Residential withholding tax - an overview Law and poetry ...s3-ap-southeast-2.amazonaws.com/adls-media/7517484/... · land withholding tax on residential property located in New Zealand

www.adls.org.nzISSUE 3 19 FEBRUARY 2016

LAWNEWS

THIS ISSUE:

Residential withholding tax - an overviewAn unusual outcome for mortgage guarantors

Law and poetry go hand-in-hand for well-known Auckland lawyer

+ Property law, tax

PROBLEMS WITH THE PROPOSED RESIDENTIAL LAND WITHHOLDING TAX

By Leicester Gouwland, Managing Director, William Buck Christmas Gouwland

A new bill has been introduced into Parliament which proposes a residential land withholding tax on residential property located in New Zealand sold within two years by offshore persons, which is or would be taxable income under the bright-line test.

This tax is intended to support the bright-line test, and is to apply from 1 July 2016.

The withholding tax applies to residential land located in New Zealand, however, there will be no exception for the seller’s main home, as an offshore person is unlikely to live in the home. However, the exemption for transfers on death or in relation to relationship property agreements will apply.

The obligation to deduct the tax will initially fall on the seller’s lawyer, as the paying agent. If the seller is not using a lawyer, the obligation then falls to the purchaser’s lawyer. In the absence of any lawyer, the obligation will fall to the purchaser. Continued on page 2

Where the seller and buyer are associated persons, the purchaser must withhold the tax, as the withholding agent.

The paying agent will be considered the seller’s agent for the purpose of this tax, and will not be liable for the tax itself, which is normally the position for agents. The paying agent will be liable though if they deduct the tax and do not pay it to the IRD.

The amount required to be deducted is the lower of 33% (28% if a company) of the simple gain on sale, or 10% of the sale price. In calculating the gain, no costs of acquisition or disposal are taken into account.

The tax will be paid before other deductions such as legal fees, except where the seller’s lawyer is the paying agent – in this case, the lawyer is able to pay off the mortgage funded by a New

Zealand registered bank or a licensed non-bank deposit taker.

If there are insufficient funds to pay the tax once the mortgage is paid, the tax will be reduced to the surplus available.

Standard penalties will apply except, in the case of a paying agent, late payment penalties will not apply where the tax has not been retained by the paying agent.

Paying agents who do not comply with their obligations to deduct the tax may be reported to their professional body.

The tax is only required to be deducted from the “residential land purchase amount” which is the amount due on the disposal of the land, excluding deposits and part payments, provided

PAGE 2 - ISSUE 3, 19 FEBRUARY 2016

Editor: Lisa Clark

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+ Property law, tax

PROBLEMS WITH THE PROPOSED RESIDENTIAL LAND WITHHOLDING TAXContinued from page 1

that any deposits and part payments do not exceed 50% of the sale price of the land.

The due date for payment to the IRD is the 20th of the month following deduction, however, payment may be made earlier in order for the seller to obtain a refund. A refund will be able to be used to pay income tax due on other taxable income. A refund is not available until the tax has been paid.

The tax is not a final tax, and will be a credit against the seller’s final income tax liability.

Taxpayers will be able to file an interim income tax return in respect of income from the sale of residential land taxable under the bright-line test. A refund is only possible in respect of the withholding tax – however, the income tax will not be final until the end of the tax year.

Should the tax not be collected in the year the income is taxable, the tax credit will be able to be used in an earlier year.

A feature of the proposed tax is that should the disposal be taxable under a different land taxing section, the requirement to deduct the withholding tax will still apply.

Who does this affect?

The tax only applies to offshore persons. An individual will be an offshore person if they are not a New Zealand citizen or do not hold a resident visa or permanent resident visa.

A New Zealand citizen will be an offshore person if they have not been present in New Zealand within the last three years. A residence visa holder will be an offshore person if they have not been present in New Zealand within the previous 12 months.

A New Zealand citizen or residence visa holder may have difficulty proving they have been present in New Zealand if they are not present in New Zealand at the time of sale. A certified statement or other proof such as travel tickets should be provided to the paying agent.

If the residential land is co-owned but only one owner is an offshore person then the tax will still need to be deducted.

For a company (or unit trust) to qualify for the non-offshore exemption, all of the following must be met:

• the company is registered in New Zealand;

• all directors and executives are non-offshore individuals; and

• no more than 25% of the shareholder decision-making rights are held by offshore persons.

The IRD suggests that these requirements could be proved by a copy of the New Zealand registration, sighting a copy of each director’s and executive’s New Zealand passport or residence class visa, and a statement from each director that, to their knowledge, no more than 25% of the shareholder decision-making rights are held by offshore persons.

A partnership will be an offshore person if one of the partners is an offshore person.

For a trust, the rules are far more complicated and if any of the following apply the trust will be an offshore person:

• the trustee is an offshore person;• the trustee has a co-trustee who is an

offshore person;• a settlor is an offshore person;• all natural person beneficiaries are offshore

persons;• all beneficiaries and all discretionary

beneficiaries are offshore persons; or• a beneficiary who is an offshore person has

received a distribution from the trust within the last six years of a relevant disposition of residential land.

A corporate trustee will need to meet both the company and trust criteria for the exemption to apply.

There are information requirements that will need to be complied with. The vendor is required to provide information to the IRD, including whether they are an offshore person and whether they are associated with the purchaser. Certified copies of documents will be required.

Paying agents and withholding agents will be required to provide statements detailing their tax obligations to the Commissioner.

