What Is Tax Avoidance vs Tax Evasion
No. Using a tax practitioner to legitimately minimise your tax is legal tax planning, not evasion.
What Is Tax Avoidance
Tax avoidance is the legal use of deductions, exemptions, and tax-efficient structures to minimise your tax liability. Examples include claiming home office deductions, retirement annuity contributions, and medical tax credits.
What Is Tax Evasion
Tax evasion is the illegal non-payment or under-payment of tax. Examples include not declaring cash income, falsifying expense claims, keeping two sets of books, and using fake invoices.
Penalties for Tax Evasion
Tax evasion carries criminal penalties including fines up to double the tax evaded and imprisonment for up to 5 years. SARS has dedicated investigative units and shares data with other government agencies.
Frequently Asked Questions
Is using a tax practitioner tax avoidance?
No. Using a tax practitioner to legitimately minimise your tax is legal tax planning, not evasion.
What should I do if I made a mistake on my return?
Submit a Request for Correction as soon as possible. Honest mistakes are not tax evasion.
Can SARS criminally prosecute for tax evasion?
Yes. SARS can and does criminally prosecute serious cases of tax evasion, leading to fines and imprisonment.
Need Help With Your Tax?
Admin Boss is a registered tax practice with over 20 years of experience helping South African individuals and businesses navigate SARS.