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Regulatory Compliance

Business briefs

Commercial Law, Consumer Protection, Employment Law, Privacy Law, Regulatory Compliance, Trade & Investment
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Commerce Commission – unconscionable conduct

For the first time, the Commerce Commission has filed proceedings under the prohibition on unconscionable conduct in the Fair Trading Act 1986. This development suggests that active enforcement in this area is underway.

Unconscionable conduct is business behaviour that falls well below accepted New Zealand standards and goes beyond ordinary commercial practice to conduct that is clearly unfair and unreasonable. This is one of several areas the Commission has identified as an enforcement priority.

The Commission has taken action against Brand Developers Limited (trading as The TV Shop) and Tech Vault Enterprises Limited (trading as HouseSmile), alleging both used high-pressure sales tactics on vulnerable consumers, including people with cognitive impairments or serious illnesses. The Commission considers this conduct a clear departure from acceptable business standards.

Businesses found in breach of the prohibition risk a fine of up to $600,000 and individuals may be liable for a fine of up to $200,000. Courts may also order businesses to compensate affected customers.

This action serves as a timely reminder to all businesses to ensure their sales practices are up to scratch, especially when they are dealing with vulnerable customers.

 

Overseas Investment Act 2005 reform

The Overseas Investment (National Interest Test and Other Matters) Amendment Act came into force on 6 March 2026, delivering a significant overhaul of New Zealand’s foreign investment framework.

The reforms are designed to make it easier and faster for overseas investors to invest in New Zealand, while ensuring the government retains the ability to scrutinise transactions that could affect New Zealand’s national interests.

Part of the reform involved streamlining the overseas investment application process. Previously, overseas investment applications had to satisfy several separate tests. A single national interest test now applies to transactions involving significant business assets and sensitive land, other than farmland, fishing quota and residential land (for which the existing consent pathways remain). Applications are assessed through a three-stage process:

  1. Risk identification: The Overseas Investment Office (OIO) assesses the application for any national interest concerns. If none are identified, consent is granted. The statutory timeframe for decisions under this stage is up to 15 working days.
  2. Risk assessment: If concerns are identified, a more detailed assessment follows. Consent can still be granted at this stage, with or without conditions. The statutory timeframe for review under this stage increases by 55 working days.
  3. Ministerial decision: In cases where the transaction may be contrary to New Zealand’s national interest, the matter may be referred to the Minister of Finance who can decline consent. There is no fixed statutory timeframe for a ministerial decision.

For business owners looking to attract overseas investment or to sell to a foreign buyer, this framework should make the consent process faster and more straightforward. That said, the regime still applies and any agreement must be specifically conditional on OIO consent being obtained before the deal proceeds.

 

New obligations for businesses collecting personal information from third parties

On 1 May 2026, Information Privacy Principle 3A (IPP3A) came into effect, expanding the notification requirement under the Privacy Act 2020 to cover indirect collection of personal information.

Previously, businesses had no obligation to notify individuals when collecting their personal information from a third party. IPP3A has changed that.

What your business must disclose: From now on, when your business collects personal information indirectly, you must take reasonable steps, as soon as is reasonably practicable, to make the individual aware of the:

  • Fact that their information has been collected
  • Purpose of the collection
  • Intended recipients of the information
  • Name and address of the agency, or agencies, collecting and holding the information
  • If applicable, which law authorises or requires the collection, and
  • Rights of the individual to access and correct their information.

Exceptions: IPP3A does not require notification in all circumstances. Exceptions include, but are not limited to, where:

  • The individual has already been notified
  • The information is publicly available
  • Compliance is not reasonably practicable, and/or
  • It is necessary for law enforcement or court proceedings.

Please note the above is to be treated as a guide rather than an exhaustive list. We recommend seeking tailored legal advice before relying on any exception.

Next steps: If you haven’t already, you may want to consider building notification into your existing policies and this should be communicated clearly to individuals. The Office of the Privacy Commissioner has released guidance on IPP3A which provides a helpful starting point for understanding your obligations. Non-compliance may result in a complaint to the Privacy Commissioner, which may lead to a formal investigation and have potentially significant consequences for your business, so it is important you take steps now to ensure your processes are up to date.

