What is the difference between Tax Planning, Tax avoidance and Tax Evasion ?

Tax Planning describes a process to legally reduce tax costs and is sometimes referred to as Tax Avoidance. Both of these strategies can be legal and tax effective.

Tax Evasion is an illegal activity to reduce tax such as non-disclosure of taxable  income or claiming deductions or expenses to which you are not entitled.

The Australian Tax Office describes tax planning like this. (see link below)

http://www.ato.gov.au/atp/PrintFriendly.aspx?ms=atp&doc=/content/00242194.htm&mnu=49310&mfp=001/008

"You are entitled to minimise your tax liabilities through investment activities and to receive the benefits provided for under the law.

Tax minimisation is when you legitimately arrange your tax affairs to reduce the amount of tax you pay. These arrangements comply with both the letter and spirit of the law.

However, investment schemes and legal structures that do not comply with the law are considered to be aggressive tax planning arrangements – referred to as tax schemes.

A tax scheme is an artificial or contrived arrangement to avoid or defer tax obligations. Schemes often involve a series of complex transactions. They typically move funds through several entities, such as trusts, in order to avoid or minimise tax otherwise payable.

Schemes may also involve distorting the way funds are being used to enable a taxpayer to claim deductions they are not entitled to.

Last Modified: Thursday, 27 May 2010"

It is clear therefore that, because A4Companies Pty. Ltd. and Fintel Group Pty. Ltd. provide structures and information restricted to legal tax planning measures you can feel comfortable knowing that you should not face any difficulties with the ATO.

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