ATAX – May 2016 – L3 – Q7a – Tax Planning and Management

List seven essential documents/information required for effective tax planning strategies.

Question

Tax planning involves making conscious efforts to arrange a taxpayer’s affairs in ways that will minimize tax liabilities. It requires detailed knowledge of tax legislation and the application of the same to particular circumstances, identifying and taking advantage of loopholes, if any.

The tax-conscious taxpayer and the expert tax adviser working together can often significantly reduce the tax liability that would have otherwise been payable.

You are required to:
Provide an adequate checklist of any SEVEN documents/information to be considered for effective tax planning strategies. (7 marks)

Answer

For effective tax planning strategies, knowledge of the following documents/information should be considered:

List of approved taxes and levies.
Timing of the dates of acquisitions of Property, Plant, and Equipment.
Timing of the dates of disposals of Property, Plant, and Equipment in view of balancing adjustments.
Timing and amount of capital allowances claimable.
Hire of assets as an alternative to outright purchase—full hire charge is tax deductible.
Where to invest (e.g., investments that attract tax incentives).
Making specific provisions as against general provisions.

Additional relevant considerations may include:

Accurate deduction of PAYE (Pay As You Earn) tax.
Accurate deduction of Withholding Tax (WHT).
Knowledge of critical dates for:
- Filing of tax returns.
- Filing of notices of objection.
- Monthly remittances of PAYE.
- Year-end returns and final payment of PAYE.
- Remittance of WHT and VAT to Revenue Authorities.
Roll-over relief in Capital Gains Tax (CGT).
Investments in stocks and shares, which are exempt from CGT.

Tags: Tax Documentation, Tax Planning, Tax Strategies
Level: Level 3

Topic: Tax Planning and Management

Uploader: Kofi