LawNews - Issue 21

NEWS Jul 1, 2022 Issue 21

Inside ■ CONSULTATION

Have your say on regulation P05

■ CREDIT

Lending changes kick in today P06-07

Is legal aid a adls.org.nz

LOST CAUSE?

Contents 03-05 THRESHOLDS ACCESS REPRESENTATION

A legal aid system in crisis

LawNews is an official publication of Auckland District Law Society Inc. (ADLS).

06-07 CONSUMERS BANKS CREDIT

How banks will apply the new consumer credit rules

Editor: Jenni McManus Publisher: ADLS Editorial and contributor enquiries to: Jenni McManus 021 971 598 Jenni.Mcmanus@adls.org.nz Advertising enquiries to: Darrell Denney 021 936 858 Darrell.Denney@adls.org.nz

08 GIFTING TAX DONATIONS

Using donation tax credits for good

All mail to: ADLS, Level 4, Chancery Chambers, 2 Chancery Street, Auckland 1010 PO Box 58, Shortland Street DX CP24001, Auckland 1140, adls.org.nz

10-11 FEATURED CPD

12 Photo: VasjaKoman / Getty Images

CPD IN BRIEF

13 EVENTS

Write for LawNews LawNews welcomes commentary and opinion pieces from ADLS members and readers. We ask that contributions are civil in tone, factually correct, well-written and logically argued – and fewer than 800 words. And we won’t publish anonymous commentary.

Any questions, please email the editor at: Jenni.McManus@adls.org.nz

LawNews is published weekly (with the exception of a small period over the Christmas holiday break) and is available free of charge to members of ADLS, and available by subscription to non-members for $140 (plus GST) per year.

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Responsibility for such views and for the correctness of the information within their articles lies with the authors.

Cover: Bill Oxford / Getty Images

02

Jul 1, 2022 Issue 21

LEGAL AID

Why our legal aid system is broken When the income thresholds increase next year, it will still be the case that a person working on the minimum wage and with one dependent will be considered too wealthy to get legal aid

David Fleming

Jenni McManus On Budget night this year, and with much fanfare, the government announced a $148.7 million injection of funds into New Zealand’s legal aid system, to be drip-fed over the next four years.

The money would, the government said, “ensure continued access to justice by significantly strengthening the legal aid scheme”. It would also allow for changes to woefully low financial eligibility thresholds and boost the equally low remuneration for legal aid lawyers.

An additional $41.4m has been granted to meet the expected increase in demand for legal aid when the income thresholds change on 1 January next year and an estimated 93,000 more people become eligible.

The Budget announcement was received with enthusiasm by the Legal Aid Commissioner, Tracey Baguley. In a note to the profession, she acknowledged there would be no increase for legal aid lawyers working on fixed rates (the bulk of legal aid work) and that there would be no raise either for duty lawyers, working for $86 an hour.

Nevertheless, Baguley said, “This is exciting and a huge step in the right direction for the legal aid scheme”.

Lawyers, not surprisingly, view the Budget announcement somewhat differently, particularly those who have been lobbying the government for years for sustainable fees for legal aid work and realistic income thresholds for their clients.

David Fleming, from David Fleming Employment Law, is in no doubt the legal aid system is broken. “When the income thresholds increase next year, it will still be the case that a person working on the minimum wage and with one dependent will be

Julie-Anne Kincade QC

considered too wealthy to get legal aid,” he says.

He would like to think that someone on the minimum wage ($44,096) would qualify for legal aid and the system would be structured in such a way that a law firm could run a sustainable legal aid practice.

Although the Budget funding is a good start, it’s disappointing, he says. The system is broken when you consider its purpose: providing access to justice without effectively requiring lawyers to subsidise it.

The current income threshold for a single legal aid applicant is $23,326. For someone with a partner and one dependent, it is $36,940. At the upper end, the cut-off point for an applicant with a partner and five kids is $75,404. These thresholds, set in 2017, will rise by 15% from 1 January next year and by 1.9% for each of the following three years.

But, apart from applicants with large families, those on the minimum wage will still be ineligible, not to mention middleincome New Zealanders who also struggle to access legal representation. Only low-paid part-time workers, beneficiaries, superannuitants and those in custody are likely to qualify.

Pressing issue

The system is broken when you consider its purpose: providing access to justice without effectively requiring lawyers to subsidise it

Chief Justice Dame Helen Winkelmann devoted a special section of her inaugural annual report earlier this year to what she described as “the pressing issue of legal aid”.

“A well-functioning democracy needs a fair, just and sustainable legal aid system to provide access to justice and to promote respect for the rule of law,” she said.

“New Zealand’s legal aid system is underfunded and some of its legislative and regulatory settings are creating their own barriers to access to the courts and legal representation. These deficiencies are causing the system to fail to meet its objectives of facilitating access to justice and upholding the rule of law.”

