Tax Reviews Very Close to Home
For those not aware, the IRD is conducting risk reviews of accounting firms. Yes you read correctly, review of the firms and the partners affairs. The primary areas being looked at are the level of shareholder salaries in light of the Penny and Hooper case and salaries to spouses. The rationale of the Penny and Hooper case fits a sole trader business but how does it apply to a multi staffed firm? We are dealing with this issue with the IRD in some of the reviews being conducted. In one such case the IRD is contending the profit of the firm belongs to the partners. Surely the profit generated by staff belongs to the firm.
If you are concerned with the level of salary paid in your firm then there is always the voluntary disclosure option as referred to in the previous article.
Other areas being looked at are the treatment of work in progress, motor vehicles and the treatment of other benefits provided.
Phil Walker
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