AFM 361 Chapter Notes -Tax Avoidance, Regressive Tax, Proportional Tax
3 Aug 2013
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Document Summary
Tax compliance often occurs after a transaction is complete, and so the structure and timing of the transaction are fixed. Tax planning occurs before the transaction, the structure and timing can be managed to get a favorable outcome - for the client. 3 things to consider while tax planning: calculations, timing, character and parties to the transaction, additional costs to consider. The tax rate varies - the base is divided into segments as the rate increases. Progressive tax - because the tax rate increases as the base increases. Proportional tax - the rate does not change as the base increases. Regressive tax - rate decreases as base increases - not as common ( violates vertical equity) Assume federal personal credits = 2100 and provincial = 700. the total tax is net of this amount. Marginal tax rate = tax rate that applies to the next increment of the base.
