Tax evasion vs Tax Avoidance
What is it & the difference between the 2.
A thread
Tax evasion = Illegal 🚫 Criminal
Tax avoidance = legal ✅ allowed
Tax evasion is an illegal & unlawful practice of not paying tax. A person or business structures their affairs in a way that they don't pay taxes due to SARS. This happens by not reporting their income, deducting frivolous expenses, inflating expenses, underpaying or understating
Tax avoidance on the other hand is a legal & allowed way of minimizing your tax liability. Our tax legislations allow us to structure our affairs in order to minimize your tax liability
E.g. in personal taxes, medical aid, out of pocket, RA deductions, TFSA etc. In VAT, output & input tax provisions allows for payment of lesser taxes. Business are also allowed to deduct allowable expenses, ring fence losses etc in order to minimize their tax liability