Taxpayer Wins Avoidance Case in the High Court - Salary was too low

A surgeon has won a tax case against the IRD, which had argued that he had avoided tax by paying himself an artificially low salary from his company.  The Court determined that the use of a company to do business was a valid choice and that there was nothing in the Tax Act that prevented a person with personal skills from using a company, or that required them to fix their salary from such a company at arms-length.

Further, the fact that a family trust owned the shares in the company and that dividends received by the trustees were passed on to the surgeon was not avoidance either, as all taxes required to be paid along the way had been paid.

Neither did the Court think that the amount of the tax saving was of importance (as it was in the well known "Dentist" case).

A victory for common sense.