There was a pressing need for investment in the legal aid system, Chief Justice Winkelmann said, and debt repayment thresholds needed to be lifted for those who received legal aid as a loan. She noted that the hourly rate for lawyers had not risen since 2008, while fixed fees for criminal legal aid had not been adjusted since 2016.

Continued on page 04 03

Continued from page 03 When compared with the adult minimum wage (then $41,600), legal assistance is out of reach for many and thresholds had not kept up with costs and wage inflation, she said.

Senior criminal barrister Julie-Anne Kincade QC agrees with those who say there’s no silver bullet for fixing the system.

“We welcome the attention that Cabinet is giving to the issue and the fact that there is movement there to avoid the situation that exists in the UK, where legal aid lawyers have been forced to take strike action,” she says. “ “They haven’t been able to find lawyers to cover the cases that existed even before the strike action. The criminal system in the UK is at crisis point so I really do welcome the fact that here in New Zealand we’re trying to avoid reaching that point.”

The increase in people eligible for legal aid is also welcome, Kincade says, but who is going to do the work?

In the area of criminal law, there is a bottom-heavy pool of lawyers at the junior level, partly because several senior criminal legal aid lawyers have been appointed to the bench. And because there have been few trials over the past couple of years, a good proportion of these junior barristers are not trained to handle jury trials.

The remaining senior legal aid lawyers are “swamped”, Kincade says. “We are doing our best, but we are a very small pool of people to cover a lot of work.”

There are also few lawyers doing legal aid work in some geographical areas of New Zealand, especially in the South Island, where they’re spread very thin. “So, again, there is an overall concern about who’s going to do these increased cases when more people are now entitled to legal aid.”

Juniors coming through the ranks need to be supervised, especially for trial work – a point also taken up by barrister Emma Priest.

Even if the money were available, there is no capacity in the profession to train enough juniors to meet the need, Priest says.

And the workload is taking its toll. “What we do is vocational but there is a tipping point for us all in terms of wellbeing and burnout and capacity.”

Priest was hoping the Budget would allocate funding for training junior barristers for trial work. At the moment she is meeting the costs herself.

“I have a junior, but I have to pay for her to be with me in a trial for a week at my cost and I do that, but it means I make no money for that trial. Almost 100% [of defendants] are now electing trial by jury so we need jury trial lawyers and the only way they can get experience is by junioring and the only way they can junior is by senior lawyers having the time and the inclination to take them on. Most juniors don’t want, or aren’t able, to do that for free.”

Nominal fee Funding for juniors, Priest says, is where the legal aid system 04

Emma Priest

would get most bang for buck. She proposes a nominal fee of $500 a day, to be funded from the legal aid budget, to cover trial preparation and time spent in court. “That would allow us to take on juniors and get them up to speed very quickly.” Many of these juniors are on the cusp of reaching the level required to do more complex work. They meet the criteria but for the fact they need jury trial experience.

For Priest, it’s all about succession. “We need to ensure that we’ve got more people coming through the ranks,” she says.

This will become more important from next January when the thresholds change, and more people become eligible for legal aid.

“It’s quite terrifying – the prospect of more clients and no more lawyers,” she says.

She says the demand is so high she is turning away between five and 15 briefs every week. Fleming, whose firm began doing legal aid work only six months ago, says he is getting inquiries from as far away as Taupo and is having to turn down work.

Keziah Singleton

Erosion of rates

What we do is vocational but there is a tipping point for us all in terms of wellbeing and burnout and capacity

Both the ADLS Employment Law committee and the New Zealand Bar Association (NZBA) have lobbied the government about the increasingly desperate situation.

In a letter to then Justice Minister Kris Faafoi in November last year, the committee said with only 20 employment legal aid providers across the whole country, it had become a significant access-to-justice issue. Those providers could not meet the demand from “vulnerable New Zealanders” with limited financial means who need employment advice and representation.

NZBA said the fixed fee schedule meant legal aid lawyers were often working for an effective hourly rate of $120, plus gst – a rate that was set in 2008 and has not been increased in the Budget. It was a “significant erosion of the rate of pay for such work” which in many cases was below $120. Some legal aid lawyers were working for $100 an hour, NZBA said, and for the majority of work the rate was less than $80.

As an example, NZBA cited a fixed fee of $580 for “preproceedings activities”. Typically, these would require a minimum of 10 hours’ work and include taking instructions, attending the client, reviewing relevant files and reports, defining the legal and factual issues, drafting a statement of problem, preparing a legal aid application, raising a personal grievance, receiving and considering the response and reporting back to the client. All for $580.

