tax avoidance
Introduction:
The goal of report is going to analysis the facts and use appropriate information to conclude whether there has been a tax avoidance arrangement, and also to outline the effect on a taxpayer if the tax avoidance arrangement exists. In order to meet the goal, this report followed steps from Draft Interpretations Statement to prove my opinions.
Law:
BG 1, YA 1, GA 1 of Income tax 2007,
Penny and Hooper v Commissioner of Inland Revenue (2011) 3 NZTR 21-014.
Ben Nevis Forestry Ventures Ltd & Ors v Commissioner of Inland Revenue; Accent Management Ltd & Ors v Commissioner of Inland Revenue (No 2) (2008) 23 NZTC 21,842.
White v Commissioner of Inland Revenue (2010) 24 NZTC 24, 600 (HC).
Application:
First of all, we need to identify the arrangement. According to YA 1 the definition of arrangement, arrangement concluded that all kinds of operation taken by the company to carried into effect. The definition of arrangement is very widely. It can be a contract or agreement between two parties, which comes with a particular effect. Even if there is one person who doesn’t know all or part of by which arrangement would be carried out by another person, that person may be consider as one party to an arrangement. Based on above, arrangement can be very complex and very hard to understand, or aspects of arrangement can be very hard to know at first. Hence, it is very important to make sure that all of relevant facts and information relating to arrangement are fully understand, and the effects of arrangement must be known. In this case, two shareholders have reduced their salary from $80,000 to $50,000. At the first examination, the reason why they reduced salary was that the earthquake made the business going down. However, the fixed salary is still considerably lower than regular IT consultants’ salary. According to the basic tax rates, when the salary was $80,000 a year, these two independent shareholders should bear the maximum personal income tax rate
The goal of report is going to analysis the facts and use appropriate information to conclude whether there has been a tax avoidance arrangement, and also to outline the effect on a taxpayer if the tax avoidance arrangement exists. In order to meet the goal, this report followed steps from Draft Interpretations Statement to prove my opinions.
Law:
BG 1, YA 1, GA 1 of Income tax 2007,
Penny and Hooper v Commissioner of Inland Revenue (2011) 3 NZTR 21-014.
Ben Nevis Forestry Ventures Ltd & Ors v Commissioner of Inland Revenue; Accent Management Ltd & Ors v Commissioner of Inland Revenue (No 2) (2008) 23 NZTC 21,842.
White v Commissioner of Inland Revenue (2010) 24 NZTC 24, 600 (HC).
Application:
First of all, we need to identify the arrangement. According to YA 1 the definition of arrangement, arrangement concluded that all kinds of operation taken by the company to carried into effect. The definition of arrangement is very widely. It can be a contract or agreement between two parties, which comes with a particular effect. Even if there is one person who doesn’t know all or part of by which arrangement would be carried out by another person, that person may be consider as one party to an arrangement. Based on above, arrangement can be very complex and very hard to understand, or aspects of arrangement can be very hard to know at first. Hence, it is very important to make sure that all of relevant facts and information relating to arrangement are fully understand, and the effects of arrangement must be known. In this case, two shareholders have reduced their salary from $80,000 to $50,000. At the first examination, the reason why they reduced salary was that the earthquake made the business going down. However, the fixed salary is still considerably lower than regular IT consultants’ salary. According to the basic tax rates, when the salary was $80,000 a year, these two independent shareholders should bear the maximum personal income tax rate