2008 media releases
Inland Revenue warns about income diversion
17 April 2008
Inland Revenue has issued a revenue alert about people who divert personal services income in an effort to pay less tax.
Group Tax Counsel Graham Tubb said that Inland Revenue has an ongoing concern about people who divert some or all of the personal services income they earn (or could earn) into an entity, such as a trust or a company, to take advantage of lower income tax rates.
''We acknowledge that there are legitimate business reasons for using such entities, and the use of such business structures does not necessarily amount to tax avoidance,'' he said.
''However, some cases contain common features which would encourage us to look at them further. These features include the entity employing the person for either no payment, or payment at an artificially low level, and a redistribution of the entity's income to the person or to family members.''
Mr Tubb noted that such personal income diversion can also have the effect of reducing child support liabilities or student loan repayments, as well as allowing people to become eligible for benefits such as Working for Families tax credits or student allowances.
He said each case would be reviewed on its own facts. "We will continue to investigate these arrangements and, where necessary, take steps to counteract the tax benefits obtained.''
Revenue alerts are an early warning service for tax professionals designed to highlight any significant or emerging areas of concern.
Tax professionals and customers can go to www.ird.govt.nz/technical-tax/revenue-alerts and subscribe by email to the revenue alerts, which are also posted on the website. The alerts are issued whenever Inland Revenue identifies a tax planning issue that needs highlighting.
Ends
For more information:
Mac Dalton
Media Advisor
(04) 890 1743
Other media releases this year
- Accountant sentenced for tax evasion
- Invercargill accountant jailed for tax evasion
- Dairy owner sentenced for hiding half a million
- Tauranga court jails man for tax evasion
- Most Working for Families recipients not charged interest for overpayments
- Former Kaikohe farm manager jailed for tax evasion
- Auckland plasterer jailed for tax evasion
- New callback service rolled out across Call Centre
- Former employee sentenced
- KiwiSaver report released
- Inland Revenue expands e-services
- Do-it-yourself tax refunds
- Employers reminded about new tax rates
- Former Inland Revenue employee pleads guilty to corruption
- Sentencing strong message for contractors
- Accountant jailed for defrauding clients and Inland Revenue
- Inland Revenue pilots callback system to help customers
- Inland Revenue proposes changes to company tax return
- Agricultural contractor sentenced
- Jail for horticultural student
- Tax fraud results in jail term
- Thousands apply for student loan amnesty
- Early Working for Families Tax Credits payments
- Inland Revenue wins People's Choice NetGuide web award for second time
- Waikato couple sentenced for tax evasion
- Report of investigation of an error in tax revenue numbers
- Tax credits for people made redundant
- R&D tax credit goes live
- Student Loan amnesty - last chance to apply
- Revised financial statements
- Tax advice for investors in failed finance companies
- Tax advice for property investors
- Provisional tax gets easier
- Early Working for Families Tax Credits payments
- IRD numbers about to get longer
- Tax authorities work together to stop international tax evasion
- Inland Revenue helps drought-affected farmers
- IRD numbers available at NZ Post and AA
- Inland Revenue warns against divulging personal details
- Second jail term for major tax scam
- Welcome surprise for owners of forgotten money
- End-of-year tax date fast approaching
- Time running out for student loan amnesty
Corporate Affairs
Inland Revenue
To make a media query:
Phone 04 890 1698 or email mediaqueries@ird.govt.nz
Please note, the email address is only for enquiries from the news media. It is monitored during normal business hours 8am - 5pm Monday to Friday.
P O Box 2198
Wellington 6140
New Zealand
Date published: 17 Apr 2008
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