Direct Tax: Laws and Practice - Week 15

What is the primary purpose of tax planning?

To ensure tax efficiency

What is the key difference between tax avoidance and tax evasion?

Tax avoidance is legal, while tax evasion is illegal

What is an example of tax avoidance?

Contributing to employer-sponsored retirement plans with pre-tax funds

What is a consideration in tax planning?

Timing of income and purchases Signup and view all the answers

What is the outcome of effective tax planning?

All elements of the financial plan working together in the most tax-efficient manner Signup and view all the answers

What is the purpose of claiming deductions and credits in tax planning?

To reduce tax liability Signup and view all the answers

What is the primary objective of tax planning?

To minimize tax liability Signup and view all the answers

What is the main difference between tax planning and tax management?

Tax planning is about minimizing tax liability, while tax management is about compliance Signup and view all the answers

What is the benefit of tax management?

It helps to avoid payment of interest, penalty, and prosecution Signup and view all the answers

What should an individual setting up a new business consider when choosing a location?

The tax rates and incentives offered by the location Signup and view all the answers

What is the purpose of auditing in tax management?

To ensure compliance with tax laws and regulations Signup and view all the answers

What is the consequence of failing to comply with tax laws and regulations?

All of the above Signup and view all the answers

What is the primary difference between tax avoidance and tax evasion?

Tax evasion involves underreporting income, while tax avoidance involves exploiting legal loopholes Signup and view all the answers

Which of the following is an example of tax evasion?

Claiming illegitimate dependents on a tax return Signup and view all the answers

What is the purpose of tax planning?

To arrange financial data and economic affairs to comply with statutory provisions Signup and view all the answers

What is the consequence of wilfully failing to pay taxes?

Criminal charges and substantial penalties Signup and view all the answers

What is the goal of tax management?

To comply with tax laws and regulations Signup and view all the answers

What is the benefit of retirement plans in terms of taxes?

They allow taxpayers to defer paying taxes until a later date Signup and view all the answers

Direct Tax: Laws and Practice - Week 15 - Tax Planning

Questions and Answers