How does the ATO Green Book view legitimate tax planning?

The ATO Green Book recognizes legitimate tax planning as acceptable but limited. This perspective acknowledges that taxpayers have the right to arrange their affairs in a way that minimizes their tax liabilities within the law. It emphasizes the importance of complying with tax laws while still allowing for legitimate strategies that can legally reduce tax payable.

Legitimate tax planning often involves utilizing available deductions, credits, and exemptions and structuring financial transactions in a tax-efficient manner. However, it is essential that taxpayers do not cross the line into aggressive tax avoidance or evasion, which the ATO actively discourages. The ATO promotes responsible tax planning that adheres to both the spirit and the letter of the law.

By categorizing legitimate tax planning in this way, the ATO Green Book aims to ensure that taxpayers understand their rights, responsibilities, and the boundaries of acceptable practices in tax strategy. This approach encourages ethical behavior while still recognizing the need for tax planning in a complex financial landscape.