What Is the Difference Between Tax Avoidance and Tax Evasion?

    No one likes to pay taxes. But taxes are the law. The terms "tax avoidance" and "tax evasion" are often used interchangeably, but they are very different concepts. Basically, tax avoidance is legal, while tax evasion is not. 

    Businesses get into trouble with SARS when they intentionally evade taxes. But your business can avoid paying taxes, and your tax preparer can help you do that.

     

    Vat History

    It came into force in 1973, introduced by Lord Barber, the chancellor under Sir Edward Heath, and started off as a simple 10 per cent tax on nearly all goods bought from a business. Since then it has swollen in size, complexity and popularity.

    Paddy Behan, a partner at Vantis accountancy firm and considered to be of the country's leading VAT specialists, said: "It is hugely efficient tax, it's a great tax from a revenue raising exercise. It has swept the world. More than 130 countries have now adopted it from Belgium to Burkina Faso. One of the few holding out is America, but academics are talking about Obama introducing it over there."

    VAT was originally a French idea, started in the 1950s. Britain introduced it as part of its condition of joining the European Economic Community. All countries joining the EEC had to replace their indirect taxes with the VAT. It replaced the Purchase Tax, which was a fairly complex system that had many different rates.

    In the early days it was a relatively low level of no more than 10 per cent, with the exception of petrol and – briefly – electrical appliances, which were deemed in the days before Britain struck North Sea oil to be luxuries. They were subject to a 25 per cent rate.

    However, Heath's Government, when in opposition, had always promised that key essential teams would not be subject to VAT, such as books.

    1. Keep Tabs on Spending

    Making your budget work is all about knowing exactly what you’ve got coming in and going out each month. If your income is relatively the same from paycheck to paycheck your primary focus needs to be on what you’re spending. You can utilize budgeting tools by taking note of your bill due dates on a calendar, setting up automatic payments or entering them into a budgeting software program. This is a good start but you also need to keep up with your everyday expenses.

    1. Define Your Goals

    Living on a budget is certainly good for your financial health but it’s important to understand what yo

    An income tax is a tax imposed on individuals or entities (taxpayers) that varies with their respective income or profits (taxable income). Many jurisdictions refer to income tax on business entities as companies tax or corporate tax. Partnerships generally are not taxed; rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions. Most jurisdictions exempt locally organized charitable organizations from tax.

    Income tax generally is computed as the product of a tax rate times taxable income. The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). Taxation rates may vary by type or characteristics of the taxpayer. Capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.

    1. The Envelope System
    The envelope system is intrinsically simple. To begin, add up all of your fixed and variable expenses,  including rent, utilities, groceries, etc. Subtract this from your income, and put each expense into its own envelope. Label each envelope with its total cost and name, and when you receive each paycheck, put the amount in cash for each envelope.

    This is a basic way of making sure you have the assets you need for all your expenses as well as a way to  only use cash for the month. The rest is yours to have, whether it be for spending or saving.

     

    A tax (from the Latin taxo) is a mandatory financial charge or some other type of levy imposed upon a taxpayer (an individual or other legal entity) by a governmental organization in order to fund various public expenditures.[1] A failure to pay, or evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent. Most countries have a tax system in place to pay for public/common/agreed national needs and government functions: some levy a flat percentage rate of taxation on personal annual income, some on a scale based on annual income amounts, and some countries impose almost no taxation at all, or a very low tax rate for a certain area of taxation. Some countries charge a tax both on corporate income and dividends; this is often referred to as double taxation as the individual shareholder(s) receiving this payment from the company will also be levied some tax on that personal income.

    Whether you’re looking to create a personal budget spreadsheet or just get a better grasp on money management, start with these six steps.

     

    Step 1: Note your net income

    The first step in creating a budget is to identify the amount of money you have coming in. Keep in mind, however, that it’s easy to overestimate what you can afford if you think of your total salary as what you have to spend. Remember to subtract your deductions when creating a budget. Your final take-home pay is called net income, and that is the number you should use when creating a budget.

    Step 2: Track your spending

    It’s helpful to keep track of and categorize your spending so you know where you can make adjustments. Doing so will help you identify what you are spending the most money on and where it might be easiest to cut back.

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