Tax relief can be achieved through tax saving and investment based. Tax reliefs provide relief from tax burden to business owners and self employed by providing deduction or exemption on their income to reduce the amount of tax payable to the government. These tax relief can also provide relief from the current financial cricis and its effect on employment. Tax relief and investment based as business owner usually the tax relief and investment based method they opt for will be decided by the business owner according to the business opportunity they are taking and are in favour of.
They are as follows:
Tax savings Investment based Tax Relief Tax saving is the simplest way of achieving tax relief. The concept of tax saving is based on the principle that business owner need to create capital gains through investing and sale of shares in their business to get tax relief. The tax savings through investment based method is achieved by selling shares of company of equal value as sold shares and get tax relief. This is done through the help of shares at lower tax rates than the tax rate of business owners shares. Tax relief through tax savings is an effective method but will only be effective if one has enough investment capital.
Tax relief can also be provided through investment based method but will not be effective if the business is struggling to survive. Business owner need to know what type of tax relief they need to maximize and in which sector and how they will use the tax savings. As tax relief is not immediate but will only manifest in future it is better that it is obtained only after one finds it suitable. Tax Relief:
The concept of tax relief is similar to investment based but only tax saving method of tax relief. Tax relief is given to business owner if they are self employed, the business owners that opt for this method are usually those with a small scale of business. A majority of business owner in Zambia are either small scale business owner or small scale agricultural farmer. The tax saving through tax relief is usually more expensive than through investment based method. Tax Relief While tax relief can be provided through both the methods (tax saving and tax relief) they are given for different reasons. Tax relief is provided to business owners to recover all losses that the business may incur and this can be done by increasing the business owner’s investment capital. Tax relief on the other hand is given to the business owner to obtain tax savings.
Tax relief can be provided to small scale business owner to meet their tax saving objectives but tax relief is best suited to owner of large scale businesses that are engaged in different business like construction, transport, agriculture etc. Most small scale business owner will not use tax relief but will opt for tax saving through tax relief. Tax relief can also be provided by giving tax concession to business.
Tax Saving and Tax Relief Tax relief can be used in different ways. It can be used for tax relief of past business losses while tax saving can be used to reduce the business expenditure. It can also be used to reduce the business income that is due to the increase in tax liability. As tax saving and tax relief are very much alike so there are no differences and most of the conditions for tax saving should also be applied in tax relief.
There are different ways that tax relief can be provided. There are different methods that can be used by the tax authority to determine the tax relief. Tax relief can be given by deducting the business expenditure incurred. However, this does not mean that the business is not to pay the business expenditure. This is just like tax saving because of the deduction, there is no income that is due.
There is also another method by which tax relief can be provided. This is to give the tax liability to the business in advance. It can also be given in advance by the tax authority in case there are losses that are to be reduced by the tax authority in future. Types of Tax Relief There are many different types of tax relief that can be provided. The most common tax relief is the tax deduction and tax deferral. They are also known as tax reliefs. They are provided when the tax authority is satisfied with the tax liability that is to be provided for.
If you are interested in more details about using professional tax relief services to resolve tax issues, please call (888)489-4889 for a free consultation.