Income tax, controlled foreign company, double tax agreement, shortfall penalties

TDS 22/07: Income tax, controlled foreign company, double tax agreement, shortfall penalties. In this technical decision summary a case of taxpayer was discussed, where taxpayers income under ordinary concepts; employment income; attributed controlled foreign company income, Double tax agreement: tax residency; dependent personal services were critically analysed. The taxpayer was using two companies, NZ and US company to provide services as a CEO to NZ company. It was held the Taxpayer was treated as a New Zealand resident for the purposes of the DTA. The effect of article 15(1) of the DTA was that New Zealand had an exclusive right to tax the income that the Taxpayer derived. The disputed payments were income under ordinary concepts under s CA 1(2).

*The above article is a high-level explanation of the methods of calculation, and there may be other technicalities/rules that are applicable. The complexity of the calculations can also vary. Please reach out to us if you have specific questions regarding your situation.

Please note that the above does not constitute specific tax advice and only intends to be a general advice. If you require specific advice related to your situation, please reach out to our tax consultant using the ‘contact us’ option.

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