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Inland Revenue warns against avoiding 39% rate

Inland Revenue (IR) says the new 39 percent tax rate for those on incomes over $180,000 may see some high-income earners tempted to try and reduce their exposure to the rate.

IR Customer Segment Leader, Tony Morris, says IR will be keeping a close watch for any activity by such people that looks like its primary aim is to avoid the 39 percent.

“If that’s how it looks to us then we’ll take the necessary action.

“We’re currently talking directly to tax agents and putting out a range of direct communications that are effectively a warning message and a guide to what kinds of activity will concern us.”

Tony Morris said IR had already published several statements covering income tax avoidance, all of which were available on IR’s website.

“We’re about to reissue one of those, a Revenue Alert first put out in 2011,” he said. “It focuses on diverting income from one business entity to another, and while we haven’t substantially changed our approach to this, it reframes the Alert in the context of the new 39 percent rate.”

Mr Morris said customers should think carefully about what moves they make around the new rate and look at the available information.

“The message really is, if you’re in doubt, or have questions, the best thing to do is seek advice. And of course, you can seek rulings from Inland Revenue.”

 

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