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Authors Kamogelo

7 days 30 days All time Recent Popular
Kamogelo
Kamogelo
@lawseed
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
FINANCE
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