For more detailed information about IPP3A together with examples of how it works, click here. If you have any questions about how IPP3A applies specifically to your organisation, please feel free to contact us.

 

Employment Relations Amendment Act 2026 – key changes

The Employment Relations Amendment Act 2026 came into force on 21 February 2026, introducing some significant changes to the New Zealand employment law framework. Some of the key changes of which businesses should be aware are listed below.

Independent contractors: The Act introduces a new gateway test to determine whether a worker is an employee or a contractor. To qualify as a ‘specified contractor,’ five criteria must be met that cover matters such as having a written agreement, freedom to work for others, flexible hours, the ability to decline work and having had a reasonable opportunity to seek legal advice. There is more information about the test here.

Personal grievances: Where an employee’s conduct amounts to serious misconduct and has contributed to the situation giving rise to the personal grievance, no remedies will be awarded. Where the conduct falls short of serious misconduct but still contributed to the grievance, remedies may be reduced by up to 100%.

High-income earner: Employees earning $200,000+ per year in total remuneration will no longer be able to bring a personal grievance or file proceedings in relation to an unjustified dismissal. A 12-month transitional protection applies to those already in roles when the legislation came into force.

Collective agreements: The requirement to apply collective agreement terms to new employees during their first 30 days, and the automatic sharing of new employee information with the union, will no longer apply.

Justification test: The section 103A justification test has been amended to take into account whether an employee obstructed the employer’s process. Significant procedural failures will no longer render a dismissal unjustifiable where the employee was not actually treated unfairly.

If you would like to discuss any aspect of how this new legislation affects your business, please don’t hesitate to contact us.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026.    Editor: Adrienne Olsen.       E-mail: [email protected]      Ph: 029 286 3650

 

Health and Safety at Work Amendment Bill

Employment Law, Government & Policy, Health and Safety, Regulatory Compliance, Risk Management, Workplace Regulation
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Expected to be enacted in the spring

The Health and Safety at Work Amendment Bill was introduced into Parliament on 8 February 2026 and passed its first reading on 12 February 2026. It is currently before the Education and Workforce Select Committee. Submissions closed at the end of March and the committee is scheduled to report back to Parliament by 12 June 2026. It is anticipated that the Bill will be passed before the election (early November).

If enacted, the Bill will represent the most significant reform of health and safety law in New Zealand since the Health and Safety at Work Act (HSWA) was passed in 2015.

 

Purpose of Bill

Workplace Relations and Safety Minister, the Hon Brooke van Velden, said that the Bill is intended to reduce compliance obligations, focus on preventing serious harm and clarify businesses’ obligations under the HSWA.[1] The key proposed changes in the Bill are:

  • Increased focus on preventing serious harm
  • Reducing compliance obligations for small businesses
  • Clarification of the health and safety obligations of landowners, and
  • Clarification of the relationship between health and safety legislation, and other legal requirements.

 

Introducing ‘critical risk’

The Bill introduces a new defined term of ‘critical risk.’ Small businesses must focus on avoiding critical risks. All other businesses must manage all risks but are required to ‘prioritise’ critical risks.

The Bill defines a ‘critical risk’ as a risk associated with one of the matters specified in Schedule 1A of the Bill; this lists a number of specific high-risk activities such as working with asbestos and other hazardous substances. A critical risk also includes any hazard that is likely to result in death, a notifiable injury or illness, a notifiable incident or an occupational disease listed in Schedule 2 of the Accident Compensation Act 2001.

Identifying what the critical risks are for a particular business is likely to be one of the more challenging aspects of the new legislation.

 

The impact on small to medium-sized businesses

The most significant change contained in the Bill is the narrowing of the duties of small to medium-sized businesses, referred to as ‘small PCBUs,’ to risks that are defined as critical risks under the Act.

This does not mean that small businesses have no obligations in relation to other risks. They are still required to provide adequate facilities to ensure the safety of their employees.

A small PCBU will be defined as a business with fewer than 20 employees. Businesses that have a fluctuating workforce will qualify provided that they have fewer than 20 employees for at least nine months of the year. This change is likely to have a significant impact on the compliance obligations of businesses in New Zealand, given that approximately 97% of businesses would qualify as a small PCBU.[1]

 

Obligations of landowners and recreational activities

Potential exposure to prosecution under health and safety legislation in New Zealand has long been a concern for landowners who wish to make their land available for recreational activities.

