GOAL OF TAX PLANNING is the way by which the imposition of taxes upon an individual is reduced by strategically implementing some policies or ideas by the individual which will beat down the tax rate.
Now the payment of tax is a policy which cannot be done away or left out without considering it in this world we find ourselves. As far as you exist and are been registered or recognized as a citizen of a country then you are bound to pay taxes to the government. Taxes, as it stands differ from nations to nations. The tax an individual will pay in one country may be different from what an individual in another country will pay because as far as government or leadership is concerned, every country has its own way of imposing tax on its citizens. For instance, citizens in United Kingdom experience high rate of tax. 50% of their income goes to the government as tax. Other countries tax rate is a little lower than that. So as said earlier, it all depends on the country where you are residing.
Goal of tax planning seeks to bring out how individuals can reduce the taxes they pay. All other things being equal, the higher your tax, the lower the investment or savings you can make and on the other hand the lower your tax the higher the investment you are going to make. The effect of higher tax in the long run is individuals saving habit decreases because all the money gotten are used to pay taxes. So a person’s ability to reduce the tax he pays guarantees him the likelihood to make enough investment which will in the long run enhances his future aspirations. Now let us look at goal of tax planning.
REDUCING OF EXPENSES:
Expenses are the daily petty buying’s or extra cost we incur. These expenses go a long way to increase the money been paid as tax. It should be noted that every expenses you make, a small quota of the total amount goes to the government as tax indirectly. So now is very clear here, the more you make expenses the more taxes you pay. For instance, if you make 100 expenses within a month, what it means is that you are paying taxes 100 times to the government. So if you reduce the expenses you make you are likely to enjoy low tax and even that helps you to save more. Now before a worker’s salary comes out, it goes through a number stage. At one stage, there is what is called deductions. This amount is deducted from the total salary gotten. Taxes are deducted from it also. All these makes the entire salary very small and so engaging yourself in too many expenses makes you suffer twice payment of tax. In conclusion, it’s not bad to make expenses but it should be noted that, too many expenses increases tax which lowers the rate at which one can save. Therefore reducing expenses is a goal of tax planning.