Keziah Singleton, of David Fleming Employment Law, says in the past couple of years the Employment Relations Authority [ERA] has become more technical in its requirements so a document that might have once taken only a couple of hours was now taking considerably longer to prepare. But the fixed rate has remained the same.

Continued on page 05

Jul 1, 2022 Issue 21

Continued from page 04 Singleton cites a fixed rate of $480 for meeting a client, reading the documentation, advising the client and raising a personal grievance.

“That’s four hours at their nominal rate. I don’t want to sound like a greedy lawyer, but [the rate is] quite low,” she says.

Fleming points out that for employment lawyers, a lot of work happens outside the courtroom. “The fixed fee schedules are very low and the amount of time you’re paid for an [ERA] hearing has no connection with the amount of work required.”

The hourly rate, rather than the fixed fee, kicks in only for appearances in the ERA, court or in mediation.

From today these hourly rates will increase slightly but firms like Fleming’s will still be out-of-pocket when doing legal aid work.

Singleton says their fees are around the scale costs that might be awarded by the Employment Court, scale costs being about two-thirds of the market price.

“Even so,” she says, “our legal aid It’s quite work is about half of what we would terrifying – normally charge.” Fleming says the firm the prospect does legal aid because it is part of what of more clients it wants to offer “but we actually lose money on every legal aid case we do”. and no more For criminal legal aid lawyers, the lawyers hourly rate for the lowest-level cases will rise to between $103 and $119, depending on experience. For the highest-level cases – for example, homicide, and for cases in the Court of Appeal and Supreme Court – the rate ranges from $146 to $178. The new Family and District Court rates range from $119 to $139. For the High Court, they range from $134 to $167 and from $146 to $178 in the Court of Appeal and Supreme Court.

Because of her seniority, Kincade is on one of the highest rates but says the money is still “risible”. “We do it because we feel sorry for people,” she says, especially for things like parole applications. “It is the same with Family Court lawyers – you want to try and help people in need.”

The fix, she says, is partly to throw money at the problem. “We need more lawyers and more attractive rates. [The Budget] was a good start but more needs to happen.”

One area that’s ripe for change is the way the legal aid system treats applicants who own houses. “They expect you to remortgage yourself instead [of using legal aid],” Kincade says. “I find that very challenging.

She would like to see those who are acquitted being released from the obligation to repay legal aid, as happens in the UK. “I also think it would be helpful if judges understood how we’re paid.

Sometimes we get criticsed and we think ‘well, I’m trying my best with very limited time and limited resources’. Sometimes things just can’t get done. Within the current system, we have to do a lot of work that isn’t really remunerated, and we do that just to get the job done.” ■

Briefs Review of the legal profession ADLS members are being urged to have their say on an NZLS consultation paper that will help determine the future regulation and structure of the profession.

The paper has been compiled as part of a once-in-a-generation review of the framework put in place by the Lawyers & Conveyancers Act 2006.

The review will be conducted by an independent panel chaired by former Ombudsman and Disability Commissioner, Professor Ron Paterson.

Three webinars will be held this month to help lawyers provide feedback, which is due by 12 August. Feedback can be given via an online survey and/or written submissions.

The panel has a broad mandate. Its terms of reference include: ■ a consideration of whether the representative function of NZLS should be separated from some or all of its regulatory functions and whether an independent regulator should be appointed for the profession; ■ the scope of regulated legal services; ■ complaints and discipline, especially how complaints are made and responded to; ■ culture and conduct in the profession; ■ the role of the Treaty of Waitangi and biculturalism, and how tikanga and te reo Māori can be further incorporated into the law; and ■ optimal structural and governance structures.

On the regulatory issue, the discussion document notes that it is rare in other professions for a regulator to also be a membership body with representative functions.

This year NZLS received $22 million for its regulatory functions (from fees and levies on lawyers) and $8m from its membership services (from other income). The regulatory cost has decreased over the past few years as the number of lawyers has grown (from 11,223 in 2010 to 16,000 today) and the cost of a practising certificate ($1290) has dropped 12% since 2010.

NZLS says it has attempted to apply a Treaty of Waitangi lens across all issues in the terms of reference.

On diversity, the paper says there are still significant barriers to the admission, progression and retention of women, Māori, and Asian lawyers and those from minority backgrounds and with disabilities.

While those of European descent make up 58% of the New Zealand population, they comprise 83% of the country’s lawyers.

Asians are 16% of the population and 10% of lawyers and Māori are 15% of the population but make up only 7% of lawyers.

Similarly, women comprise 61% of the lawyers in multi-lawyer firms but only 39% of directors or partners and 25% of QCs are women.

