Newsletter - March 2024 (March Madness)
For some reason, the month of March sends us all in to a bit of a spin and not just in New Zealand, but this is a bit of a global phenomenon. “March Madness” can refer to a lot of different things, depending on where you are on the planet. For example, the month of March in the US signals the start of the extremely packed Basketball season and hence the madness surrounding the number of tournaments on offer.
In other locations, March brings a change of weather, resulting in the ensuing ‘seasonal’ madness and some of that applies here in New Zealand, although many locals might argue that its the return of all the students (to school, the roads and public transport) that makes for some more entertaining daily commutes.
March also technically brings in Easter (on the 31st) which then rolls over to April, so two short weeks back to back, meaning more work in less days for a lot of people.
This month our newsletter tries to capture some of that “madness” and also to provide a little calm over the month as we find ourselves almost a quarter of the way through 2024 and already heading in to cooler temperatures and shorter days. We have a review of the Government’s fast and furious 100 day plan, a recap on the importance of wills, trusts and estate planning, as well as a review of the current situation with the Accredited Employer Work Visa scheme from our immigration team.
The 100 Day Plan
It seems the Government has been very busy since starting back after the summer holidays, we thought now would be a good time to give a brief synopsis on some of the policies that might affect Commercial Property, Business and Residential Property transactions.
Marching Forward
The 8th of March 2024 signaled the last day of the new coalition Government’s ambitious 100 day plan.
Of course, it is hard to keep track at the moment as the pace of the announcements seems to be coming thick and fast but here are the ones we thought might be useful to you, as at today’s date.
The Commercial and Industrial Depreciations Benefit to be removed. For those of you that are Commercial Property Investors you may remember at the start of COVID the Government reinstated the right to claim depreciation against chattels inside Commercial and Industrial Units. By removing this, it appears our new Government intends to return to the pre COVID position.
Reinstatement of Tax deductibility on mortgage interest for rental properties 80% from 1 April 2024 and 100% from 1 April 2025 as part of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. (on passed).
Reduction in the Brightline test back from 10 or 5 back to 2. The bright-line property rule will only apply for properties sold on or after 1 July 2024 if the property is sold within 2 years of acquiring it. We are yet to hear if this adjustment will apply retrospectively so that the 10 year rule is deleted in its entirety.
These two moves, Tax Deductibility reinstatement and Brightline test reduction, may provide some relief for Landlords and mum and dad investors that are currently struggling with increased mortgage rates and/or are over leveraged.
Some clearer provisions are also expected on how to apply main home exemptions when the house, being the owners main home, has been being rented out for a period of time as well as been the owner’s main home.
Improving the tax treatment of stock and trade for businesses. The idea being that stock in trade disposed of by businesses, that is at below market value, for particular reasons can be taxed at a fairer rate. Think of a quick fire “liquidation sale” and/or hospitality giving away unused food to food banks, that stock in trade may now (or some point in the future) be given a more favourable tax treatment whereas, at present stock, is treated as a market value.
Proposed removal of red tape by exempting minor building work from paying a building levy. Such minor work is to be defined as: all projects under $65,000.00 (including GST).
Change to the pending Trust Taxation increase, so that Trusts with less than $10,000.00 of Trustee income per year will continue to be taxed at the 33% rate rather than the proposed blanket proposal of 39% for all Trusts.
Last but not least, the one stop shop for major projects with an intention to fast track the consenting regime for Regional and National projects of significance (Fast Track Approvals Bill).
Announcements at such a pace make it hard to keep track and while this information appears to be correct at the time of publication, things seem to be changing on an almost daily basis.
At Turner Hopkins we will do our best to try and keep you up to date however if you have a specific issue or want clarification on any problem then please don’t hesitate to contact one of our Property or Commercial experts.
Private Clients
In the realm of estate planning in New Zealand, ensuring thorough coverage and understanding of legal frameworks is paramount. From wills to trusts and navigating legal rights within de facto relationships, a comprehensive approach is necessary to safeguard assets and ensure smooth transitions. Let's delve into each of these crucial aspects:
Will Preparation: Covering Every Eventuality
Trusts, Wills & Estates
Our Private Client team knows what matters, whether it be planning for today, tomorrow or years to come.
In the realm of estate planning in New Zealand, ensuring thorough coverage and understanding of legal frameworks is vital. From wills to trusts and navigating legal rights within de facto relationships, a structured and comprehensive approach is necessary to safeguard assets and ensure smooth transitions. Let's delve into each of these crucial aspects:
Will Preparation: Covering Every Eventuality
Drafting a will is not merely about prescribing who gets what but about anticipating any potential claims on your estate and ensuring your will safeguards as far as possible against such claims in carrying out your wishes. You should consider not only asset distribution but also guardianship arrangements for dependents, any specific instructions regarding assets and possible provision for favourite charities. Working with a legal specialist in this area can help ensure you have a comprehensive will that covers all possible eventualities, providing peace of mind for you and your loved ones.
Understanding the Purpose of Trusts
Many people opt to establish trusts to manage and protect assets, but understanding the underlying reasons is essential. Trusts offer a range of benefits, including asset protection, tax efficiency, and flexibility in estate planning. Whether it's protecting family wealth, facilitating charitable giving, or ensuring the financial security of beneficiaries, comprehending the rationale behind establishing a trust is crucial for effective wealth management and succession planning.
