Penny & Hooper Voluntary Disclosures Concession
IRD have been running a joint roadshow with NZICA on the implications of the Penny & Hooper case and the issue of market salaries.
IRD have stated that where a taxpayer makes a full and complete voluntary disclosure in respect of Penny & Hooper type arrangements, IRD will only reassess the two most recently filed income tax returns.
If IRD identifies such issues in an audit, then they will go back as far as the time bar allows which is the norm.
Reassessing two years only is potentially a significant concession and we applaud IRD’s initiative.
It is not clear what IRD will require in order for a voluntary disclosure to be “full and complete”. IRD may need to agree with the taxpayer’s assessment of a market salary or simply disclosing that the salary level is below market may be sufficient. Perhaps further guidance will be provided at the roadshow.
If you or your clients would like to make a voluntary disclosure, or would like to discuss any perceived risks you have, please contact us.
Graeme Carruthers
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