No Pacific lawyer has been appointed to the bench of any senior court and only one Asian appointment has been made. As of October 2021, Crown solicitors’ firms in urban centres had no Māori prosecutors.A controversial issue also to be considered by the panel is whether the current ban on corporate structures should be lifted and non-lawyers be allowed to have ownership stakes in law firms, and whether multi-disciplinarily firms should be permitted. ■

05

CONSUMER CREDIT

Little flexibility or discretion in new consumer lending regime The overall effect of the changes remains modest in scale – a fine-tuning rather than a rebuild – and the overarching structure of the regulations remains largely unchanged

Richard Massey Following controversial changes to consumer credit laws in December 2021, the government has finalised its modifications to the new regime after a period of urgent consultation earlier this year.

The changes, announced earlier this month, respond to widespread concern about the effect of the 2021 amendments.

As noted in a recent cabinet paper, the amended regime imposed the same detailed suitability and affordability requirements on “all lending types and all consumers, with limited lender discretion and narrow exceptions.”

The government’s changes largely follow those issued in draft in April (summarised here), with a few specific developments, and are due to take effect from 7 July 2022.

Excluding certain expenses The changes These include new guidance in the Responsible Lending Code (code) and targeted edits to the Credit Contracts and Consumer Finance Regulations 2004 (regulations). They comprise:

Removing ‘savings’ and ‘investments’ from the definition of expenses

Richard Massey

Current position: Following the December 2021 amendments, the regulations require lenders to estimate borrowers’ expenses as part of ensuring the loan is affordable. ‘Expenses’ is currently defined as including ‘savings’ and ‘investments’.

Change: The regulations will be amended to remove savings and investments from the defined list of expenses, reflecting that those items are optional and different in nature to a borrower’s outgoings or other necessary expenses. So, savings and investments will not need to be considered as part of the assessment of whether a loan is affordable.

Qualifying the requirement for detailed expense information Current position: The regulations require lenders to ensure the information used to make an initial estimate of a borrower’s expenses is obtained in “sufficient detail to minimise the risk 06

of relevant expenses being missed or underestimated to an extent that is material to the estimate”.

Change: The regulations will be amended to clarify that the above requirement applies only where the expense estimate is based on “asking the borrower” about their expenses.

It would not apply where the estimate is based on other sources (eg, bank transaction records). In other words, lenders do not need to check multiple sources of information to verify customer expenses.

The draft amendments had initially included a recommendation that when testing expense information, lenders should not “close their eyes” to contrary information in bank transaction records held for other purposes, but that has now been removed.

Current position: When calculating expenses, the regulations require the lender’s estimate to be based on the borrower’s current financial position and spending habits. There is no express provision allowing the lender to take into account changes in the borrower’s spending habits which are likely to result from entry into the loan.

Change: The code now clarifies that a lender can exclude an expense from the affordability estimate where it is clear in the circumstances that the expense will stop. The code notes as an example: “if the borrower is borrowing to buy a home they will live in, then the lender can omit any existing expenses for renting.” Similarly, borrowers who incur frequent takeaway expenses may, after taking out the loan, reduce those expenses by “eating at home more often.”

Reducing the need for a ‘reasonable surplus’ Current position: The regulations require lenders to ensure borrowers have a ‘reasonable surplus’ after deducting expenses from income, but there is no current guidance as to what that surplus should be.

Change: The amended code states that the lender does not

Continued on page 07

Jul 1, 2022 Issue 21

Continued from page 08

In most cases, lenders will still be required to conduct a very detailed, lengthy and invasive analysis of borrowers’ financial situations

need to apply a reasonable surplus in circumstances where the lender applies buffers or adjustments that adequately address the risk that likely income may be overestimated, that likely relevant expenses may be underestimated or that the borrower may need to incur other expenses that cause them to suffer substantial hardship.

This recognises that lenders are often already conservative in their estimation of a borrower’s income and expenses and do not need to include an additional buffer to an already conservative estimate.

Clarifying the ‘obviousness’ exemption Current position: The regulations provide an exemption from the detailed requirements to estimate income and expenses where it is ‘obvious’ that a borrower can make loan repayments without suffering substantial hardship. The current code offers one highly specific example of when that exemption might apply.

Change: The updated code will provide additional clarity on this exemption. The draft amendments had initially proposed four new examples, concluding in each case that affordability was ‘obvious’ (but with very little reasoning or explanation as to what principles should apply in other contexts). That has now been replaced by clearer guidance (see box below).

Our analysis For many lenders, the most significant change in the finalised amendments to the responsible lending regime is likely to be the additional clarity on the ‘obviousness’ exemption.

That guidance will be helpful for lenders and should partially facilitate the provision of credit to consumers.

However, the overall effect of the changes remains modest in scale – a fine-tuning rather than a rebuild – and the overarching structure of the regulations remains largely unchanged.