In the past, this has been a particular concern for rural landowners who have often avoided providing access to their land due to such concerns. It has also discouraged public landowners, such as schools and councils, from allowing their land to be used for recreational activities.

The potential liability of landowners was recently highlighted by the prosecution of the owner of Whakaari/White Island following the eruption in 2019, which resulted in the deaths of 22 people. The landowner was initially convicted in the District Court under the HSWA, despite not directly operating the tours to the island.[2] The High Court overturned this conviction on appeal.[3]

The passing of the Bill would mean that landowners would not generally owe health and safety obligations to people using their land for recreational activities.

 

The Health and Safety at Work Act and other legislation

The Bill would clarify the relationship between general health and safety legislation, and other legislation that applies to specific industries such as the aviation and maritime sectors.

In the past, there has been confusion as to whether or not businesses in industries covered by specific legislation have additional duties under the HSWA. The Bill clarifies that compliance with industry-specific legislation or approved industry codes of practice is also compliance with the HSWA, so there are no additional obligations.

The Bill also states that the owners of earthquake-prone buildings do not need to take additional steps under the HSWA, provided that they comply with the requirements of the Building Act 2004.

The Bill is intended to reduce the compliance work that is required by businesses under current health and safety legislation, which has become an expensive ’tick-box’ exercise for many. However, it will still be important for small businesses to identify the ‘critical risks’ in their businesses and to take steps to mitigate them.

If you have any concerns about the impact that this proposed legislation may have on your business, please don’t hesitate to contact us.

 

[1] New Zealand business demography statistics at February 2025, Statistics New Zealand.

[2] WorkSafe New Zealand v Whakaari Management Ltd [2023] NZDC 4149.

[3] Whakaari Management Ltd v WorkSafe New Zealand [2025] NZHC 288.

 

 

DISCLAIMER: All the information published in Commerical eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commerical eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026.    Editor: Adrienne Olsen.       E-mail: [email protected]      Ph: 029 286 3650

WorkSafe’s heightened focus on farm safety

Employment Law, Health & Safety, Regulatory Compliance, Rural & Agricultural Law, Workplace Regulation
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Development of Approved Codes of Practice

WorkSafe New Zealand has promised greater attention to safety in the agricultural sector when it announced the new four-year ‘Statement of Intent’ on 4 December 2025.

In recent years, WorkSafe has significantly increased its focus on the agricultural sector reflecting the industry’s persistently high rates of serious injury and fatalities. Farming remains one of the most hazardous occupations in New Zealand, and WorkSafe’s evolving approach aims to address the root causes of harm while working more collaboratively with those on the land.

A key development has been the designation of agriculture as a priority high-risk sector. Alongside the other sectors classified as high-risk (construction, manufacturing and forestry), farming now receives a significantly greater share of WorkSafe’s attention and resources.

This prioritisation is embedded in the regulator’s broader strategy which centres on reducing fatalities, minimising serious injuries and targeting the activities most likely to cause harm. Rather than applying a one-size-fits-all regulatory model, WorkSafe is increasingly tailoring its interventions to reflect the unique risks present on farms.

 

Greater attention

One of the most visible aspects of WorkSafe’s effort is the development of Approved Codes of Practice (ACOPs) specific to agriculture. These codes are designed to clarify what ‘good practice’ looks like in practical, farm-based scenarios.

Current and emerging ACOPs focus heavily on the use of vehicles and machinery – areas consistently identified as leading causes of death and injury on farms. This includes guidance on quad bikes, tractors, utes and side-by-side vehicles, as well as their safe operation on uneven terrain and proper maintenance procedures.

Additional codes address responsibilities in multi-operator environments and provide clearer expectations around child safety on farms – an issue of ongoing concern in rural communities.

Alongside regulatory guidance, WorkSafe has expanded its on-the-ground presence. Inspectors are increasingly visiting farms not only to assess compliance, but also to engage directly with farmers and workers.

Hundreds of visits have been carried out in concentrated periods, with around 1,000 farm visits conducted between October and December 2025 with a focus on observing real-world practices involving machinery, hazardous substances and general risk management.

