Tax shield


Also found in: Wikipedia.

Tax shield

The reduction in income taxes that results from taking an allowable deduction from taxable income.

Tax Shield

The reduction of one's taxable income as the result of a properly qualified deduction. Examples of tax shields include mortgage interest deductions, charitable donations, and others. The mortgage interest deduction is a particularly important tax shield to middle-class households because the value of their properties constitutes the greatest part of their net worths. Creating tax shields is also important to wealthy individuals to help them avoid as many taxes as possible.
References in periodicals archive ?
Further, interest is paid out of before tax profits thus interest provides tax shield and helps in reducing the tax burden of firms consequently the profits available to equity shareholders increase.
The debt to total assets ratio is used as a proxy for leverage and the impact of size, profitability, and tangibility of assets, cost of debt, taxes, liquidity, and nondebt tax shield is analyzed on leverage.
Franklin Templeton Tax Shield (24) also falls in this category.
The landmark studies of Modigliani and Miller [14] about the irrelevance of capital structure and tax shield advantage paved the way for the development of alternative theories and a series of empirical research on the capital structure.
This new article from Loan Love titled, "Mortgage Interest Tax Shield (Maximize Your Savings)" helps home owners to better understand how they could be benefiting from the interest tax shield.
2005) using South-Korean firms, confirm that when firms use high depreciation as a non-debt tax shield, they obtain lower debt levels.
The accelerated tax benefit from the amortization of a leasehold estate would be a valuable tax shield, but the courts have denied the deduction numerous times (although not in recent cases), and the statute and regulation adopt that interpretation.
For a profitable company, the cash flow benefits of this include crystallisation of the tax shield and therefore a tax deduction earlier which will be more advantageous as UK corporate tax rates continue to fall.
htm) formed a tax shield for the group , as the UK business is now owned by Amazon EU Sarl and the UK operation is classed only as an "order fulfilment" business.
In the literature this incentive is measured as the value of the tax shield (Grace, 1990):
An Together with the previous $100 million received and/or about to be received from Kingman and Windstar respectively, this brings the aggregate amount of cash grants, tax credits, and tax shield benefits totaling over a half a billion dollars.
There are some peripheral reasons for this situation like the lack of tax shield in the region that makes debt less attractive here than in countries with higher levels of interest taxation.