Latest News [index] Below market salary
The Court of Appeal decision in Penny and Hooper considers the circumstances where a below market salary can amount to tax avoidance. In this case the majority of the Court of Appeal found that payment of salaries that were far lower after a trust / company arrangement was adopted was tax avoidance. It is important to appreciate that the structure itself was considered a valid trading structure with no question of sham arising.
With the top marginal rate dropping to match the trustee rate this decision may seem of limited importance. However, as this case raises important issues regarding salary structuring, anyone with concern regarding these matters should contact a member of the Ayres Legal team. For the full decision in Penny and Hooper see http://www.courtsofnz.govt.nz/from/decisions/judgments.html