A see-sawing controversial tax battle involving Christchurch orthopaedic surgeons is almost certainly headed for the Supreme Court after today's finding it was tax avoidance.By a two to one majority, Court of Appeal judges reversed a High Court decision i
A see-sawing controversial tax battle involving Christchurch orthopaedic surgeons is almost certainly headed for the Supreme Court after today’s finding it was tax avoidance.
By a two to one majority, Court of Appeal judges reversed a High Court decision in the long-running Penny and Hooper case.
When surgeons Ian David Penny and Gary John Hooper each set up companies to buy their individual practice, they employed themselves in the 2002, 2003 and 2004 tax years at salaries the Inland Revenue Department considered were artificially low.
The IRD took the view that structuring their affairs so their practices were operated through companies and they were paid an artificially low salary amounted to tax avoidance.
The IRD said they took advantage of the lower company tax rate of 33c in the dollar when they should have been taxed at the higher marginal tax rate of 39c on their personal; revenue.
The High Court said the arrangement was not tax avoidance, but in a decision released on Friday afternoon Court of Appeal Justices Grant Hammond and Tony Randerson said it as tax avoidance and reversed the High Court judgment in favour of IRD.
Justice Ellen France dissented.
Penny and Hooper lawyer Geoff Harley was still analyzing the 55-page judgment late on Friday and indicated it was likely, because of is significance, leave would be sought to go to the Supreme Court.