This means in most cases lenders will still be required to conduct a very detailed, lengthy and invasive analysis of borrowers’ financial situations. There is still little flexibility or discretion for lenders, who remain subject to formidable enforcement consequences and these isolated changes are likely to be seen by many as a missed opportunity for a more meaningful overhaul.

More positively, the government has advised that the Minister of Commerce and Consumer Affairs “is considering what, if any, further actions are required” and a final report on the wider review of the consumer credit regime is due this month.

We expect lenders and many consumer borrowers will be keenly anticipating the outcome of that review. ■ Richard Massey is a senior associate at Bell Gully ■

When is it ‘obvious’ that a borrower can repay without suffering substantial hardship?

The updated code gives various scenarios of ‘obvious’ affordability. In brief summary:

Small changes to existing loans New advances on existing loans which constitute only a ‘small percentage’ of current lending are likely covered by the exemption where the lender makes reasonable inquiries into income and expenses (including checking other debts and that there have been no material adverse changes), obtains a credit report, and is satisfied that income likely exceeds expenses. The code refers to a change of “less than 5%” as an example under this scenario.

Temporary arrangements Agreements which are temporary (lasting “no more than three months”) are likely exempt where the lender is satisfied the borrower is meeting their current expenses through their current income and the borrower has confirmed the agreement will be repaid from “a bonus, commission, or one-off or permanent increase to income that is verified in writing.”

Borrowers with a large surplus If the lender is satisfied that the borrower will have a ‘large surplus’ in net income after taking out the loan (after making reasonable inquiries into income and expenses, checking other debts, and obtaining a credit report), that is likely covered by the exemption. The code refers to a surplus of “over $1,500 per month” as an example under this scenario.

The updated code also clarifies that credit scores and repayment history will not be decisive as to whether affordability is ’obvious’, on the basis that past borrowing behaviour does not establish whether previous lending was affordable or that a future loan will be affordable.

07

TAX/CHARITIES

How to use those donation tax credits – and do some good at the same time After our small fee is deducted we can grow a $100 donation to $143 over three years. It’s a really powerful way for donors’ gifts to have more impact Rod Vaughan

media and telecommunications team.

“This introduced me to the fastpaced life of technology deals and Making money is a top priority for solidified my passion in tech law. The most people and Aucklander Hannah hours were long but the work was Andrews is no exception. But much of incredibly interesting and we had a really the money she makes ends up in the close team.” pockets of charities and schools around Four years later, firmly established as New Zealand. a technology lawyer, she moved back The one-time lawyer is the managing Hannah Andrews to New Zealand, working initially for director and founder of TaxGift, a Hudson Gavin Martin before moving to company that facilitates the gifting of MinterEllisonRuddWatts. donation tax credits to charities and schools, boosting their income by up to 48%.

Gifting boost In the past three years, TaxGift has channelled hundreds of thousands of dollars of tax credits into As Andrews pursued her legal career, an idea was worthy causes, both directly and through a partnership germinating in her mind. with Givealittle.

“When living in the UK I loved the concept of Gift How Andrews, a mother of two young children, Aid,” she says. “It was a simple, straightforward way to came to be running such a successful venture is an boost your gift by donating your donation tax credit at extraordinary story with all manner of twists and turns. the same time.

It began many years ago at Otago University where “Nothing like this existed in New Zealand and after she started studying health sciences but quickly Inland Revenue underwent a process of business realised chemistry and physics weren’t her thing. So, transformation, allowing e-filing of donation tax credit she decided to follow in the footsteps of her mother claims, I saw the opportunity to implement a Gift Aidand become a lawyer, eventually graduating with like model here. science and law degrees.

“After working with start-ups for years as an advisor “I loved the commercial aspect of the advisory role it was nerve-wracking throwing my hat in the ring and lawyers take – being able to step back and look at the giving it a go myself, but also exhilarating. bigger picture,” she says.

“I started with a dev shop which built me a “I also really enjoyed how a contract is like a puzzle minimum viable product, then had to work to pitch it – each word has to fit into place. I was one of the odd to charities. I got my first sign-up, Parenting Place, in ones who loved contractual drafting. I also preferred October 2019 and it’s been all go from there.” private practice over in-house roles because of the So just what is TaxGift’s business model and how variety of the clients. It was great to be able to delve does it work? into different companies and their work.”

Andrews says it’s remarkably straightforward.

After starting her legal career at Bell Gully, Andrews “When an individual makes a donation to a charity, moved to London and joined Linklaters’ technology, school or church in New Zealand they’re entitled to a 08

33% tax credit.

“A lot of these go unclaimed, so TaxGift offers an effortless way to gift them back to the same organisation to which you donated.

