General principles of tax planning are to: (1) maximise non-taxable receipts; (2) minimise non-deductible expenses; (3) apply capital receipts in the acquisition of qualifying capital expenditure; and (4) avoid outright default of tax provisions to eliminate payment of interest and penalties.

What are the principles of tax planning?

General principles of tax planning are to: (1) maximise non-taxable receipts; (2) minimise non-deductible expenses; (3) apply capital receipts in the acquisition of qualifying capital expenditure; and (4) avoid outright default of tax provisions to eliminate payment of interest and penalties.

What are the principles of income taxation?

The principles of good taxation were formulated many years ago. In The Wealth of Nations (1776), Adam Smith argued that taxation should follow the four principles of fairness, certainty, convenience and efficiency.

What are the three types of tax planning?

Types of Tax Planning

• Short-range tax planning. Under this method, tax planning is thought of and executed at the end of the fiscal year.
• Long-term tax planning. This plan is chalked out at the beginning of the fiscal and the taxpayer follows this plan throughout the year.
• Permissive tax planning.
• Purposive tax planning.

What is tax planning in business?

Tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible. Considerations of tax planning include the timing of income, size, the timing of purchases, and planning for expenditures.

What are the two main principles of taxation?

These are: (1) the belief that taxes should be based on the individual’s ability to pay, known as the ability-to-pay principle, and (2) the benefit principle, the idea that there should be some equivalence between what the individual pays and the benefits he subsequently receives from governmental activities.

What is the importance of tax planning?

With proper tax planning, you may be able to reduce your tax burden or earn a larger refund at the end of the year. Without adequate insight, many taxpayers miss potential tax benefits and pay more than necessary. It’s important to anticipate taxes as you create your financial plan.

What are the objectives of tax planning?

The objective behind tax planning is insurance of tax efficiency. Tax planning allows all elements of the financial plan to function in sync to deliver maximum tax efficiency. Tax planning is critical for budgetary efficiency. A reduced tax liability and maximized the ability of retirement plans.

What do you mean by investment planning?

Investment planning is the process of aligning your financial goals with your investment resources. It is the main component of financial planning which puts to use your savings and ensures you earn more money through investment.

What is importance of tax planning?

What are the 2 principles of taxation?

Why are the principles of taxation important?

The principle recognises that the purpose of taxation is to pay for government services. If taxes are imposed according to the benefit principle, people pay taxes in proportion to the benefits they receive from government spending.

Why do managers need to know the principles of tax planning?

Managers need to learn about taxes because optimizing a ven- ture’s total tax burden is important to its success, and managers are the main decision makers in an organization. Knowing the funda- mentals of taxation and how to apply them allows managers to make better decisions and thus be more effective in their jobs.

What are the types of tax planning?

Types of Tax Planning: Purposive tax planning: Planning taxes with a particular objective in mind. Permissive tax planning: Tax planning that is under the framework of law. Long range and Short range tax planning: Planning done at the start and end of a fiscal year respectively.

What are the five major objectives of taxation?

Here we will discuss the objectives of taxation in modern public finance:

• Economic Development.
• Full Employment.
• Price Stability.
• Control of Cyclical Fluctuations.
• Reduction of BOP Difficulties.
• Non-Revenue Objective.

What is the main objective of investment planning?

To Keep Funds Safe & Secure. To Grow Your Funds Exponentially. To Earn a Steady & Additional Source of Income. Minimize Income Tax Burden.

What are the three function of taxation?

Purposes of taxation Musgrave, is to distinguish between objectives of resource allocation, income redistribution, and economic stability. (Economic growth or development and international competitiveness are sometimes listed as separate goals, but they can generally be subsumed under the other three.)