Analysis of Financial Planning: Wealth Protection, Tax Planning, Investment Planning, Estate Planning

Running head: ANALYSIS OF FINANCIAL PLANNING
Analysis of Financial Planning
Name of the Student
Name of the University
Author’s note

1ANALYSIS OF FINANCIAL PLANNING
Table of Contents
Question 1..................................................................................................................................1
Question 2..................................................................................................................................4
Question 3..................................................................................................................................7
References................................................................................................................................10

2ANALYSIS OF FINANCIAL PLANNING
Question 1
Wealth protection and tax planning
Differences between tax avoidance and tax evasion
Tax avoidance
Tax avoidance is the process to reduce the tax burden without breaking the rules and
regulations of the tax laws (Barker,et al 2016).
Tax evasion
Tax evasion on the other hand is an unlawful act by which the assesse reduces the tax
burden. It does not follow any rule and thereby do unlawful act so that the assesse does not
have to pay tax (Alstadsæter Johannesen & Zucman 2018).
The major point of difference are stated below
Basis of comparison Tax avoidance Tax evasion
Meaning It helps to minimise the tax
liability by using the means,
which does not violate the
tax rules.
It means reduction of tax
liability by using illegal
methods.
Methods One of the method of tax
avoidance is hedging of tax.
Tax concealment
Attributes The nature is immoral as it
involves bending the law
without breaking it.
The nature of tax evasion is
illegal and objectionable.
(Dyreng Hanlon &

3ANALYSIS OF FINANCIAL PLANNING
Maydew2018)
Concept It takes unfair advantage of
the shortcomings of the tax
laws
Intentional manipulation in
the accounts, which causes
fraud.
Legal implications It use legal ways to avoid
the tax burden
It uses such ways that are
forbidden by law.
Time of occurrence It is done before the
occurrence of tax liability
It is occurred after tax
liability arises
Consequences Deferment of tax liability Penalty or imprisonment
Concept of wealth guarding through tax planning and insurance planning
 Creating a lifetime trust for the spouse and children, can save tax and protect the
wealth.
 Purchasing long-term care insurance policies or medical facilities.
 Using domestic asset protection or life insurance trust.
Question no 1b (i)
Salary to Dr smart’s wife
This should not be paid as salary as salary will attract tax and that will put burden on
the Dr Smarts wife as she is homemaker and does not have any idea about the rules of tax.
Director’s fees to brilliants mother
Dr Brilliants mother stay in Australia for which the directors’ fees should not be paid
in the name of his mother. If they do so, his mother will also become liable to pay tax and the