What type of tax planning is discouraged in the ATO Green Book?

Aggressive tax avoidance schemes are discouraged in the ATO Green Book because they often involve exploiting loopholes and ambiguities in the tax laws with the intent to reduce tax liability below what is considered acceptable. Such strategies may stray into the territory of non-compliance or evasion, thereby undermining the integrity of the tax system and creating an unfair burden on those who comply with tax obligations.

The ATO encourages taxpayers to engage in responsible and ethical tax planning that aligns with the spirit of the law. This includes transparent practices and methods that reflect a genuine economic activity. Aggressive avoidance schemes typically lack this transparency and can result in unexpected audits and penalties, as they are often viewed unfavorably by tax authorities.

In contrast, standard tax planning practices, conservative strategies, and legitimate tax reduction methods are seen as appropriate approaches within the framework of the law. These methods offer ways to optimize tax liabilities that remain within legal boundaries, helping individuals and businesses fulfill their obligations while taking advantage of available deductions and credits.