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SARS has to prove three things before it finds you guilty of breaking anti-avoidance rules

by , 12 June 2014
SARS knows you'd rather not give it all your company's money. It also knows there are methods you can use to reduce your company's income tax.

Because of this, SARS has created ways to stop you from completely skirting your tax obligations. These are anti-avoidance measures and if SARS finds out you've broken these rules, you're in serious trouble.

Luckily though, SARS can't just come after you. It first has to prove you've broken the rules.

Keep reading to discover the three things SARS must prove in this case.

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Legally pay less tax

It's your legal obligation to pay tax

Your company has a legal obligation to pay tax. 
If you don't register your company to pay income tax or your hide your company's taxable income from SARS, that's tax evasion. This is a lot more serious than avoidance.
Avoidance is simply finding ways to get out of paying your tax. Whether those ways are legal or not can depend on the situation. 
But, because avoidance tactics often come from lots of legal tax deductions and tax allowances, SARS had to put in the anti-avoidance measures. 
So if SARS catches you out for avoiding your tax obligation, ensure it proves these three things first...
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Avoid costly tax issues

Three things SARS must prove before it comes after you for breaking anti-avoidance rules

SARS must prove: 
1. You entered into a transaction or agreement;
2. The purpose of this transaction or agreement was to avoid paying tax; and
3. The transaction is abnormal.
Only if SARS can prove these three things can it penalise your company for avoidance. If it does prove them, however, you're in a lot of trouble, so rather just pay the minimum amount of tax and consult your copy of the Practical Tax Loose Leaf to see how you can pay less tax legally.

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SARS has to prove three things before it finds you guilty of breaking anti-avoidance rules
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