“We provide a simple platform for the charity, church or school to ask their donors to grow their donations by opting in to TaxGift through our webform. It takes less than a minute for donors to sign up, then their job is done.

“We then work with the entity and Inland Revenue to claim the tax credit and pass it back to the charity as an additional TaxGift in that donor’s name.

“What’s more, that TaxGift is considered a donation, so the next year we can claim 33% on the TaxGift and gift it back too. This goes on until a donation reaches the $5 threshold set by IR. “After our small fee is deducted we can grow a $100 donation to $143 over three years. It’s a really powerful way for donors’ gifts to have more impact.”

Andrews says her company operates what’s known as a straightforward pass-through model with gifts going back only to the entity that received the original donation.

“That means every TaxGifter that signs up becomes almost guaranteed revenue. We’re really unique in this model. We’re passionate about business for good. Our purpose is to create more revenue for charities, schools and faith organisations.”

New partnership In 2020, TaxGift got a major break when it was chosen

by Givealittle to be its exclusive donation tax credit partner.

Andrews says this means every time someone donates through Givealittle, they can opt to TaxGift their donation.

“We work with Givealittle to channel the TaxGift back to the relevant entity that received the donation.

“We’re now helping over 200 schools and charities directly in New Zealand, with key TaxGift partners including St John, SPCA, Starship, Blind Low Vision NZ,

Continued on page 14

Jul 1, 2022 Issue 21

TAX/TRUSTS

Are the new disclosure rules for trusts likely to survive a change of government?

The cost of compliance will outweigh any potential revenue collection which may happen as a result of the scrutiny the disclosure rules allow

Tammy McLeod

Tammy McLeod In December 2020, the government enacted several new disclosure requirements for domestic trusts which came into effect on 1 April 2022.

The information disclosed through the new requirements enables the government to gain an insight as to whether the use of trusts has increased in response to the 39% personal tax rate.

The new requirements mean the government has complete visibility over domestic trusts to monitor various risks and to understand how trust structures and entities are being used by trustees.

All trusts that file annual income tax returns and have an annual income of $200 or more must file an annual trust return, with the following information: ■ The name, date of birth and IRD number of the settlor/s of the trust.

■ Any amounts settled in the trust during the relevant income tax year. For the 2022 trust return, all settlements made during the prior income tax years must also be disclosed.

■ A capital distribution made to a beneficiary must be disclosed alongside the relevant beneficiary’s name, date of birth and IRD number. The details of distributions must also be included as well as any change in beneficiary accounts.

■ The details of any appointor/s (ie, those with the power to appoint and remove trustees) must be disclosed, in particular their names, dates of birth and IRD numbers.

A client asked me whether I thought these disclosure requirements would continue if there was a change of government.

I thought back to the abolition of gift duty: one of the reasons for abolishing that was because the costs of monitoring gifts and the duty threshold far

outweighed the revenue collected.

My view is that this will be the case with the disclosure requirements. The cost of compliance will outweigh any potential revenue collection which may happen as a result of the scrutiny the disclosure rules allow.

The details The new rules impose minimum standards on financial statements prepared by almost all trusts for all income years starting with the 2022 tax year.

Financial statements must be prepared using doubleentry accounting and with additional disclosures, including the valuation methods used to value assets and liabilities as well as information about the dividends and interest received by the trust.

The new requirements do not apply universally to all trusts. Charitable trusts, foreign trusts, non-active trusts and trusts with less than $200 income a year are exempt from the new disclosure requirements.

If they have not already done so, trustees of a non-active trust should complete and file an IR 633 declaration. This removes the requirement for the non-active trust to complete an income tax return and comply with the disclosure requirements.

The main driver behind the disclosure rules is to see who is putting income-producing assets into trusts with the effect that income is paid at the trust tax rate of 33% (as opposed to 39% for individuals earning more than $180k a year) and then making taxpaid distrubutions to themselves, thereby using the trust as a tax minimising vehicle.

Tammy McLeod is managing director of Davenports Law Ltd For information on an upcoming CPD webinar, click here ■ 09

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Jul 1, 2022 Issue 21

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Seminar | Livestream 2 CPD hrs Thursday 4 August 4pm – 6.15pm Presenters David Amodeo, barrister; Val Muller, barrister; Sonya Singh, barrister and Craig Walker, service manager Family Court coordinators, District Courts, Ministry of Justice

The law and the wellbeing of tamariki FRAMEWORK JURISDICTION MECHANISMS

Giving perspectives from those in the role – the judiciary and the ministry – this seminar will provide key insights into what the role is (and is not), the statutory framework and the balancing act required when considering the child’s views and his or her welfare and best interests.