There is a seven-year rule for the retention of records for anyone who receives information, and this applies irrespective of whether the tax is ultimately paid or not.

What are the issues?

The draft legislation presents a number of issues.

Continued on page 10

Leicester Gouwland

The government is essentially receiving a loan from taxpayers for the over-taxing, and the taxpayers receive only a small amount of interest (which is subject to tax), in compensation. A much fairer way would be to reduce the amount of the withholding tax to a level which allows for these deductions.


+ Guarantees, case note

Crown Asset Management Limited v Cameron [2015] NZHC 98By Michael Lenihan, Barrister and member of ADLSI’s Commercial Law Committee

Introduction

A company sues a husband and wife under a guarantee secured under a mortgage over land. The guarantee on its face secures the lending. In this all too familiar scenario, the guarantors are almost always held liable. However, in Crown Asset Management Limited v Cameron [2015] NZHC 98, the High Court was confronted with this scenario, yet decided in favour of the guarantors.

The case is worthy of consideration as it reminds us that a guarantee is a secondary obligation. In order for it to be enforceable there must be proof of a valid primary obligation that has been breached. This is where the plaintiff in Cameron came to grief.

Facts

The fact situation is complex and will be significantly simplified here.

The Camerons were farmers who had also engaged in property development since (at least) the late 1990s. They did so with the aid of lending from South Canterbury Finance (SCF).

The plaintiff purchased certain loans and securities from SCF after SCF was placed into receivership. The security sued upon in this case was a mortgage dated 1 March 2009 (2009 Mortgage). The principal sum owing under the 2009 Mortgage was $550,000. The mortgagor was Twin Oaks Enterprises Limited (TOEL). The Camerons personally guaranteed TOEL’s performance of the secured lending (as that term was defined in the 2009 Mortgage).

This should have been a straightforward enforcement of a guarantee. However, the plaintiff faced difficulties in proving its case because of the shambolic state of SCF’s records. The plaintiff was unable to prove that the guaranteed sum of $550,000 was in fact advanced to TOEL.

The plaintiff attempted to argue that there were earlier advances made to TOEL that were covered by the guarantee. The Hon Justice Duffy noted that the complexity of the records made this hard to follow and so this allegation failed.

Where the plaintiff got some traction was in arguing the following:

1. The 2009 Mortgage contained a term in an Annexure Schedule that stated “This mortgage is in substitution for and secures the same monies as were secured under Mortgage No. B501871.2 and B668717.2”.

2. Her Honour held that mortgage B501871.2 could not be relied on by the plaintiff because of the doctrine of merger.

3. Mortgage B668717.2 listed TOEL as the principal debtor. There was no evidence showing that TOEL continued to owe

money under this mortgage. However, mortgage B668717.2 extended the security of that instrument to an earlier mortgage 638239.5 in Memorandum of Variation 652586.1. The Camerons were named as principal debtors and mortgagors in this document.

The plaintiff accordingly argued that the Camerons were liable under that mortgage.

Her Honour said that for the plaintiff to succeed it had to show:

1. the Annexure Schedule in the 2009 Mortgage had the effect of extending the benefit of the guarantee to cover the indebtedness in mortgage 638239.5; and

2. the payment of the money owing under that mortgage was still outstanding.

The plaintiffs argued that the personal covenant to pay the loan automatically ran with the charge that was contained in each mortgage. Duffy J did not accept this based on the wording of each of the mortgages.

Duffy J set out an alternative ground as to why the personal covenant in mortgage 638239.5 was not covered by the 2009 Mortgage. This was that mortgage 638239.5 was two steps removed from the 2009 Mortgage. Her Honour said, at [32]: “The law of guarantees requires that the document creating the guarantee ‘evidences with sufficient clarity an intention’ on the part of the guarantors to guarantee the debt in issue.” Bradley West Solicitors Nominee Co Ltd v Keeman [1994] 2 NZLR 111 at 116 was cited as authority for this.

In this case, there was not a sufficient incorporation by reference to mortgage 638239.5 in respect of the guarantee given in the 2009 Mortgage. The reference to mortgage B668717.2 in the Annexure Schedule may have been enough to incorporate that mortgage, but it was insufficient to incorporate mortgage

638239.5 as well.

There was nothing that the plaintiff could point to as coming within the scope of the guarantee. The plaintiff ’s claim accordingly failed.

The plaintiff also argued that the Camerons owed money as principal debtors. This claim again foundered on the morass that were the records of SCF. The plaintiff presented evidence from one of its officers who had reconstructed what had happened at SCF. The officer did not have personal knowledge of the events though. His evidence represented essentially his best guess as to what occurred. He was not an expert, and so her Honour disregarded his evidence. There was no loan documentation or other evidence to support the amount claimed. The claim failed.

Comment

The decision is, with respect, difficult to support on the issue of intention to create legal relations. This is a well-known doctrine, but one which has very seldom been successfully invoked by a guarantor. There is a heavy presumption of an intention to create legal relations in business transactions: see The Laws of New Zealand: Contract at [88]. There could be no argument that this transaction did not generally occur in a business context. On the specific ground of the intent to include mortgage 638239.5, had the Camerons carefully read the documents, as her Honour did, they would have seen that this could have been included in the 2009 Mortgage. A person signing a document is taken to know its terms. The issue does not appear to be one of intent.

Her Honour was, however, on much firmer ground in holding at [35] that the plaintiff could not prove the debt and so the claim must therefore fail for want of proof.

