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    Po17 - Tax Planning and Advice

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    Po17 - Tax Planning and Advice

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    passmore
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    Po17 – Tax Planning and Advice

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    Po17 - Tax Planning and Advice

    Uploaded by

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    © All Rights Reserved
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    PO17 – TAX PLANNING AND ADVICE

    Description

    You advise on mitigating and deferring tax liabilities through

    legitimate tax planning measures.

    Elements

    a Explain the differences between tax planning, tax avoidance and tax evasion.

    b Review and advise on the potential tax risks and/or tax minimisation measures for individuals and
    organisations.

    c Assess the tax implications of proposed activities or plans, referring to up-to-date legislation.

    d Mitigate and/or defer tax liabilities through standard reliefs, exemptions and incentives.

    e Know when to refer matters to someone with more specialist knowledge.

    Tax planning is financial planning for tax efficiency. It aims to reduce one's tax liabilities by optimally
    utilize tax exemptions, tax rebates, and benefits as much as possible. Tax planning includes making
    financial and business decisions to minimize the incidence of tax. One of my Duties was to look for any
    provisions in the Tax Laws so as to minimize the tax obligation.

    One of the tax provisions in Zimbabwe Income Tax Law is Special Initial Allowances on new assets
    acquired in Income Tax Law. An example was when I advised the management on the newly constructed
    building to make use of such an election of the provision as it would reduce the tax obligation
    significantly for the first four years of that’s asset’s use.

    The second one I advised the management was on donations which are allowed by income tax act to
    claim as an expense provided the donations meet the requirements specified in the act.

    Whilst Tax avoidance is any legal method used by a taxpayer to minimize the amount of income tax
    owed. Individual taxpayers and corporations can use forms of tax avoidance to lower their tax bills. Tax
    credits, deductions, income exclusion, and loopholes are forms of tax avoidance. On reducing tax
    liability I proposed that the company to put employees on medical aid to reduce PAYE liability.

    Whilst Tax evasion is an illegal activity in which a person or entity deliberately avoids paying a true tax
    liability. To willfully fail to pay taxes can lead to litigation in the court of law in terms of the Tax Law of
    Zimbabwe. So my duty was to check for compliance with the ant-tax evasion laws. I would make sure all
    the Returns are prepared in accordance to the law, submitted on time and the payment of the tax
    obligations on all the tax heads. In the event that the provisions in the tax law are ambiguous, I would
    then seek professional help from our supervisors and ZIMRA in the interpretation of Tax Law since any
    non-compliance linked with evasion of the tax law may result in prosecution and litigation.
    One of the potential risks in Tax Law is late payment of Tax. Late payment of the Tax Obligations attracts
    a heavy interest charge. In that manner, I would advise management to reserve a portion of the funds
    for the Tax Obligations before they fall due. Paying Taxes on time saves the organization the interest
    charges, and hence tax saving. When the funds have been availed, I would then make sure that the
    payment has been made on or before the due date. This was possible by setting a reminder a few days
    before the due date of each and every return’s payment. In the event that the funding is not available, I
    would then advise the management to make a payment plan so as to reduce risk of the interest charged.

    Another potential risk is late submission of returns. Late submission of returns attracts a heavy penalty
    for each day the return would have surpassed the due date. I would then have to set the reminder a few
    days before the due date. Upon the reminder, I would then make sure that the return is submitted on or
    before the due date to reduce the risk of late submission penalties.

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