Following our post the other day about Michael Hill moving to Australia to dodge tax comes this article in the Herald where the IRD are saying that the Tax system is under pressure from rich avoiding tax.
There are some interesting lines from the article:
“There is ample evidence that people are using different entities to structure their affairs in ways which reduce their tax liabilities.”
This to me is common sense. If you can minimise your tax by legal means then you would be a fool not to. We’ve had that discussion many times before on this blog. It’s also interesting to note that the IRD were not saying in the above quote that they were concerned that taxpayers were using illegal means to minimise their tax, simply that they were minimising their tax.
The report goes on to say:
“It can create a mentality that rather than tax being something which is paid for by all, tax is something for the smart, the able and the well advised to avoid. Over time, this can erode confidence that the tax system is fair.”
This has long been a view held by all salary and wage earners (that self employed people get a better deal). However many a salaried person chases their dream of owning their own business only to have it shattered upon the rocks of IRD compliance and red tape.
You could sum up the IRD’s view by saying that he who has the best advisors wins. Well put I say.