The controller of Little Company Ltd.has decided to sell a piece of capital equipment after the company's year-end in order to avoid paying tax on capital gains this year.The controller is engaging in
A)tax planning.
B)tax avoidance.
C)tax evasion.
D)GAAR.

Question

Quizplus · Accepted Answer

The controller is engaging in tax planning by taking legitimate steps to minimize the company's tax liability. Tax planning is the proactive and lawful arrangement of a taxpayer's financial affairs to minimize tax liability. The sale of capital equipment is a legitimate tax planning strategy that can reduce a company's capital gains tax liability.

The Controller of Little Company Ltd