The plaintiff failed to satisfy a fundamental requirement of a guarantee claim set out in the two principles below (that overlap to a large degree):

1. First, section 27(4) of the Property Law Act, which states that “in this section, contract of guarantee means a contract under which a person agrees to answer to another person for the debt, default, or liability of a third person” (emphasis added).

2. Secondly, the principle of co-extensiveness (see O’Donovan and Phillips, The Modern Contract of Guarantee, at 5-152). A guarantor cannot be liable to a greater degree than the principal debtor.

In short, on the principles above, if there is no principal debt, there cannot be any liability on the part of the guarantor.

The plaintiff was in fact unable to prove its claim on three key issues: (1) debt owed; (2) default; and (3) quantum. Looked at in this way, the correct result was undoubtedly arrived at in Cameron.

Michael Lenihan

LN


+ People in the law, law and poetry

Jim Boyack’s poems finally take flight As the old saying goes, you never know what is inside a book until you open its cover. Similarly, if you open the cover on someone’s life and look behind their nine-to-five job, you often find hidden talents.

In Jim Boyack’s case, he has been sitting on considerable poetic talents which, but for the urging of others, may never have been shared more widely. Although he has written poetry for many years to express reflections on a person, place or moment in life, it has been largely for his own satisfaction, with little thought of ever seeing his thoughts come to life in print.

“I’ve been writing poetry since high school, and it was my habit to stash the poem I’d just written in a drawer – a less than useful place to keep them! I would worry about the poem for a few days after it was created but then would stop doing so reasonably promptly. And by hook or by crook, it turns out that after 50 years or so I’ve created a whole pile of poems.”

Jim is one half of the New Zealand Restorative Justice Trust, the other half being his wife, Helen Bowen. Both are practising criminal lawyers and have worked extensively in the Youth and Alcohol and Other Drug Treatment Courts, sharing a passion for therapeutic and restorative justice. They have worked as facilitators and trainers in these areas and also jointly authored the New Zealand Restorative Justice Practice Manual (2000).

With quiet modesty, Jim notes that the compilation and publication of his poetical musings was “not my initiative”. It came about partly due to the promptings of friends and family who were worried about his self-confessed “propensity for losing bits of paper”, and urged him to come up with a better arrangement. While in recent years Jim had typed up some of his poems, they were still subject to technological misfortunes (such as the time his computer blew up), and earlier poems were still all over the place.

The decisive push to organise and publish came “out of the blue” when, earlier this year, poet and editor Dr John Weir contacted Jim. Having heard one of Jim’s poems in Wellington, he invited him to send through 20 or so poems which he would then collate into a small collection. Such an invitation was not to be taken lightly, with Dr Weir having recently edited the Complete Prose of James K. Baxter (Victoria University Press, 2015).

“It was such a kind offer that I got off my chuff and snooped around here and there to find my old poems,” says Jim. Thus Gracing the Wind: Poems 1966-2016 was born.

Jim wanted to have a representation from his earlier work in the 1960s and 70s through to more recent poems from the 2000s, but there were gaps of missing material in the middle. Luckily, his four adult children pitched in to help gather poems “from various bags, drawers and boxes” in his Ponsonby office.

“I was very pleased when some poems from 1966 when I lived in Tahiti came to light. They were dumped on a table in front of me and I thought, ‘These poems aren’t so bad’.”

As with many projects, the scope of the proposed “small collection” quickly escalated, with 20 poems being insufficient to capture the topical breadth and variety of Jim’s poetry and, in little over a fortnight, the selected poems numbered 100.

Jim describes himself as “a lawyer with a bent towards helping people”, and his and Helen’s practice has been characterised by a focus on therapeutic and restorative forms of justice and a desire to see the courts working as a positive instrument of change. Many of his poems have been inspired by his legal work, including in the Youth Court and more recently the Waitakere Alcohol and Other Drug Treatment Court, where he has been a supervising lawyer since its initiation.

“I’ve found it fascinating and thrilling to see recidivist offenders, whose offending was driven by addiction, fight against it and win. Similarly, the Youth Court is a very positive jurisdiction in which to work and so many good things happen when young offenders are supervised on the marae, encouraged to take responsibility and to

learn about their tikanga.”

Jim is not alone in combining a practice of the law with poetical leanings, but sees no special magic in the tendency for lawyers to want to express themselves less prosaically than they tend to do in their day jobs.

“I was a journalist for many years before I went to Law School in my 30s. Journalists, lawyers, judges and poets all come from a tradition of using words, and like to use words to express themselves. It is part and parcel of the same need to communicate something significant and to use words to do so. The poet simply reports on life in the in-between times of what he usually does – whether that be Bernard Brown writing poetry in between teaching, judging or, in my case, lawyering.”

Jim’s poem “For A Lawyer” is reproduced below with permission, but for those wishing to hear more, all are welcome to attend the launch of Gracing the Wind upstairs at Little Easy Pub, 198 Ponsonby Road on Sunday 28 February 2016 from 4pm-6.30pm. Please RSVP to [email protected].

Jim Boyack(photo courtesy of Stephen Piper)

Gracing the WindPoems 1966-2016

Jim Boyack Poem for a lawyer for KieranOne day it ends,the job we dowe do one last time.

There is no fanfare,no fandom present.We ask one last

question, pack our bagand go out the doorwe first came through

seems a moment ago.Even if it is a speechwe give in closing

on this last occasion,the very last questionis one we ask ourselves.

