3 Aug 2010

Surgeons take tax case to Supreme Court

5:57 am on 3 August 2010

Two Christchurch surgeons involved in a long-running legal battle with the Inland Revenue Department about their tax arrangements have been given permission to take an appeal to the Supreme Court.

Ian Penny and Gary Hooper formed companies and employed themselves - a move the IRD said was designed to reduce their income tax liability.

The IRD won an appeal in June, overturning a High Court decision which had ruled in the surgeons' favour.

A majority of the Appeal Court agreed with the IRD that the surgeons' companies paid them salaries lower than the market rate payable to someone with similar skills, which amounted to tax avoidance.

However in a dissenting judgment, Justice Ellen France said not all arrangements which produce a tax advantage will constitute tax avoidance.