Chair Judge Antony Mahon

IN PERSON

Seminar | Livestream 2 CPD hours Thursday 18 August 4pm – 6.15pm Presenters Judge Sharyn Otene; Alison Cleland, senior lecturer, AUT and Anthony Dickson, principal advisor, Oranga Tamariki Chair Judge Emma Parsons

IN PERSON

LIVESTREAM

Providing an understanding of the context and nature of legislation around the care and wellbeing of children, this seminar will help lawyers better comprehend – and perform − their role in this crucial area.

LIVESTREAM 11

CPD IN BRIEF

Dealing with media

Choosing business structures

Leading your career

Webinar 1.5 CPD hrs Tuesday 30 August 4pm – 5.30pm Presenters Jenni McManus, journalist and LawNews editor; Brenda Newth, PR consultant and Samira Taghavi, barrister and practice manager, AM Legal

Have you ever had a microphone shoved in your face when entering or emerging from court? If you were asked for an ‘off the record’ comment, how would you react? What is the effect of an embargo?

Livestream 2 CPD hrs Wednesday 31 August 4pm – 6pm Presenters Bevan Miles, partner, Chapman Tripp (tax); and Greer Fredricson, special counsel, Chapman Tripp (corporate and commercial)

Knowing your clients’ business needs, coupled with a good understanding of the legal and tax features of common business structures, are key to advising clients on the best structure for their business. There can be unanticipated consequences for poorly advised clients – for example, increased personal liability, difficulties in exit or unforeseen tax issues.

Workshop 8 CPD hrs Tuesday 13 September 8.45am – 5pm Facilitators Miriam Dean QC and Liz Riversdale, Catapult

This practical, interactive one-day workshop, led by one of New Zealand’s top QCs and one of New Zealand’s senior leadership experts, will arm you with resources, self-confidence and focus to apply immediately to your role and to enhance your future career.

Chair Marie Dyhrberg QC

FIND OUT MORE

FIND OUT MORE

Places are limited. Register now to avoid missing out.

FIND OUT MORE

International family law conference

In Person | Livestream 5.75 CPD hrs Thursday 10 November 9.15am – 4pm Presenters Ewan Eggleston; Isaac Hikaka; Jennie Hawker; Calina Tataru; Margaret Casey QC; Inger Blackford; Zandra Wackenier and Duncan Holmes

Increasingly, family law matters involve one or more international aspects.

This conference will explore the key issues of property, maintenance and parenting. The focus will be on trans-Tasman proceedings with insights into other jurisdictions.

Chair Simon Jefferson QC

IN PERSON

International Family Law Conference Thursday 10 November | In Person | Livestream | 5.75 CPD hours Visit adls.org.nz for more information.

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LIVESTREAM

Jul 1, 2022 Issue 21

Events Featured events

Connecting New Zealand lawyers

Commercial Lawyer

Rotorua lawyers’ lunch Wednesday 27 July 12.30pm – 2pm Ambrosia Restaurant, 1096 Tutanekai Street, Rotorua

We are a busy general practice located in Howick, Auckland. We are looking for an experienced Commercial Lawyer to join our team.

The role requires solid experience in all areas of Commercial Law, including sale and purchase of businesses and commercial premises, commercial leases, franchise agreements, employment agreements and shareholder agreements.

Learn more

Henderson lawyers’ lunch

We anticipate that you would have 10+ years’ New Zealand PQE. You will be experienced in dealing with clients, able to work autonomously and manage a heavy workload. Excellent interpersonal and communication skills are essential, as well as a confident and professional approach.

Thursday 11 August 12.30pm – 2pm The Grounds, 8-14 Henderson Valley Road, Henderson, Auckland

The successful applicant will :

Learn more

• Be proactive and motivated with a positive attitude and strong work ethic; • Have excellent time management skills; and

Upcoming

• Be able to communicate in plain language and use common sense to provide practical solutions tailored to our clients’ specific needs.

August

Wednesday 28 | Takapuna lawyers’ lunch

We see a long-term future within the firm in our well-established community. We have an extensive client base consisting of quality businesses, trusts and individuals. We have fantastic schools, shopping, beaches, cafes, sports and cultural facilities all within a short distance, and believe East Auckland is a great place to live and work.

Soon to be added:

An attractive salary package will be offered to the successful applicant including Fencible Law’s “Flextime” hours for professional staff.

Thursday 4 | Tauranga lawyers’ lunch Wednesday 17 | Hawke’s Bay lawyers’ lunch Wednesday 24 | Christchurch lawyers’ lunch

September

October | Wellington lawyers’ lunch November | New Plymouth sundowner November | East Auckland lawyers’ lunch November | Tauranga sundowner December | Northland lawyers’ lunch

If you would like to learn more about this opportunity please email your CV, in confidence, to Richard Galbraith at Richard@fenciblelaw.co.nz or phone Richard for a confidential discussion on 021-433996. www.fenciblelaw.co.nz

events@adls.org.nz

adls.org.nz

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Expert witness/Retired Civil Engineer Investigations/civil works & buildings

• 33 years as a contractor/property developer • 20 years as a project manager/consulting engineer Experience includes: Sales, unit title, buildings, price specifications, quantities, volumes, concrete works, roading, subdivisions, survey, general civil work.