These visits are not purely enforcement-driven; they are also intended to provide practical advice and identify common issues across the sector. This hands-on approach allows WorkSafe to gather valuable data while building relationships within the farming community.

 

More collaboration

Another important element of WorkSafe’s strategy is its emphasis on education and industry collaboration. Acknowledging that lasting improvements in safety require cultural change, the regulator has partnered with industry groups and events to promote safer practices. Campaigns and resources such as ‘Keep safe, keep farming’ aim to integrate health and safety into everyday decision-making on farms.

By working with organisations that already have credibility in rural communities, WorkSafe’s aim is to influence behaviour in a way that traditional enforcement alone cannot achieve.

Perhaps the most notable shift in WorkSafe’s approach is its move toward a more balanced model of regulation, combining enforcement with proactive guidance.

While WorkSafe retains the ability to take enforcement action where necessary, there is now a stronger emphasis on helping farmers understand and meet their obligations before incidents occur.

This reflects an understanding that many farmers operate in complex, resource-constrained environments where practical, accessible advice can be more effective than punitive measures alone.

 

Looking ahead

WorkSafe New Zealand’s activities in the agricultural sector represent an evolving strategy.

Through targeted regulation, increased farm visits, collaborative education efforts and a focus on the most significant risks, the regulator is working to improve safety outcomes across one of New Zealand’s most vital industries. While challenges remain, the current approach signals a commitment to reducing harm through both accountability and support.

To read more on WorkSafe’s ACOPs, click here.

 

 

DISCLAIMER: All the information published in Rural eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Rural eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026.    Editor: Adrienne Olsen.       E-mail: [email protected]      Ph: 029 286 3650

Navigating redundancy

Employment Law, Human Resources, Regulatory Compliance, Risk Management, Workplace Regulation, Workplace Rights
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Understanding the legal process for employers

Redundancy refers to a situation where an employee’s position is deemed superfluous to an employer’s needs. Understandably, a redundancy proposal can bring stress and uncertainty to those affected. Unfortunately, it is a term that many New Zealanders may be familiar with.

We provide a summary of the required process, and obligations by you, as an employer, in proposing a potential redundancy in your organisation.

 

Lawful redundancy

For a redundancy to be lawful, it must be both justified and carried out through a fair process. A redundancy is justified only where there is a genuine commercial reason for it; redundancy cannot be used as a means to dismiss a poor performing employee or as an alternative to a disciplinary process for misconduct.

‘Genuine commercial reasons’ may include a downturn in work/revenue, declining financial performance, organisational restructuring, or the merger or acquisition of a business. Courts are increasingly applying scrutiny into the ‘commercial rationale’ for a redundancy.

However, even where a genuine reason exists, the dismissal will not be lawful unless the correct process is followed.

 

Process

The process that all employers must follow includes:
• Providing your employees with relevant information about the proposed change and the potential impact on their employment if the proposal is adopted
• Consultation with your employees and considering their feedback (and enabling your employees opportunities to seek advice or support within the consultation period)
• Considering alternatives to redundancy, and
• Following any additional procedural requirements specified in the relevant employment agreement or policy documents.

 

Providing information

The Employment Relations Act 2000 sets out that an employer who is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of employment of one or more of his or her employees, is required to provide the affected employees with access to relevant information about the decision.

The term ‘relevant information’ will depend on the specific circumstances. It includes, however, information necessary for employees to understand the rationale for the proposed change and to enable them to provide informed feedback. Your employee is entitled to ask for additional information relevant to your proposal. While an employer is not required to provide confidential information, they must be able to genuinely demonstrate that disclosure would cause actual, unreasonable prejudice, and must show that they have explored alternative options for confidential consultation.

 

Consultation

You are not only required to provide a potentially affected employee with all relevant information, but you must also ensure there is a genuine opportunity for your employee to comment on that information before any decision is made. This includes providing sufficient time to provide feedback.

You must approach this process with an open mind and genuinely consider any feedback received before deciding whether to proceed with the proposed change. Without genuine consultation, the redundancy may be deemed a pre-determined outcome, and a breach of your obligation as their employer to act in good faith.

