You may have heard or read about the well publicised tax case of two Christchurch surgeons Penny & Hooper who used company structures and family trusts to artificially lower their salaries to avoid a higher personal income tax rate.
The Supreme Court sided with the Inland Revenue when it ruled that “income derived from personal exertion should belong in its appropriate taxation band and should not be inappropriately diverted away”.
Inland Revenue concession to make a voluntary disclosure granted after the outcome of theÂ Penny and Hooper caseÂ runs out at the end of this month.
Those who make a voluntary disclosure before 31 March 2013 would be required to make adjustments for only the last two income years.
Those who did not come forward might incur not only penalties, but Inland Revenue might also reassess their tax position over four years.
Advisory AccountantsÂ have developed our Shareholder Remuneration Kit for our clients, and aÂ procedure to help you by assessing the risk that the Inland Revenue will disagree with the tax positions taken.
Please urgently arrange a meeting with me, so that we could assess the risk and advise whether we need to do a voluntary disclosure to Inland Revenue.
Should you require any further information, please let me know.