10:03am, 16 June 2015, High Court, Auckland

LN


ADLSI’s annual “Opening of the legal year” church service took place last week and saw practitioners, members of the judiciary and others from the legal community taking the chance to reflect and touch base at the outset of another new year.

The service was held at the University of Auckland’s MacLaurin Chapel on Wednesday 10 February 2016, and was led by the Very Reverend Jo Kelly-

+ ADLSI event review

2016 “Opening of the legal year” church service

LN

The AGM of members of the Auckland District Law Society Incorporated will be held on Thursday 3 March 2016, 6th Floor, Norman Shieff Room, Chancery Chambers at 5:30pm.

AGM Business

• Annual Report on ADLS Inc

• Confirmation of President and two Council Members

• Appointment of auditors

• Amendments to the Rules

• Notices of motion

• General business

Any notices of motion for consideration at the meeting must be received by the Chief Executive Officer at the Society’s premises by Monday 22 February 2016 at 5:00pm.

For catering purposes, ADLSI members wishing to attend the AGM are requested to RSVP to [email protected] or 09 303 5287 by Friday 26 February 2016.

For more information, telephone (09) 303 5270 or visit www.adls.org.nz.

+ ADLSI notice

Notice of Annual General Meeting

The Courthouse Liaison Committee has noted some issues arising from the recent changes to the ways in which the Ministry of Justice delivers its services to the profession and the public.

Of concern to some members is the combined effect of silence and delay when documents for the District Court’s civil jurisdiction have been filed by post or DX (which is the Ministry’s recommended option for all Auckland region courts). Upon receipt of Court documents in this category by the Ministry at Auckland-based Civil and Family Service, the documents are sent on to the Central Processing Unit in Wellington for assessment, and either acceptance for filing or rejection and return.

Even with conscientious and helpful Ministry staff dealing with documents on the day of receipt, the potential exists for the documents to be in transit from solicitor - Auckland - Wellington - Auckland for up to nine days. If documents are rejected, necessitating amended or substituted documents to be filed, the time frame for a successful filing will be double that length of time. Remember that when you have a limitation period looming.

Remember too that under the District Courts Rules (see DCR1A “to file” and DCR Sol), a court document is not filed until it is lodged in the required form in the proper registry.

A partial solution to relieve the stress of waiting in silence may be the ability to make enquiry by phone or email with the relevant staff at Civil and Family Services to monitor progress. To that end, the Ministry of Justice Service Delivery Manager for the six Auckland Courts agreed in July last year to supply a detailed contact list of the Civil Case Management team members. Regretfully, we are still waiting for the list, despite reminders.

+ Update from ADLSI’s Courthouse Liaison Committee

Service delivery delays

LN

Moore and the Reverend Dr Carolyn Kelly.

Pictured below at the service is ADLSI President Brian Keene QC with the Hon Justice Anne Hinton.

Attendees enjoyed some time to engage and chat over a cup of tea following the service.


+ Notice from AWLA

AWLA 2016 membership

Registration for membership of the Auckland Women Lawyers’ Association (AWLA) for 2016 is now open.

AWLA is a representative organisation of women involved in the legal profession, holding regular functions and networking events throughout the year.

If you join AWLA by 1 March 2016 then, as well as being eligible for discounted entry to these functions, you will automatically enter the draw to win a $200 Karen Walker voucher.

For more information and a member registration form please visit www.awla.org.nz. Completed registration forms should be returned to [email protected]. LN

Acting District Court Judge appointed

Auckland barrister and ADLSI member Andrea Manuel has been appointed an Acting District Court Judge with a Family Court warrant to be based in Auckland, to be sworn in on 22 March 2016 in Auckland.

Judge Manuel’s core area of practice has covered complex trust, estate and relationship property cases. She also has extensive experience in civil litigation, family law and Hague Convention work. Judge Manuel has been at the independent bar since 2006, initially with O’Connell Chambers and then with Shortland Chambers since 2014, and is also an author of the Fisher on Matrimonial and Relationship Property text.

Appointment of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016.

Ms Fong has held her current role since April 2013. She has also spent time as Acting General Counsel for the New Zealand Security Intelligence Service. Prior to joining the GCSB, Ms Fong spent eight years at Crown Law.

Current Acting Director Una Jagose is leaving the GCSB to take up her appointment as Solicitor-General. The State Services Commission is in the final stages of a recruitment process to find a permanent Director of the GCSB.

+ Appointments

A round-up of recent appointments

ADLSI invites the legal profession to come together at a breakfast with the Attorney-General, the Hon Chris Finlayson QC, to be held at the Northern Club on Friday 11 March 2016.

Please note the date change of this breakfast from 19 February 2016, as was previously advertised.

ADLSI would be delighted if you would join us at this event to hear an address from the Attorney-General. The Attorney-General will also be happy to answer questions following his presentation.

Date: Friday, 11 March 2016

Timing: 7.15am for 7.30am start

Dress code: Business attire

Venue: Northern Club, 19 Princes Street, Auckland

Tickets: $40.00 + GST ($46.00 incl. GST) for ADLSI members and the judiciary;

$55.00 + GST ($63.25 incl. GST) for non-members.

Spaces are limited so register before Friday 4 March 2016 to secure your space (subject to availability), by contacting us on [email protected] or (09) 303 5287.

ADLSI’s standard cancellation policy applies for this event.