 

Selection criteria

In circumstances where you are reducing a number of same/similar roles, a fair and reasonable selection process must be followed to decide which of your employees will be appointed to the remaining roles. Clear and relevant selection criteria should be provided to your employees in advance, and their feedback sought. This includes providing details as to how that criteria will be assessed and weighed.

 

Redeployment

If a role is disestablished, you have an obligation to consider redeployment opportunities within your organisation for any of your affected employees. The affected employee/s continuing employment must be considered before a new or vacant role is advertised externally. Redeployment must be considered for an affected employee, even if some (reasonable) training or upskilling may be required.

Your obligation to consider all redeployment options, stems from an employer’s statutory requirement of good faith – to be active and constructive in maintaining the employment relationship, including being responsive and communicative.

 

A challenging time

Proposed redundancy can be a challenging and uncertain time for all; but understanding the legal framework and the required process can help you to navigate this with more confidence.

It is also important to carefully review employment agreements and relevant workplace policies to carefully identify any relevant provisions, including any entitlement to redundancy compensation.

If your organisation is contemplating redundancies, we recommend you talk with us at the outset; this will help you and your employees better understand their rights and obligations.

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2025.     Editor: Adrienne Olsen.       E-mail: [email protected]     Ph: 029 286 3650 

Cleared for take-off

Aviation Law, Privacy Law, Regulatory Compliance, Technology Law, Transport & Infrastructure
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Using your drone the right way

Over the past decade, drones have gone from niche gadgets to everyday tools. Drones help farmers to check stock, let filmmakers capture sweeping aerial. shots and give hobbyists a fun way to explore the skies. In New Zealand, drones are part of a fast-growing aviation sector: with that growth comes a clear need for sensible rules to keep people, property and other aircraft safe.

Whether you’re a teenager flying a drone in the backyard or a business experimenting with new technology, knowing the rules helps everyone share the skies safely.

New Zealand has a well-developed structure for drone regulation overseen by the Civil Aviation Authority (CAA). In this article, we explain the Civil Aviation Rules that govern drone use in New Zealand.

 

CAA Rules

Civil Aviation Rules Part 101 sets out the provisions that must be adhered to when piloting a drone that weighs under 25kg. These are the default rules for everyday recreational and simple commercial use of drones. Any drone that weighs more than 25kg requires certification from the CAA in accordance with Part 102 of the CAA Rules. Most commercial drones, however, weigh less than 25kg.

 

When and where can you fly a drone?

It is important to be familiar with the Rules before flying your drone. A drone is considered a remotely piloted aircraft, so it can be a hazard to people, property and other aircraft. Under Part 101 of the CAA Rules, drone pilots must:
• Fly below 120 metres (400 feet)
• Always ensure the drone is within their line of sight
• Fly only during daylight hours and in good weather
• Stay at least four km away from airports and aerodromes (unless specific conditions are met), and
• Not fly over homes without the property owner’s consent.

 

Privacy issues

Drone rules aren’t just about aircraft safety; they’re also about protecting people on the ground. The requirement to get consent before flying over people or private property helps reduce anxiety and avoid misunderstandings. In practice, this means:
• Asking before flying over someone’s property
• Being mindful when operating near crowds, and
• Avoiding capturing photos or videos when people reasonably expect privacy.

Some public areas, such as national parks, require separate permits from the Department of Conservation.

 

What can you do about drones over your property?

No, you cannot shoot down a drone flying over your property! This would open you up to prosecution under the Summary Offences Act 1981, the Crimes Act 1961 and the Arms Act 1983. Any complaints about drones intruding over private property without consent or in breach of the CAA Rules should be addressed to the Privacy Commissioner or the CAA.

 

Penalties

As drones are legally treated as aircraft in New Zealand, unsafe flying isn’t just ‘messing around.’ Breaches of the Civil Aviation Act 2023 and the Civil Aviation Rules carry significant penalties. Under the CAA Rules, fines can vary, usually ranging from around $500 for minor breaches, such as flying too close to an airport, and up to $10,000 for serious violations such as endangering or tampering with an aircraft. For companies that breach drone rules, the maximum fines are higher – up to $30,000.

