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Unit 3: Tax Planning: An Introduction

9. Employee 8 (E8) receives HRA instead of RFA and the same emoluments as E7. Notes
10. Employee 9 (E9) receives RFA and reimbursement of his personal car expenses, fuel
and driver valued at RM28,000.

11. Employee 10 (E10) receives HRA instead of RFA and the same emoluments as E9.
The Assignment
Ravi was really confused with the above data and was not sure whether there could be any
tax savings. He requested that Khir to give a more detailed calculations and explanations
on the relevant income tax sections that allowed those deductions and reliefs. Ravi wanted
to know the ultimate tax payable by each employee for the year of assessment 2010.

Questions
1. Comment on the differences in benefits to the employees.

2. What are the learning points from the case study?
Source: http://ejournal.unirazak.edu.my/articles/TAX_AVOIDANCE-Ravindran.pdf
3.6 Summary

Tax planning is not a device to reduce tax burden but is in fact helps savings by investments
in government securities.

Tax planning is an essential part of your financial planning.
There are also some areas of tax planning that are specific to certain business forms—i.e.,
sole proprietorships, partnerships, C corporations, and S corporations.

Tax planning also applies to various types of employee benefits that can provide a business
with tax deductions, such as contributions to life insurance, health insurance, or retirement
plans.

Tax Planning India is an application to reduce tax liability through the finest use of all
accessible allowances, exclusions, deductions, exemptions, etc., to trim down income and/
or capital profits.
Corporate Tax Planning is the strategies to reduce the taxes.
Tax evasion is the general term for efforts by individuals, firms, trusts and other entities
to evade taxes by illegal means.
Tax avoidance is a strategy which involves exploiting legal means of reducing taxes with
the goal of minimizing tax liability.
Double taxation is the levying of tax by two or more jurisdictions on the same declared
income (in the case of income taxes), asset (in the case of capital taxes), or financial
transaction (in the case of sales taxes).

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