S660
S660 rules have been around in one form or another since the 1930’s. Original rules stated that you cannot pass income to someone else in your family in order to reduce your tax bill. This aimed to stop people settling their income on another person, usually a family member, who pays a lower tax rate.
A common approach would be to transfer profit in the way of dividends from a high level earner to a partner or spouse. This reduces the amount of tax you would have to pay. S660 has become hugely unpopular and caused great controversy. It is estimated that half million family businesses will be effected by the s660 legislation. People who have been using such an approach have being asked to pay the tax back.
Dividends received by non-payrolled partners will now be taxed as income of the principal director. It is important to ensure that individuals pay the right amount of tax each year.
