ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
Which of the following is an example of legitimate tax avoidance rather than tax evasion?
Claiming capital allowances on qualifying equipment is legitimate because it uses a relief that tax law expressly provides. Disguising private costs as business expenses, hiding cash wages, or backdating invoices all involve falsifying or concealing information, which is tax evasion.
- AClaiming capital allowances available under tax law on qualifying equipment purchasesCorrect
- BRecording personal holiday costs as business expenses
- CPaying staff in cash without declaring it
- DBackdating invoices to move profit into a later year
Explanation
Claiming reliefs that legislation provides for qualifying spending is lawful tax planning. The other options involve false records or concealment, which are evasion.
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