Posts Tagged ‘tax avoidance’

‘Tis the season to be giving…or is it?

October 6, 2011

ConfusedFollowing the abolition of gift duty on 1 October, we publish a special edition of Fineprint here.

You may be considering whether to complete your gifting programme in one fell swoop – or perhaps not.

Everyone has their own reasons for establishing a trust, and your own individual situation will be unique to you and your family. Completing your gifting programme in its entirety may not be the best step for you.

Do get in touch with us so we can talk about the best path forward for you and your particular circumstances.

The taxing issue of family trusts and companies

August 24, 2011

The Supreme Court has just released its judgment in the ‘Penny Hooper’ case. This case involved two doctors that worked in their own private practices. They then formed companies for which their family trusts were shareholders. Rather than the doctors receiving the full income they generated – they were paid a salary. The IRD said the salary was significantly below market value (i.e. one doctor went from $650,000 income one year to a salary of around $100,000).

The Supreme Court has said that having a salary set at a low rate to avoid paying tax is tax avoidance. However, if the salary is at a low rate for a legitimate reason (e.g. saving income for the purchase of a capital item) then this is not tax avoidance.

A more detailed summary of the decision follows and you can read the full decision here.

(more…)