Avoid Losing Out! Tax Planning, Tax Avoidance & Tax Evasion, What is the difference?
Good Question, I am glad you asked.
As you tag along with me I'll tell you the story to help you understand why it saves you loads of money to know this crucial differences.
According To http://nationalpost.com/news/canada/canadians-pay-42-of-income-in-tax-more-than-they-spend-on-food-shelter-clothing-combined Canadians Already Loses 42% Of Their Income To Tax. Add To That The Fact That Most Canadians Pays More Tax Than They Should, Simply Because They Don't Claim All Their Expenses.
Planning
Anyway, what would happen if you don't stop at a red traffic light? A law enforcer or camera will catch you and you get a ticket, right?
So if Frosty stops at the red light he is AVOIDING the ticket with proper PLANNING. His planning makes it possible to stop in time to avoid a ticket. Is avoiding traffic tickets legal? Of course it is, they want us to avoid tickets and obey the law, isn't it?
Likewise, it is perfectly legal to reduce your taxes with the proper planning.
EVASION
If Frosty didn't stop at a red light and a cop sees him, he would chase him down.
If Frosty runs away he is EVADING a ticket.
He is breaking two laws, he skipped the red light and he is EVADING a ticket by disobeying the police officer that signals him to pull over.
Caution
Don't confuse the above "definition of tax avoidance" with the CRA's "definition of tax avoidance".
It is very different.
the CRA's definition can be found here: https://www.canada.ca/en/revenue-agency/news/about-canada-revenue-agency-cra/tax-alert/tax-avoidance.html
Be honest. Avoid possible criminal charges of tax evasion. Pay your fair share of taxes (nobody likes a Moocher) and on the other hand it is not necessary to pay MORE than your share with proper tax planning. With all the loopholes the rich left for us, I don't see why one needs to protests paying tax.
Do proper tax planing to avoid unnecessary payments in a way that upholds both the letter and the spirit of the law.
Are the rich not the ones who makes the laws or at least influence (bribe) the law makers? So why not learn from them?
See also how Warren Buffet Pays a lower tax rate than his secretary with the right tax planning.
http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/index.html
Or see how Star Bucks use loopholes of the rich and pay almost no income tax.
http://www.independent.co.uk/news/business/news/good-bean-counters-starbucks-has-paid-no-tax-in-uk-since-2009-8212579.html