TaxBlog

Ben Nevis & Ors v Inland Revenue

Tourism operator wins seven-year fight with IRD A tourism operator has won a case against Inland Revenue to have $6.28 million in goods and service tax paid back after a seven-year fight over a cheque that bounced.

Glenharrow Holdings Ltd v Inland Revenue

Previously The Court of Appeal had dismissed Glenharrow’s appeal and reduced Glenharrows refund.

The Supreme Court has confirmed that ruling, agreeing that the Commissioner was entitled to invoke s 76 of the GST Act 1985 and to treat the arrangement as a tax avoidance. The Court has found that the arrangement entered into to defeat the intent and application of the Act: the price was not paid in economic terms, even though as between the parties a debt was discharged. The structure adopted by the parties achieved no economic effect and nothing significant in commercial terms.

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Another interesting Herald editorial is out suggesting that there should be some kind of tax releif on interest.

The editorial is written by a guy called Jean Albert who is a “specialist in international law and a consultant on taxation, trade and competition.

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Business is calling for a raft of tax changes to alleviate its cash flow problems.

Furthermore there are provisions in the current system which require you to revise your profit estimates and make payments accordingly.

This seems to me to be a knee jerk reaction.

(I put the question mark above because it seems like a couple of people want an overhaul and the article claimes that these people are representative of all NZ business)

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The NZ Herald editorial is claiming that capital gains tax is viable and perfect for the financial climate

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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.

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The Govenor of New York has today proposed an “ipod Tax”

The ipod tax would tax the sale of downloaded music and other “digitally delivered entertainment services” by 4 per cent.

The article goes on to say that:

There also would be higher taxes on gas, taxi rides, cable and satellite TV service, cigars, beer, movie and sports tickets, and health spa visits, to name a few items.

Paterson seems to be fighting both obesity and budget deficits with a proposal for an 18 per cent tax on soda and other sugary drinks containing less than 70 per cent real fruit juice.

An ipod tax… That’s something to think about.

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Michael Hill International today announced that they would be moving their operations to Australia to save tax.

The restructuring “will materially and positively affect the after-tax profits and cash flow of the group,” chairman Michael Hill said in a statement. “This fundamental shift in functions has also required the Group to review its existing international transfer pricing arrangements which are in place for taxation purposes.”

It looks like there is nothing that the NZ revenue authorities can do to stop other NZ companies from following suit.

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Wesley Snipes has reached a settlement with the Internal Revenue Service regarding his tax fraud charges.

The agreement will likely see Snipes surrender to federal authorities when he next returns to America.

In return for agreeing to a payment plan, Snipes will not be jailed and will be allowed both to continue working and to travel abroad.

According to an October 17 indictment, Snipes tried to unsuccessfully claim nearly $12 million in false refunds for taxes he paid in 1996 and 1997.

The “Blade” star had his taxes prepared by accountants with a history of filing false returns to reap payments for their clients.

Snipes is currently in Namibia shooting the horror film “Gallowwalker.”

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Plans to hire 300-400 Inland Revenue staff to administer KiwiSaver are yet another example of the Labour Government’s public sector hiring binge, says National Party Associate Finance spokesman Craig Foss.

“This hiring will increase IRD’s staff numbers by around 8%. IRD already has 5,358 full-time equivalent staff on its books.

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Germany’s coalition government has reached agreement on slashing business taxes from 2008, in a bid to improve the country’s competitiveness.

In future, the standard rate for firms will be cut from nearly 39% to just under 30%.

Changes to the business tax regime are seen as a test of Chancellor Angela Merkel’s ability to push through her reform agenda.

The measure was agreed by a German government working group of tax experts. A simpler tax system has long been sought in Germany.

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