CV on request Contact: Walter MacDonald Ph: 021 822 634 E: walterma45@gmail.com

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

LawNews: The no-hassle way to source missing wills for $80.50 (GST Included) reception@adls.org.nz

ADLS, PO Box 58, Shortland Street,

DX CP24001, Auckland 1140

( 09) 303 5270

DAVIS Wynne Edmund

TELFORD Ruth Sharon

• Late of 351 State Highway 2, Mangatawhiri • Divorced • Retired • Aged 80 / Died 06’05’21

• Late of 12 Taratoa Street, Point England, Auckland • Widow • Retail assistant, delicatessen • Aged 74 / Died 30’01’20

FELIUAI Naama • Late of 9 Tomuri Place, Mt Wellington, Auckland • De Facto • Machine operator • Aged 49 / Died 03’04’22

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Fax: (09) 309 3726

Continued from page 08

Cure Kids, Heart Foundation, Coastguard and Cancer Society.

“We’re also helping thousands more, indirectly, through the Givealittle partnership.” And that partnership cannot be underestimated, given Givealittle’s phenomenal success.

In the past three years, the amount that individuals, charities and communities have raised through the site has grown from $500,000 to $22 million a year.

Getting a slice of that funding has proved a tremendous boost for TaxGift. “It’s been a really successful partnership,” says Andrews, “with tens of thousands of donors signing up through Givealittle.”

Givealittle charges a flat 5% fee on the amount raised by fundraisers on its site. So how much does TaxGift charge for its services?

“We want to make it easy for schools and charities to say ‘yes’ to TaxGift, so there’s no sign-up or implementation fee. Nothing is payable until we start to give TaxGifts back,” says Andrews.

“Our standard fee is equal to 10% plus gst of the amount that we receive back from Inland Revenue.

“We’re still in start-up mode, so all revenue gets ploughed back into the company, whether it’s for development, increasing our staffing bandwidth or upgrading our marketing collateral.

“In particular, we have a large tech spend. We’re a technology platform, so there is always further development work to be done.”

In the two years since being launched commercially, TaxGift has grown to a team of five people with more than 35,000 registered TaxGifters.

In addition to its partnership with Givealittle, it is also working with more than 200 entities directly.

Not surprisingly, Andrews is coy about disclosing how much money the firm is making for itself, citing commercial sensitivity.

However, she says it has processed hundreds of thousands of dollars of tax credits through the platform so far.

“All of this goes back to schools and charities and is only up to the tax year ending 31 March 2021. We’re about to start the claims process for the tax year just ended.

“In the last financial year, our platform grew more than three-fold, so we’re looking forward to having exponential growth in our impact too,” she says, adding that the company is looking at ways the platform could be adapted for an offshore market in the future.

TaxGift is one of only two companies of its kind in the world, the other being Gift Aid in the UK upon which it is modelled.

There’s no doubt in Andrews’ mind that the company’s success to date is due in part to some excellent career advice she was given some time ago.

“Funnily enough, it came from my husband, who told me that career-wise I’m my own best asset. It came in the context of cultivating resilience – essential for a start-up. You’ve got to look after yourself and back yourself if you want to see results.

“However, I think this advice is true for anyone, whatever the role. You get out what you personally put into any role and you need to leverage the unique traits that you bring.

“A job description is just that – it’s the extras that you bring to a role that make it successful for you.

“This has been pivotal for me in giving me the courage to launch a company, learn new skills and market myself and TaxGift in the last three years.” ■

Jul 1, 2022 Issue 21

1.5 CPD HOURS

Digital Property: Legal Developments in Ownership of Digital Data Thursday 28 July | 1.00 - 2.30pm | Webinar With reference to key cases from New Zealand and overseas, on rights in property in the digital space, this webinar will provide you with insights so you are better placed to recognise and advise on the increasingly common and complex legal area of digital property.

T 09 303 5278

E cpd@adls.org.nz

W adls.org.nz/cpd

E cpd@adls.org.nz

W adls.org.nz/cpd

2 CPD HOURS

The New Incorporated Societies Act - What is new, and what can lawyers o er?

Tuesday 27 September | 4pm - 6.15pm | Livestream | In Person With coverage of key matters and insights into particular situations, this seminar will provide a vital and timely update on an area of law relevant to many lawyers in their professional and/or personal capacity.

T 09 303 5278

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