Legal Rights in De Facto Relationships
In New Zealand, the law gives legal rights to people in de facto relationships. Understanding how and when these legal rights crystalise, especially when not living together full-time, is vital. Getting advice from a legal specialist can help clarify rights concerning property division, inheritance, and financial obligations, ensuring clients are informed and empowered to confidently navigate their legal affairs within a de facto partnership.
Best Practices in Trust Administration
Proper trust administration is fundamental to maintaining the integrity and effectiveness of trusts. This entails diligent record-keeping, prudent investment management, regular reviews to ensure alignment with evolving circumstances, and adherence to legal and fiduciary responsibilities. Engaging professional trustees or seeking guidance from legal experts can help implement sound trust administration practices, safeguarding assets and fulfilling fiduciary duties effectively.
In conclusion, navigating the complexities of trusts, wills, and estates in New Zealand demands a holistic approach that addresses various legal, financial, and personal considerations. By ensuring comprehensive will preparation, understanding the rationale behind trusts, clarifying legal rights in de facto relationships, and adhering to best practices in trust administration, individuals can secure their assets, protect their interests, and facilitate seamless intergenerational growth within families. Seeking guidance from legal professionals and keeping informed about relevant legal developments are crucial steps in achieving robust estate planning strategies tailored to your individual needs and objectives.
Visa Updates
Late last month the Public Service Commission issued its findings into a review of the Accredited Employer Work Visa (AEWV) scheme, which apart from pointing out significant flaws in INZ’s processing model, painted a very grim picture of the impact on migrants, amidst increasing levels of exploitation. The irony of course being that the AEWV scheme was introduced by the previous Labour Government as a means to reduce that exploitation.
AEWV Scheme Under Review
The (AEWV) scheme and in turn INZ were recently placed under the microscope with a less than glowing review…
The report (available here) goes in to great detail as to how the process failed, largely because of the adoption of a “light-touch” or “high-trust” processing model. In non-Government speak, this means INZ were told to assess applications from employers and applicants at face value, relying primarily on the declarations made in the application form. While the vast majority of those were accurate and well intentioned, this lack of scrutiny opened the door for a number of bad actors to take the stage.
Over the course of the last year and a half, a significant number of rogue employers and recruitment agencies entered the system, effectively securing the ability to sell “job tokens” which were issued by INZ enabling these agencies to employ migrants. The problem is that many of these ‘tokens’ were not supported by real jobs and they became a form of currency (in some cases these employers were asking for and being given hundreds of tokens at once).
Obviously there were INZ staff working all of this out and raising the alarms, yet the report highlights that these warnings were not addressed quickly enough by INZ senior management, which meant that the cracks could grow bigger, with more rogue employers rushing to fill them.
So what does this review mean, now that the cat is out of the Visa bag?
The Minister has already signaled her intent to tighten the system up, which will mean potential changes to the policy and criteria over the next few months. The challenge for Erica Stanford however is that tweaking rules won’t really solve the problem and it comes back to how those rules are delivered.
To that point (delivery) we are already seeing INZ’s processing pendulum swing back towards a far stricter and narrower approach. There is far great scrutiny being placed on employers and applicants now, with a significant increase in the times INZ ask for more information. The slightest whiff of something not being done properly will lead to questions being asked.
So what you can you do avoid delays and complications?
Our advice is to do this:
Before you renew your Accreditation, check and double check your compliance with the AEWV rules. Have you provided your Work Visa staff with the right information, kept accurate records and are all staff on the correct Visas.
If there have been any significant changes to your business, since Accreditation was first granted, be sure to disclose these.
Make sure you are prepared to present INZ with additional information, if requested, but equally ensure that you know what they can reasonably ask for and what is simply a fishing exercise.
For candidates, time your applications carefully and be sure you have all the necessary documents in order, and applications presented clearly. Small mistakes can lead to significant delays.
Now more than ever and certainly as the Minister looks to tighten the reigns, getting all steps in the Work Visa and Accreditation process correct is going to be crucial to maintaining your ability to use this system in the future. Being able to stay on top of the official changes is one thing, but knowing how quickly that processing pendulum swings is somewhat of an art - one that the team at Turner Hopkins Immigration Specialists are uniquely qualified for.
Questions? Contact Us Today
Private Clients
Commercial
Immigration
That brings our March newsletter to a close and hopefully has added a little sanity to the madness that befalls the month of March. We hope you all enjoy your Easter break and have a very safe, relaxing and enjoyable holiday break - with any luck the weather will come to the party as we farewell the last remnants of summer (yes some of us are still holding on tight).
Before we go, a little reminder that as things are getting tougher out there for many families, and as proud supporters of KidsCan, we would like to encourage anyone who can give a little, to do so. You can donate online, and every little bit helps this amazing organisation to provide valuable support to children throughout New Zealand.
We will be back in April, having consumed far too much chocolate and also with some interesting discussion and insights in to the world of AI and its impacts on the legal system. We will also be reviewing changes to Work Visa policy, which we expect will have been released by that date and further insights from the legal team here at Turner Hopkins.
The Team - Turner Hopkins
