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March 12, 2021
Inland Revenue Department (IRD) has notified that the new 39% 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.
IRD Customer Segment Leader Tony Morris said that the Department will be keeping a close watch for any activity by such people with the primary aim to avoid the 39% tax.
“If that is how it looks to us, then we will take necessary action. We are 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,” he said.
Revenue Alert being issued
Mr Morris said that IRD had already published several statements covering income tax avoidance, all of which are available on IRD website.
“We are about to reissue a Revenue Alert first put out in 2011. It focuses on diverting income from one business entity to another, and while we have not substantially changed our approach to this, it reframes the Alert in the context of the new 39% rate,” he said.
Mr Morris said that customers should think carefully about what moves they make around the new rate and look at the available information.
“The message really is, that if you are in doubt, or have questions, the best thing to do is seek advice. And of course, you can seek rulings from IRD,” he said.
