Tax efficiency

A financial process is said to be tax efficient if it is taxed at a lower rate than an alternative financial process that achieves the same end.[1]

For the economic theory of tax efficiency, see Excess burden of taxation.

Passing one's assets onto one's heirs using a Grantor Retained Annuity Trust, for example, is potentially more tax efficient than simply letting the heirs inherit the assets directly.

References
  1. Investor Words definition of "tax efficient"
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