A Court of Appeal decision is cited to bring Inland Revenue Department under the spot light, in a bid to prosecute professionals taking undue advantage of Company structures to avoid high personal income tax rates.

Revenue Minister, Peter Dunne posts that Inland Revenue (IRD) delivers out 26 million correspondences every year and the aim is to significantly cut it.

The decision would be a strong step towards the use of structures that made professionals to get lower Company or trust tax rate, instead of the top personal tax rate.

The case involved Ian David Penny and Gary John Hooper, two orthopedic surgeons practicing in Christchurch, who established Companies to purchase their practices in 1997 and 2000, respectively.

In both cases, since the salaries from their newly set up Companies were lower than their previous self-employed earnings, they witnessed reduced tax rates.

Penny and Hooper won in the High Court; however, the Court of Appeal, ruled out that the sticking to the Company structure and the non-payment of market salaries unreasonably, leads to tax avoidance.

"This issue has been uncertain since the Labor-led government introduced a 39% personal tax rate in 2000. We have had 10 years of not knowing what the boundaries have been", Turner quoted.

A few doctors and dentists seem to develop jitters following the Court of Appeal's decision.