+ ADLSI event

Breakfast with the Attorney-General, 11 March 2016

LN

The Hon Chris Finlayson QC

Andrea Manuel

LN

The Attorney-General has announced that an appointment round for Queen’s Counsel will take place in 2016.

Appointments of Queen’s Counsel are made by the Governor-General on the recommendation of the Attorney-General and with the concurrence of the Chief Justice. The Governor-General retains the discretion to appoint Queen’s Counsel in recognition of their extraordinary contributions to the law in fields other than advocacy.

The Chief Justice and the Attorney-General have issued Guidelines for Candidates. The Guidelines (and an application form) are available at www.crownlaw.govt.nz and set out the criteria for appointment and other information about the appointment process.

The regulations set a fee of $500.00 for applicants, reflecting the costs of the appointment process.

Applications for appointment as Queen’s Counsel open on 15 February 2016. Applications using the application form should be sent electronically to the Solicitor-General no later than 15 March 2016.

The Solicitor-General will consult with the New Zealand Law Society and the New Zealand Bar Association regarding the candidates. It is expected appointments will be made in late May 2016.

+ Notice to the profession

Appointment of Queen’s Counsel in 2016

LN


+ New book

New Zealand Employment Law Guide 2016

LN

Author: Richard Rudman

This new edition is based on the law in effect at 1 January 2016 and includes extensive commentary on the new Health and Safety at Work Act (coming into force on 4 April 2016), which is much broader in scope, with more severe penalties, than its predecessor.

Also discussed is the Employment Standards Legislation Bill (due for enactment in 2016), which makes some key changes to parental leave, prohibits zero-hours contracts and places higher expectations on employers to exhibit their compliance with statutory minima (holidays, minimum wages, etc) or face harsher penalties.

Price: $88.00 plus GST ($101.20 incl. GST)*

Price for ADLSI Members: $79.20 plus GST ($91.08 incl. GST)*

(* + Postage and packaging)

To purchase this book, please visit www.adls.org.nz or contact the ADLSI bookstore by phone: 09 306 5740, fax: 09 306 5741 or email: [email protected].

Waiata Bell and John Delaney are the joint winners of the Environmental Law Prize for 2016.

The award recognises the student with the best overall mark in the University of Waikato’s environmental law paper.

Ms Bell and Mr Delaney were presented with a cheque for $1,000 each at a function at the firm’s Auckland office. Padraig McNamara, partner in Simpson Grierson’s environment group, awarded the cheques.

Mr McNamara says: “Simpson Grierson is committed to rewarding academic excellence. We are delighted to contribute to the development of talented people like Waiata and John and wish them all the best for their futures.”

Ms Bell says of winning the prize: “It is an honour to receive this award from such a highly recognised and respected law firm. Environmental law is becoming increasingly important in modern society with issues that require sustainable and creative approaches.

“I greatly appreciate the generosity and encouragement provided by Simpson Grierson in my endeavour to contribute to the area of environmental law.”

Mr Delaney says of winning the prize: “I’m grateful to Simpson Grierson for sponsoring the environmental law prize. The interview process to identify the recipients was robust and enjoyable and added a sense of value and significance to the prize. I’m delighted to win it.”

Simpson Grierson has been sponsoring the University of Waikato’s Environmental Law Prize since 1992.Readers of last week’s Law News article entitled “Organised Crime and

Anti-Corruption Legislation” by Sarah Mead and Daniel King may be interested in attending a public lecture being hosted by Transparency International New Zealand and the NZ Governance Centre on Thursday 25 February 2016.

The lecture is entitled “How New Zealand Can Prevent Corruption and Why It Matters to Maintain Our Reputation for Integrity” and is being given at Auckland University, Arts One, Auckland University City Campus (by the Symonds Street underpass), Room 206-315, from 6:30pm-7:30pm.

In the recently released Transparency International Corruptions Perceptions Index (CPI), New Zealand dropped to fourth place – its second consecutive drop in a survey it has previously topped seven times. Following changes to our domestic anti-corruption legislation, New Zealand immediately ratified the United Nations Convention Against Corruption (UNCAC). But has enough been done to protect New Zealand’s corrupt- free reputation? Or is there more that we should be doing? What are the downsides if New Zealand’s reputation and integrity systems are weakened through apathy?

Speakers include Phil Goff (Auckland Mayoral Candidate and Labour MP), Nick Paterson (General Manager Investigations, Serious Fraud Office), Suzanne Snively (Chair of Transparency International New Zealand Inc), and the lecture will be moderated by Mark Sainsbury (Director, Transparency International New Zealand and broadcaster).

For more information or to RSVP, please contact [email protected].

+ Environmental law, young lawyers

Simpson Grierson awards Environmental Law Prize

Pictured from left to right are Simpson Grierson partner Padraig McNamara, John Delaney, Waiata Bell and Simpson Grierson partner

Gerald Lanning.

LN

+ Event, anti-corruption law

Upcoming lecture on anti-corruption law


Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

Featured CPD

Wednesday 24 February 2016 12pm – 1pm

1 CPD HOUR

Commercial Law Series: Shareholders’ Agreements – A Shag for Every Purpose When it comes to shareholders’ agreements, one size does not fit all. There are several situations where shareholders’ agreements are used, for different purposes and requiring different features. This webinar will compare and contrast the different types of shareholders’ agreements. It will also consider what you should include in a shareholders’ agreement to make it fit for purpose.

Learning Outcomes:• Understand when a shareholders’ agreement is necessary.

• Learn about tailoring shareholders’ agreements for different types of businesses and different ownership interests.

