Tax planning is the analysis of a financial situation or plan from tax perspective. The purpose of tax planning is to ensure tax efficiency. Returns generated from different asset class are taxed at different rate; we always focus on post tax asset return.
Mr Happy is in a 30% tax bracket, he is considering an Bank FD at a rate of 6.5%, he would be paying 30% of the interest income as tax; so his after tax return is just 4.55%.
Please be aware tax can significantly impact your return. Focus on building a portfolio which is tax efficient
Get in touch with us today so that you can plan your taxes efficiently