Avoidance of tax refers to legal strategies and methods by which a taxpayer reduces their tax liability, often through investing in tax shelters or utilizing other deduced deductions and credits allowed by tax law.
A tax shelter, also known as a tax shield, is any financial arrangement made to legally lower an individual or a corporation's tax liabilities. These shelters can involve transactions or methods that result in deductions, credits, or reductions in taxable income.
Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.