Quote:
Originally Posted by Enoch Root
Making an RSP contribution is not avoidance, by the way, it is a deferral. Most tax strategies are deferrals.
|
Well, okay, but from the standpoint of Canadian tax law on abusive tax avoidance there's no difference - tax deferred is tax avoided. Hence a deferral strategy that includes an RRSP contribution can be targeted as abusive tax avoidance and subject to GAAR, if the strategy is found to be an abuse of the rules.
The point that we agree on is that there are three different types of reducing your tax burden, broadly speaking:
1. Tax avoidance - perfectly legal and expected, and the system is designed to allow for it.
2. Abusive tax avoidance - legal in the sense that you have technically complied with the rules, but have engaged in shenanigans to avoid the spirit of the rules to minimize or defer your taxes in a way that is contrary to the intention of the rules in the tax act.
3. Tax evasion - stuff like lying on your tax returns or misreporting transactions, illegal and criminal.
These are all very different things, but obviously 3 is the most different (it can in some cases be hard to tell the difference between 1 and 2).