• Understand why provisions that are essential in some forms of shareholders’ agreement are counter-productive in others.

Who should attend?Corporate/commercial lawyers. General practitioners, as well as those who provide structuring advice to companies and shareholders, are likely to find this topic of interest. Accountants, directors and shareholders may also benefit from attending.

Presenters: Andrew Simmonds, Partner, Simmonds Stewart; Julie Fowler, Partner, Simmonds Stewart

Tuesday 1 March 2016 4pm – 6.15pm

2 CPD HOURS

Health and Safety at Work: Getting Reform-ReadyA new health and safety regime comes into effect on 4 April 2016. Preparing clients for, and advising them on, the new reforms will be essential for many lawyers. This seminar will shed light on the new legislation, provide insights into how WorkSafe will enforce the regime, and offer advice on how best to comply with the provisions of the Act as well as how to deal with prosecutions if they occur.

Learning Outcomes:• Gain an understanding of the new legal duties which will apply under the legislation (including the obligations of due diligence for officers) and how they can be met by your clients.

• Learn about the functions and powers of WorkSafe’s health and safety inspectors and the approach which they can be expected to take when dealing with duty holders.

• Understand the penalty regime which will apply under the legislation and the new enforcement powers which will be available.

Who should attend?Health and safety lawyers, in-house counsel, employment lawyers, civil litigators, insurance litigators, criminal lawyers, those advising on company and governance issues as well as general practitioners and commercial lawyers.

Presenters: Fletcher Pilditch, Barrister, Richmond Chambers; Mike Hargreaves, Chief Legal Adviser, WorkSafe; Sam Moore, Associate, Meredith Connell; Chair: Rob Coltman, Partner, Fortune Manning

Preserving Assets: A Litigator’s Armoury for Interim Relief Preserving assets may mean the difference between a Pyrrhic victory and one for which the client will thank you. Litigators have several weapons to achieve this objective: an array of orders (eg search, freezing, pre-trial charging), in addition to the Court’s jurisdiction to appoint receivers.

Learning Outcomes:• Gain a deeper understanding of the various ways to preserve assets, their respective advantages and disadvantages and how they interrelate.

• Receive guidance on practical issues, such as how to identify assets and how to make applications.

• Gain insights into the utility of the various forms of relief for particular contexts, such as situations involving trusts.

Who should attend?Civil litigators and in-house counsel. Accountants, insolvency practitioners and insurers may also benefit from attending.

Presenters: Seb Bisley, Partner, Buddle Findlay; James Nolen, Partner, Lowndes; Chair: The Honourable Justice Hinton


2 CPD HOURS


2 CPD HOURS

Accounting Principles You Need to Know to Become an Effective Commercial LawyerUnderstanding accounting principles and financial statements is vital in effectively advising on M&A mandates. This seminar will provide both legal and accounting insights that will assist you in identifying key risk areas for due diligence and better understanding the different purchase price mechanisms, completion adjustments and deferred purchase price considerations.

Learning Outcomes:• Get to grips with valuation principles and practice.

• Gain a better understanding about determining the key risk areas in order to be able to ask the right questions for due diligence.

• Understand the nature and rationale for completion, completion adjustments and effective dispute mechanisms.

• Learn about the meaning and use of deferred consideration and earnouts.

Who should attend?Commercial lawyers at all levels who wish to upskill and/or receive a refresher, and general practitioners who do commercial work.

Presenters: Tom Logan, Senior Associate, Minter Ellison Rudd Watts; Simon Peacocke, Partner, BDO Auckland

Chair: Andrew Lewis, Principal, Andrew Lewis Law

7. 10 hour 8. On demands6. Webcast5. Forum

1. Seminar 2. Webinar 3. Workshop 4. Conference

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Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

Featured CPD

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CPD in Brief

Company Directors: Risk of Civil Liability to Third Parties – 2 CPD hrs Thursday 10 March 2016, 4.30pm – 6.45pmCompany directors are well aware of the risk of civil liability. For the most part, their focus is on liability to the company under the Companies Act 1993. But developments in common and statute law mean that the potential for company directors’ civil liability to third parties deserves consideration also. This seminar seeks to bring together disparate areas of law to help directors better understand when they are personally at risk of civil liability to third parties, with a focus on liability in tort and under the Fair Trading Act 1986.

Presenters: Daniel Kalderimis, Partner, Chapman Tripp; Chris Noonan, Associate Professor, Faculty of Law, University of Auckland

Chair: The Honourable Justice Edwards

Rural Law Series: Current Issues in Resource Management – 1 CPD hr Wednesday 16 March 2016, 12pm – 1pmWith an ever-increasing focus on sustainability and environmental considerations, being able to advise farming clients on resource management is an essential aspect of any rural law practice. This webinar will look at the resource management issues currently facing farmers in both the North and South Islands and how lawyers can best assist their farming clients in dealing with them.

Presenters: Maree Baker-Galloway, Partner, Anderson Lloyd; Marianne Mackintosh, Special Counsel, Tompkins Wake

Evidence and Trial Preparation Workshop – 3 CPD hrs Saturday 19 March 2016, 9.30am – 5pmThe facts of a case, whether criminal or civil, are a variable over which a lawyer has little control. The optimum collection and skilful use of evidence are, therefore, essential aspects of any litigator’s toolkit. This workshop will cover the core competencies of evidence, proof and factual analysis (EPF). It will also look at methodologies and approaches to factual investigation, the development of a case theory and how to prepare a case for court.

