Northern News : September 7th 2011
5 NORTHERN NEWS, SEPTEMBER 7, 2011 NEWS The recent decision of the Supreme Court in Penny and Hooper v C of IR has been one of the most eagerly awaited tax cases for some time. It involved the issue of 'market salary' and tax avoidance arrangements. The case has gone through the High Court, The Court of Appeal and now the Supreme Court -- with judgements changing along the way. Briefly, it involved two orthopaedic surgeons who restructured their affairs through companies and trusts and at the same time began paying themselves salaries far below what they had been earning. Decision The Supreme Court essentially found: a) The structures themselves were 'entirely lawful and unremarkable'. b) That 'there was no failure (by the taxpayers) to comply with any express requirement of the (Income Tax) Act in the setting of the salaries, since there are none'. (italics added) c) That it was then possible to go straight to a general part of the Act, which overrides all specific parts, and ask the question: did the structure result in tax avoidance? The Supreme Court's answer was, yes. Conclusion As a taxpayer, you may comply with all specific technical parts of the taxation rules, but nevertheless, if your purpose was to avoid tax, the general anti-avoidance rule will win. What it means for you All situations will have their own specific facts that will alter the boundaries of what is and is not tax-avoidance. However, generally, if you operate your business through a company or trust, you should pay yourself a salary that is at 'arms-length'. That is, what you would pay some other independent, non related person to perform the same work. Disclaimer The information contained in this article is intended to provide general information in summary form current at the time of printing. The contents do not constitute taxation and/or accounting advice and should not be relied on as such. Specialist advice should be sought for your own circumstances in every case. Keep salaries at 'arms-length' Paul Young firstname.lastname@example.org Phone: 09 407 5252 www.byers.co.nz THE TURNERCENTRE PRESENTS Top Energy 2011 Far North Science & Technology Fair An annual event, sponsored by Top Energy since 2002, the Fair is a hands-on educa- interest in science and technology for the region's Year 7 through 13 secondary school students. technology subject which challenges their TESF11 Public Open Days & Prize Giving Exhibits will be on public display. Dates: Venue: Entry: www.topenergy.co.nz ｩ Ectg qh gzkuvkpi vtggu0 ｩ Tgoqxcn qh fcpigtqwu vtggu0 ｩ Tgoqxcn qt tgfwevkqp qh vtggu hqt uwpnkijv qt vq kortqxg xkgy0 ｩ Rcno tgoqxcn ( ockpvgpcpeg0 ｩ Pq lqd vqq dki qt uocnn0 Ecnn 2:22 :95546 3934031AE Encouraging smiles Best medicine: Kidney failure survivor Wallace Wihongi's book of laughs. A book designed to encourage and bring a smile to those in adversity through kidney problems was launched on Thursday. Kidney Fix is written and illustrated by Kai- kohe identity and artist Wallace Wihongi, him- self a survivor of kidney failure after his daughter Marian donated a kidney in 2009. Wallace did cartoons for the Northern News for some 10 years. Published by Papawai Press, the book is a col- lection of Wallace s cartoons about dialysis and transplants and designed to raise the spirit, elicit a smile and hasten recovery for renal patients. There are 75 pages of mirth in this book, on offer to renal patients at the special price of $29.99 plus p&p (usual price $34.99). Order from Wallace at wihongiwal email@example.com. FREE COPY The Northern News has a free copy to give away courtesy of the author. To go in a draw, write your name, address and phone num- ber on an envelope, and send to Kidney Fix, Northern News, PO Box 1, Kaikohe 0440, or email the same details to firstname.lastname@example.org. nz.Last entries by Friday, September 16. Winner notified by phone. Clean up, clear out and donate your sale proceeds to Starship Starship Foundation has begun its Starship Spring Clean campaign where New Zealanders are asked to clean up, clear out and sell off, all in support of the kids at Starship. Throughout September, the public can list items for sale on TradeMe at www.trade me.co.nz/starship pledging all or part of the sale proceeds. Exclusive items donated by Starship s celebrity supporters, include Sparta- cus costumes donated by Lucy Lawless, a bespoke suit donated by the Prime Minis- ter John Key, signed gear from the All Whites and NZ Breakers and a 2010 racing suit, signed gloves and a signed car part from Scott Dixon. There are some exciting items that have been donated by the Starship Foundation s corporate sponsors, including a Be a Zookeeper for the Day experience and an ASB Classic shirt signed by Maria Sharapova donated by ASB; the world s biggest gas barbe- cue from Mercury Energy; a Vodafone Warriors signed shirt and ball from Vodafone; and coaching sessions with Silver Fern and Barfoot & Thompson Starship ambassa- dor Anna Scarlett. Visit www.trademe.co.nz/ starship to get started. During September Spring Clean, Starship has other ways to donate -- via its website, or dial 0800 STARSHIP (0800-7827-7447) to donate any amount, or text STAR to 469 to donate $3.
August 31st 2011
September 14th 2011