1. tax avoidance Tax avoidance is a term used to define the legal utilization of the taxation to personal advantage.

Generally avoidance is regarded as actions within the law. Finding tax "loopholes," where you can use existing laws to your advantage. Finally it results in the reduction of amount of the tax payable by using legal means. 2. Tax Shifting Tax Shifting involves changing the composition of taxes but not the level. It means reducing income taxes and offsetting them with taxes on environmentally destructive activities such as carbon emissions, the generation of toxic waste, the use of virgin raw materials, the use of non-refillable beverage containers, mercury emissions, the generation of garbage, the use of pesticides, and the use of throwaway products. This is by no means a comprehensive list, but it does include the more important activities that should be discouraged by taxing. There is wide agreement among environmental scientists on the kinds of activities that need to be taxed more. The question now is how to generate public support for the wholesale tax shifting that is needed. 3. Tax Planning It is Systematic analysis of differing tax options aimed at the minimization of tax liability in current and future tax periods. Whether to file jointly or separately, the timing of a sale of an asset, ascertaining over how many years to withdraw retirement funds, when to receive income, when to pay expenditures, the timing and amounts of gifts to be made, and estate planning are examples of tax planning. tax software can be used for tax planning purposes. It is Logical analysis of a financial situation or plan from a tax perspective, to align financial goals with tax efficiency planning. The purpose of tax planning is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax planning thus allows the other elements of a financial plan to interact more effectively by minimizing tax liability. 4. Tax Deferment It is where Investment earnings such as interest, dividends or capital gains that accumulate tax free until the investor withdraws and takes possession of them. The most common types of tax-deferred investments include those in individual retirement accounts (IRAs) and deferred annuities. By deferring taxes on the returns of an investment, the investor benefits in two ways. The first benefit is taxfree growth: instead of paying tax on the returns of an investment, tax is paid only at a later date, leaving the investment to grow unhindered. The second benefit of tax deferral is that investments are usually made when a person is earning higher income and is taxed at a higher tax rate. Withdrawals are made from an investment account when a person is earning little or no income and is taxed at a lower rate. 5. Tax Deductions A tax deduction is a reduction of a taxpayers total income that decreases the amount of money used in calculating the tax due. Essentially, a tax deduction is a break granted by the government. It reduces taxes by a percentage that is dependent upon the income bracket of the taxpayer. Tax deductions generally are allowed only for expenses incurred that produce current benefits, and capitalization of items producing future benefit is required, sometimes with exceptions. Most systems allow recovery in some manner over a period of time of capitalized business and investment items, such as through allowances for depreciation, obsolescence, or decline in value. Many systems reduce taxable income for

personal allowances or provide a range of income subject to zero tax. In addition, some systems allow deductions from the tax base for items the tax levying government desires to encourage. 7. Tax Shelters Tax shelters are defined as investments that allow a reduction in an individual` s taxable income. A legal method of minimizing or decreasing an investor's taxable income and, therefore, his or her tax liability. Tax shelters can range from investments or investment accounts that provide favorable tax treatment, to activities or transactions that lower taxable income. 8. Tax Shield A reduction in taxable income for an individual or corporation achieved through claiming allowable deductions such as mortgage interest, medical expenses, charitable donations, amortization and depreciation. These deductions reduce taxpayers' taxable income for a given year or defer income taxes into future years. Tax shields vary from country to country, and their benefits will depend on the taxpayer's overall tax rate and cash flows for the given tax year. For example, because interest on debt is a tax-deductible expense, taking on debt can act as a tax shield. Taxefficient investing strategies are a cornerstone of investing for high-net-worth individuals and corporations, whose annual tax bills can be very high. The ability to use a home mortgage as a tax shield is a major benefit for many middle-class people whose homes are a major component of their net worth. 9. Tax Allocation Tax allocation is the process of apportioning the effect of tax among the various income statement items and among the various accounting periods so that the financial statements can reflect the true financial picture of the company as of a specific period and date. 10. Tax Credit This is an amount of money that a taxpayer is able to subtract from the amount of tax that they owe to the government. The value of a tax credit depends on what the credit is being provided for, and certain types of tax credits are granted to individuals or businesses in specific locations, classifications or industries. Unlike deductions and exemptions, which reduce the amount of your income that is taxable, tax credits reduce the actual amount of tax owed. Governments may grant a tax credit to promote a specific behavior, such as replacing older appliances with more efficient ones, or to help disadvantaged taxpayers by reducing the total cost of housing. 11. Tax Splitting (Income Splitting) It is a tax reduction strategy employed by families living in areas that are subject to bracketed tax regulations. The goal of using an income-splitting strategy is to reduce the family's gross tax level, at the expense of some family members paying higher taxes than they otherwise would.