Presenter: Chris Patterson, Barrister, Chris Patterson Barrister Limited

CPD On Demand

When an IP Disaster Strikes: Managing Intellectual Property Disputes – 1 CPD hrInfringement of a client’s intellectual property rights often requires immediate action. The client could face significant loss or have its entire business threatened if delays occur. The lawyer is often faced with a number of possible causes of action and procedural options. This On Demand webinar will assist lawyers in making the best choices at the outset to strongly enhance the prospects of a favourable negotiated or litigated outcome for the client. Presenter: Kevin Glover, Barrister, Shortland Chambers

Rural Law Series: Best Practice for Tailored Succession Planning – 1 CPD hr Rural properties (including farms) stand apart from other realty and income-generating assets in that they are frequently the culmination of lifetime investments, driving significant emotional attachment. These factors, together with the increasingly complex nature of families, mean that careful attention and expertise are required when advising such clients on succession planning matters. With focus on both legal and financial aspects, this On Demand webinar will equip lawyers with knowledge of how best to advise rural and farming clients according to their individual needs when planning their future, that of the farm and their children.

Presenters: Warwick Deuchrass, Partner, Anderson Lloyd, Queenstown; John Adams, Director – Tax, KPMG, Hamilton

Professional Disciplinary Tribunals: Achieving the Best Outcomes – 1 CPD hr For many practitioners, the realm of disciplinary tribunals, which relate to numerous professional bodies, is somewhat of an unknown, particularly in respect of procedural matters. Because the livelihood and reputation of clients are involved, the stakes are high. This On Demand webinar will provide insights from both someone who acts for professional disciplinary bodies and someone who represents clients at hearings.

Presenters: Michael Hodge, Partner, Meredith Connell; Sam Wimsett, Barrister, 22 Lorne Chambers

CPD Pricing

Delivery Method Member Pricing Non-Member Pricing

Webinar $75.00 + GST (= $86.25 incl. GST) $95.00 + GST (= $109.25 incl. GST)

Seminar (in person) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

Seminar (live stream) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

On Demand (1-hour recording) $85.00 + GST (= $97.75 incl. GST) $110.00 + GST (= $126.50 incl. GST)

On Demand (2-hour recording) $95.00 + GST (= $109.25 incl. GST) $130.00 + GST (= $149.50 incl. GST)

For group bookings for webinars & CPD On Demand, see the ADLSI website at: www.adls.org.nz/cpd/help-and-faqs/group-bookings/.











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Continued from page 2, “Problems with the proposed residential withholding tax”

First, there is the increased complexity and compliance involved. Vendors will need to prove they are not offshore persons and will need to file interim tax returns to get refunds of excess tax deducted.

Their costs will increase as there will be more work for lawyers who have to administer the withholding process, and accountants will be required to compile income tax returns.

Further, determining whether the seller and buyer for tax purposes are associated is often quite complex to determine. However, there are clear obligations on the purchaser when association is present.

The actual withholding tax in every situation will be more than the actual tax owed, if any. This is because the withholding tax calculation does not allow for costs of acquisition, costs of disposal, any improvements, or any existing losses. Or, in the case of a resident co-owner, they may not be liable for the tax at all. There is no reason why the tax could not be allocated on a percentage of ownership basis. This would save all the extra costs of recovering the refund, not to mention the opportunity cost of the use of the money.

The government is essentially receiving a loan from taxpayers for the over-taxing, and the taxpayers receive only a small amount of interest (which is subject to tax), in compensation.

A much fairer way would be to reduce the amount of the withholding tax to a level which allows for these deductions.

It is not unusual for New Zealand companies to have relatively small shareholdings held by offshore persons – we are a trading nation after all. If these companies have only a minority offshore shareholding they will need to comply with the withholding requirement even though they are essentially New Zealand companies.

It is even more commonplace to have an overseas director, so even if the

company is solely owned by New Zealand residents, it will be subject to the withholding tax.

This will be particularly irritating to land-dealing or development companies that are predominantly New Zealand owned but are offshore persons for this tax. Every time a sale is made, these companies will need to lodge an interim tax return in order to get their overpayment of tax back.

What is not clear from the definition is whether the withholding tax applies only to the GST exclusive amounts. If the amounts are GST inclusive this would lead to inaccurate amounts being deducted.

Lenders who are not banks or licensed non-bank deposit takers will find their security has been eroded as the withholding tax will need to be paid first. This will particularly affect related-party funding.

The Bill is now with the select committee. It is to be hoped that the select committee will carefully consider these issues, and make amendments so the tax is not only more workable, but also fair.

Note: ADLSI’s Property Law Committee also wrote about this topic last year in Issue 33, 25 September 2015. The Committee has recently made submissions on the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill and the Regulatory Systems Bill. Both submissions can be viewed under the Property Law Committee’s tab on the ADLSI website http://www.adls.org.nz/for-the-profession/committees/list-of-commitees/property-law/.

The first will introduce a residential land withholding tax from 1 July 2016 which will have a significant impact upon conveyancing practice in New Zealand. The second submission addresses planned amendments to the Unit Titles Act 2010 which are included in the Regulatory Systems Bill. Further updates will be provided in due course. LN

CHANCERY STREET CHAMBERS • Paul Dale has rooms available in his Chambers at 45 Chancery

Street. The options are either one large or one or two smaller offices, or any configuration to suit.