The Civil Aviation Act 2023 which came into force on 5 April 2025 states that the CAA and the Police have the power to require a drone operator to provide any information that may help identify the pilot in command. Refusing to provide that information is itself an offence.

 

Understand the Rules

Drones open up exciting possibilities, but they also turn every operator, no matter how young, into a participant in New Zealand’s aviation system. By understanding the Rules, keeping safety in mind and showing respect for other’s privacy, we can ensure drones remain a positive and innovative part of Aotearoa’s future.

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2025.     Editor: Adrienne Olsen.       E-mail: [email protected]     Ph: 029 286 3650 

Taxing the business income of charities

Charities & Not-for-Profits, Government & Policy, Regulatory Compliance, Taxation, Trusts & Legal Governance
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Inland Revenue proposal unlikely to proceed

In February 2025, Inland Revenue issued a paper entitled ‘Taxation and the not-for-profit sector’ (the Issues Paper).

Among other things, the Issues Paper proposed taxing the business income of charities, where that income did not relate to their charitable purposes. This was highly controversial and resulted in a flurry of submissions.

 

Charities in New Zealand

Section 5 of the Charities Act 2005 defines ‘charitable purpose’ as including ‘every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community.’

From time to time, public debate arises over organisations that have been granted charitable status, particularly where that status is seen as controversial. For example, Greenpeace has gained and lost charitable status a number of times, and Family First has had charitable status declined by the Supreme Court. After serious allegations of abuse and law-breaking, Gloriavale’s charitable status is under review.

One charity in New Zealand has been controversial for some years. Sanitarium, the company that makes Weet-bix and other breakfast cereals, is owned by the Seventh-day Adventist Church.

As a general rule, where a charity owns a business, and receives business profits, tax does not need to be paid on those profits, because they are being distributed to a charity which can only use them for charitable purposes. This tax exemption was closely scrutinized by Inland Revenue in the Issues Paper.

 

Taxing business income

The Issues Paper suggested that businesses owned or operated by charities have certain competitive advantages over non-charitable businesses. These businesses:

  • Can accumulate funds without paying tax, and therefore invest in and grow their businesses faster, and
  • May not face the same compliance costs as tax-paying businesses.

This led to Inland Revenue’s proposal to tax charities’ business profits where they were not related to the charitable activities in question.

The charitable sector argued that it would be very difficult to identify what business activities were related to furthering a charitable purpose and what activities were unconnected.

The Salvation Army’s thrift stores might remain untaxed, but what about Sanitarium’s production of healthy breakfast cereals?  Sanitarium might argue that it provides free healthy breakfasts in more than 1,400 schools as part of the overall charitable endeavours of the Seventh-day Adventist Church. (It might also make the point that John Kellogg invented cornflakes in the late 1800s because he believed that eating bland breakfast cereals facilitated godly morality.)

More specific counterarguments were also made in submissions. Charities said that they faced a number of competitive ‘disadvantages’ which for-profit businesses did not face; these include a limited ability to raise finance and differences in their ability to claim imputation credits. Any advantages their businesses might enjoy were offset by disadvantages.

Submissions also said that where business profits were taxed and then distributed to the charity which owned the business, they would always have to be used for charitable purposes, and a tax credit would need to be given to the charity in due course. It was argued that it would be time-consuming and costly (for both the charities and Inland Revenue) to make a tax payment and later receive a credit in respect of the same funds.

A number of charities also said that they face much greater compliance costs than small businesses. They have, for example, much more stringent audit requirements; if the law changed, there might need to be an income threshold whereby small charities are exempted from having to distinguish between types of income earned.

Sue Barker, a well-known tax and charities lawyer, said that the Issues Paper did not start by asking the fundamental question of whether there is a problem in the charitable sector regarding the payment of business income tax? If charities are misusing funds and not using them for charitable purposes, this would justify more scrutiny over charitable activities and perhaps better enforcement of existing laws, but it would not justify a law change.

 

Government response

Recently, Revenue Minister, Simon Watts confirmed that Inland Revenue is unlikely to pursue the proposal to tax charities’ business income. He suggested that there might be more scrutiny over the way charities use funds to ensure that existing laws are being followed, and there may be changes yet to come regarding ‘donor controlled’ charities, including rules about minimum distributions which must be made each year.

