Frequently Asked Questions

What is the difference between tax avoidance and tax evasion?

Tax evasion refers to illegal activities that you deliberately undertake to free yourself from a tax burden. An easy example to illustrate tax evasion is, if you intentionally omit income from your annual tax return. Tax evasion is subject to penalties under Section 65 and 66 of the Income Tax Act.

Tax avoidance, on the other hand, is a form of tax planning which involves the use of legal means to reduce your tax liability, i.e. to seek the minimum amount of tax payable without contravening the provisions of the Income Tax Act.

If you are able to arrange your business and tax affairs in a manner that reduces your tax liability, you are welcome to do so as long as it does not contravene the provisions of the Income Tax Act. There is no obligation for a taxpayer to pay more tax than is legally required under the Income Tax Act.

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