IRD reaps $4m from taxpayers using trusts, sets deal deadline
BUSINESSDESK: Inland Revenue has collected $4 million from 170 taxpayers since the Supreme Court found two orthopaedic surgeons had avoided income tax by paying themselves low salaries through a structure of companies and trusts.
IRD announced today that those affected by the Penny and Hooper decision have until March 31, 2013, to make voluntary disclosures.
It has previously agreed to accept settlement for those who make voluntary disclosure for a two-year limit, which is less than the four years that could be audited under the decision.
The period of time for disclosure was brokered between the New Zealand Institute of Chartered Accountants and IRD, tax partner at Ernst & Young Jo Doolan says.
Until now, the IRD offer to restrict tax adjustments had lacked clarity around when the offer would expire, she says.
"But taxpayers are justified in having a sour taste in their mouth."
Businesses are struggling and the last thing they need is to be side-tracked by a lengthy battle with IRD.
The extension of the period for the two-year concession was welcomed by the institute.
IRD had sent risk-review letters to a range of taxpayers who it thought seemed to be taking positions at the more extreme end of the scale, it says.
IRD group tax counsel Graham Tubb saysthe department's objective is to encourage taxpayers affected by the case to contact it.
"By continuing this concession until March 31, 2013, we anticipate further voluntary disclosures, and this is a process that benefits everyone involved."