The Inland Revenue Department has won an appeal relating to tax paid by two Christchurch surgeons.
In February, the department asked the Court of Appeal to overturn an earlier High Court decision that found the surgeons had paid themselves a relatively low salary to try to avoid paying the full amount of tax.
The surgeons, Ian Penny and Gary Hooper, formed companies and employed themselves.
However, the IRD said their companies paid them salaries lower than the market rate payable to someone with similar skills, and amounted to tax avoidance.
Two out of the three Appeal Court judges ruled in favour of the department.
But in a dissenting judgement, Justice Ellen France says not all arrangements that produce a tax advantage will constitute tax avoidance.
