Tax Planning vs Tax Avoidance

‘The difference between tax planning and tax avoidance largely comes down to intent. Tax planning, is organising your clients’ tax affairs in the most tax effective way within the intent of the law’ according to the Australian Taxation Office.

In contrast, tax avoidance is the legal usage of the tax regime to reduce the amount of tax that is payable by means that are within the law (but outside the intent of the law). Tax avoidance may be considered to be the dodging of one’s duties to society, or alternatively the right of every citizen to structure one’s affairs in a manner allowed by law, to pay no more tax than what is required. Community attitudes to tax avoidance vary from approval through to neutrality and outright hostility. Attitudes may vary depending on the steps taken in the avoidance scheme, or the perceived unfairness of the tax being avoided.