Surgeon Tax Case Goes to Supreme Court

August 3, 2010 New Zealand Taxation

MedicineThe legal action between the Inland revenue Department and two Christchurch surgeons is set to continue, after their tax dispute case was accepted to be seen in front of the New Zealand Supreme Court.

Ian David Penny and Gary John Hooper’s application to appeal to take their “company structure” tax evasion case to the Supreme Court was approved on August 2nd. The action revolves around alleged tax evasion committed by the medical professionals through a controversial company structure which was claimed, by the Inland Revenue Department (IRD), to amount to non-payment of their fair market salaries, for the purpose of reducing income tax liabilities.

In June 2010, the New Zealand Court of Appeal agreed with the IRD that the doctors used corporate and family trust structures to greatly downplay their taxable incomes, by paying themselves salaries well below the “market rate”. The IRD claims that Ian David Penny saved a cumulative NZD 102 000 in personal income tax payments through the structure. Gary John Cooper was alleged to have lowered his payments by NZD 65 000.

The case is scheduled to be heard by the Supreme Court in early 2011. Meanwhile the IRD commented on the development, saying that it welcomes the opportunity to hear the Court’s clarification of the Income Tax Act 1994, but until then will continue to apply the laws as set out by the Court of Appeal.

Photo by iPocrates

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