Tax Avoidance Versus Tax Evasion
Taxes—A Love/Hate Relationship
Canadians (like most of the world) have a love/hate relationship with taxes. On the one hand, we like the services that our pooled taxes provide, but on the other hand, we hate sending our hard-earned money to the government. Avoiding paying more taxes than your share is a smart financial move; evading taxes is a crime.
Reduce Your Tax Bill Legitimately
Reducing your tax bill legitimately means working within the tax laws and regulations and figuring out ways to take the deductions you can legally take, and report what you need to report. It might take the form of figuring out what to do and when, with one choice having a better tax implication than another, which requires tax expertise on the part of your tax preparer.
Tax Evasion Is Illegal
Tax evasion is going outside the law, and it is not a good idea. As noted by canadianaccountant.com, “It’s critical to understand the difference between tax avoidance and tax evasion. Tax evasion involves either not following or breaking the rules of Canada’s Income Tax Act to avoid or minimize taxes, thus making it an illegal activity.
“Examples of tax evasion would be failing to report, or under-reporting income, or taking excess deductions for expenses that may not have been incurred while earning income. The Canada Revenue Agency (CRA) takes this very seriously.”
For a little more explanation on the difference between tax avoidance and tax evasion, check out this video.
Hire a Good Tax Preparer
A good tax preparer will help you figure out how much you owe and how to legitimately reduce your tax bill. They WON’T help you break the law by slipping over the line from reducing taxes to evading taxes.
Shaw & Associates Is on Your Side
Taxes are complicated and changing every year. It’s a good idea to have your taxes prepared by someone who is familiar with the current Canadian tax laws, and is also available to defend your taxes if you happen to get audited. The tax team at Shaw & Associates Chartered Accountants are tax experts; it’s our business to know the current tax laws, and we’ll be in your corner if you need us.
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.