Do you know the Difference Between Tax Evasion and Tax Planning?

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1. Tax Evasion

By definition tax evasion means not paying tax you legally owe and therefore is definitely illegal.  Tax evasion is breaking the law.

Most people will agree that tax evasion is morally wrong – if you evade tax you are doing something clearly illegal.

2. Tax Planning

Tax planning on the other hand is perfectly legal.  It is a reduction in tax paid based on strategic planned and actions but into play based on items that have been agreed by the Government and there is nothing wrong in making use of it, that’s what you’re meant to do as long as you use it in the way it was intended.

Tax planning is clearly not immoral, if you are complying with the spirit of the law. For example if you get tax relief on your pension contributions, that money should go to fund yourself in retirement.

 

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