• The Chambers are comprised of a modern open plan reception and boardroom layout with the offices off that space. Opening windows and plenty of natural light make this a very pleasant

working environment.

• Full secretarial services can be provided if required. The Chambers have a good in house library, a friendly atmosphere and

are positioned in a great central location.

Call Paul Dale on 021 990 966 or Marlene Dale on 021 976 657

a solicitor with at least 3 years post qualification experience to join our expanding practice.

Ideally, you will have experience in commercial and residential property transactions, leases, trusts, companies, estates and the wide variety of work generally encountered in general practice. You need to be able to work with minimal supervision and basic training, and have a desire to expand your experience and grow a client base.

Ideally you will have gained client confidence and loyalty in your current position and can bring with you your personal client base. You may well have a specialty area of law that you wish to develop and expand.

We have a well located and appointed office and a congenial team of lawyers and legal executives. The future possibilities within the firm are not limited, for the right candidate.

In the first instance; email your CV and contact details to the director;Graeme Skeates [email protected].

skeates lawL I M I T E D

EXPERIENCED SOLICITOR REQUIRED Skeates Law Limited is a general practice located in Newton/Grafton, Auckland. We are seeking to employ

SOLICITOR - LITIGATIONWe are a boutique firm specialising in unit titles advice and disputes based in Waitakere City looking for a newly admitted or about to be admitted solicitor to work in our litigation team.

The role is primarily debt collection but with scope to expand to other litigation areas. The successful candidate will be available to start in early/mid April 2016.

Please apply to Price Baker Berridge by email to [email protected].

Applications will close on 26 February 2016.


WILL INQUIRIES LAW NEWSThe no-hassle way to source missing wills for

$80.50 (GST Included)Email to: [email protected]

Post to: Auckland District Law Society Inc.,PO Box 58, Shortland Street, DX CP24001, Auckland 1140

Fax to: 09 309 3726 For enquiries phone: 09 303 5270

+ Wills

Please refer to deeds clerk. Please check your records and advise ADLSI if you hold a will or testamentary disposition for any of the following persons. If you do not reply within three weeks it will be assumed that you do not hold or have never held such a document.

Yuan HE (AKA Angela HE), late of 8 Larkin Place, Somerville, Aged 34 (Died between 02’11’15 and 03’11’15 subject to Coroner’s findings)

Jessica Ariana POTAE, late of 8 Freemont Street, Chartwell, Hamilton, Early Childhood Educator, Aged 27 (Died 04’09’15)

Christine Elizabeth REAY, late of 30 Potter Avenue, Northcote, Auckland, Married, Aged 74 (Died 07’02’16)

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For information about leaving a legacy for the animals contact Bob Kerridge on 09 256 7306 or [email protected]

Protect Auckland’s animals for generations to come.For those who have enjoyed the love and companionship of an animal during their lifetime, leaving a gift to SPCA Auckland in their will is a fi tting way to honour that special relationship.


STEP AUSTRALASIAN CONFERENCE 2016

CONFERENCE DETAILS

Date Thursday and Friday 17th and 18th March 2016

Location Regatta room AD, The Pullman Hotel, Cnr Princes St and Waterloo Quadrant, Auckland 1010

Drinks and dinner to follow at The Northern Club

The Difficult and Demanding Trust Client/Beneficiary,

and how they should be managed.

For full details please visit www.step.org/conferences/1

SPEAKERSProf. Charles Rickett Keynote Speaker Dean of Law, AUT Law School, New Zealand

Carl L. Sheeler, PhD, ASA Managing Director, Berkeley Research Group LLC, USA

Prof. Matthew Conaglen Faculty of Law, University of Sydney, Australia

Andrew Butler Partner, Russell McVeagh, Wellington

Antonia Fisher QC O’Connell Street Barristers, Auckland

Bill Patterson TEP Partner, Patterson Hopkins, Auckland

Simon Beck TEP Principal, Baker & McKenzie LLP, Miami, USA

Stephen Tomlinson Principal, Tomlinson Law, Christchurch

Kathryn Dalziel Partner, Taylor Shaw Barristers & Solicitors, Christchurch

Ingrid Taylor Partner, Taylor Shaw Barristers & Solicitors, Christchurch

Jeremy Johnson Partner, Wynn Williams, Christchurch

CONFERENCE PROGRAM FOCUS• Instrumentalism in the Law of trusts: The disturbing case of constructive trust,

on an express trust.

• The 4-Letter Word That Allows Advisors to Manage Client Risk and Leverage Human and Financial Capital

• Equitable Compensation for Breach of Trust

• Taking Care of Information: Trustees’ Duties in Confidentiality, Privacy & Disclosure

• Tax Planning and Trusts: Drawing the Line

• Obtaining directions from the Court: The why, when and how

• Challenges to s21 agreements after death: Second marriages, blended families and the increasing number of claims against estates

• The difficult and demanding client (trust focus) and how they should be handled

REGISTRATION FEESMembers $1,000 +GSTCAANZ (TSIG) & ETPC Members $1,100 +GSTNon-Members $1,200 +GST

Spaces are limited. To reserve your ticket contact Megan Llewellyn on +64 21 189 5546 or [email protected] today.

Proudly supported by

The modern trust climate exposes trustees to increased scrutiny of their management of trust property. This conference focuses on the complexities facing the trustee, attorney and advisor alike.

Documents

Residential withholding tax - an overview Law and poetry ...s3-ap-southeast-2.amazonaws.com/adls-media/7517484/... · land withholding tax on residential property located in New Zealand