The aim to conceal details in order for the Commissioner to deem the taxpayer responsible to a greater degree than the taxpayer is willing to concede is behaviour that would warrant a finding of evasion if the result is to escape tax. Not all avoidance is deceptive. If there is a deliberate effort to defraud the tax, it is considered fraudulent. Evasion, on the other hand, can occur but is not necessarily fraudulent if it is the result of a genuine error. The Commissioner must demonstrate that the taxpayer intended to evade in order to prove evasion. This motive, like that of other crimes, can be inferred from the circumstances of the case. Tax evasion and tax mitigation are incompatible. Tax evasion and tax avoidance are not mutually exclusive: they may both result from the same circumstances. For example, a taxpayer can file a tax return based on the effectiveness of a transaction that is known to be void as a tax avoidance scheme against the Commissioner. Tax preparation service
Tax Mitigation Definitions Evasion and Avoidance It is difficult to define a specific test for determining whether taxpayers have diverted, evaded, or simply reduced their tax liabilities. As Baragwanath J said in Miller v CIR; McDougall v CIR, the Commissioner, the Taxation Review Authority, and ultimately the courts must determine what is legitimate ‘mitigation’ (meaning avoidance) and what is illegitimate ‘avoidance’ (meaning evasion). Please note that the terms in the above statement are exactly as specified in the judgement. However, there is a mishmash of terms that I have explained with the words in brackets. Mitigation of taxes (Avoidance by Planning) Taxpayers have the right to reduce their tax liability and are not subject to the general anti-avoidance provisions of the law. In CIR v Challenge Corporate Ltd, Lord Templeman defined tax mitigation as follows: A taxpayer who decreases his income or incurs expenses in situations that minimise his assessable income or entitle him to a reduction in his tax liability reduces his tax liability.