divestiture, or restructuring of a business or corporate entity.
"Tax avoidance should not be confused with tax evasion, which is illegal."
"Tax havens are jurisdictions that facilitate reduced taxes."
"Benefiting from tax laws in ways that were intended by governments is sometimes referred to as tax planning."
"Forms of tax avoidance that use legal tax laws in ways not necessarily intended by the government are often criticized in the court of public opinion and by journalists."
"Many corporations and businesses that take part in the practice experience a backlash from their active customers or online."
"The World Bank's World Development Report 2019 on the future of work supports increased government efforts to curb tax avoidance as part of a new social contract focused on human capital investments and expanded social protection."
""Tax mitigation", "tax aggressive", "aggressive tax avoidance" or "tax neutral" schemes generally refer to multiterritory schemes that fall into the grey area between common and well-accepted tax avoidance."
"Laws known as a General Anti-Avoidance Rule (GAAR) statutes, which prohibit "aggressive" tax avoidance, have been passed in several countries and regions including Canada, Australia, New Zealand, South Africa, Norway, Hong Kong, and the United Kingdom."
"The specifics may vary according to jurisdiction, but such rules invalidate tax avoidance that is technically legal but is not for a business purpose or is in violation of the spirit of the tax code."
"In addition, judicial doctrines have accomplished the similar purpose, notably in the United States through the 'business purpose' and 'economic substance' doctrines established in Gregory v. Helvering and in the United Kingdom in Ramsay."
"The term 'avoidance' has also been used in the tax regulations of some jurisdictions to distinguish tax avoidance foreseen by the legislators from tax avoidance exploiting loopholes in the law."
"Tax evasion is the general term for efforts by individuals, corporations, trusts, and other entities to evade taxes by illegal means."
"Both tax evasion and some forms of tax avoidance can be viewed as forms of tax noncompliance."
"According to Joseph Stiglitz (1986), there are three principles of tax avoidance: postponement of taxes, tax arbitrage across individuals facing different tax brackets, and tax arbitrage across income streams facing different tax treatment."
"The postponement of taxes is the present discounted value of postponed tax is much less than of a tax currently paid."
"Tax arbitrage across individuals facing different tax brackets or the same individual facing different marginal tax rates at different times is an effective method of reducing tax liabilities within a family."
"Differential tax rates may also lead to transactions among individuals in different brackets leading to 'tax induced transactions'."
"The last principle is the tax arbitrage across income streams facing different tax treatment."
"Since 1995, trillions of dollars have been transferred from OECD and developing countries into tax havens using these schemes."