Charities seem to agree that better enforcement of existing laws is preferable to more law changes. The not-for-profit sector has already responded to considerable change in recent years; charitable trusts were impacted by the Trusts Act 2019, and incorporated societies have been significantly affected by substantial law changes under the Incorporated Societies Act 2022.

The most common criticism of New Zealand law relating to charities seems to be that ‘advancement of religion’ qualifies as a charitable purpose, even where the religion (or a popular figure associated with it) has a questionable reputation. There are, however, no current proposals to review that aspect of the law.

 

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2026.     Editor: Adrienne Olsen.       E-mail: [email protected]      Ph: 029 286 3650

 

Business briefs

Artificial Intelligence & Technology, Business & Investment, Consumer Rights, Immigration Law, Regulatory Compliance
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Launch of the Business Investor Visa

The government has introduced the Business Investor Visa (BIV), a new immigration pathway aimed at attracting experienced international investors to strengthen New Zealand’s economy. The launch of the BIV follows the closure of the Entrepreneur Work Visa and represents a significant shift toward sustained investment in established New Zealand businesses.

The BIV offers two residency pathways:

  1. Work-to-residency (3 years) – minimum investment threshold of $1 million, or
  2. Fast-track residency (12 months) – minimum investment threshold of $2 million.

Investments must be directed into an existing, actively operated New Zealand business. Other key requirements include demonstrated business experience by the investor, investment in a business that employs at least five full-time staff, and compliance with approved and qualifying business categories.

For New Zealand business owners, the BIV presents an opportunity to attract new capital, expand operations and generate employment that, in turn, will promote long-term economic growth.

Responsible AI usage

AI is advancing and reshaping how businesses operate. However, if you adopt AI without a clear strategy it may expose your business to serious risk – including, without limitation, bias, errors, privacy breaches and cybersecurity threats.

To help businesses navigate this, the Ministry of business, innovation and Employment has released Responsible AI Guidance for Businesses, The Guidance outlines practical steps to ensure AI use is responsible and aligns with your commercial goals, legal obligations and ethical standards.

Key recommendations include:

  • Defining your purpose for using AI and starting with low-risk projects
  • Maintaining human oversight to prevent errors and unintended consequences
  • Reviewing governance, risk management and compliance processes
  • Choosing trusted AI providers and implementing strong data protection methods, and
  • Training staff to understand AI’s capabilities and limitations.

For a more comprehensive overview, we encourage you to read the Guidance and consider seeking legal advice to protect your business as you implement AI. While AI can deliver significant benefits, successful implementation requires a cautious and comprehensive approach.

HelloFresh and the Fair Trading Act 1986

In the Winter 2025 edition of Commercial eSpeaking, we reported on the Commerce Commission’s allegations against HelloFresh for misleading conduct under the Fair Trading Act 1986 (FTA).

The commission’s prosecution focused on an 18-month cold call campaign, during which former customers of HelloFresh were offered discount vouchers without a clear explanation that accepting those offers would result in subscriptions being reactivated, consequently triggering customer account charges.

Recently, in the Auckland District Court, it was found that the way the discount vouchers were presented created a misleading overall impression for former customers. HelloFresh was fined $845,000 as a result.

The above decision underscores the serious consequences of breaching the FTA. This is particularly relevant now, as the government has proposed to substantially increase the penalties for non-compliance. At present, the maximum penalties for misleading and deceptive conduct under the FTA are capped at $200,000 for individuals and $600,000 for businesses. The proposal to increase these limits will allow penalties to reach the greater of:

  • $1 million for individuals
  • $5 million for businesses
  • Three times the value of any commercial gain or loss avoided, or
  • The value of the transaction(s) involved.

Although a new civil regime will also apply for most breaches, the most serious or deliberate conduct will remain a criminal offence. These changes are expected to take effect by late 2026.

This announcement marks a significant increase in potential liability, emphasising the need for businesses to ensure advertising, pricing and promotional terms are accurate and transparent. Disclaimers buried in fine print may not be enough to correct misleading impressions. With penalties expected to become significantly higher, compliance with the FTA is essential to avoid financial and reputational consequences.

 

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Copyright, NZ LAW Limited, 2026.     Editor: Adrienne Olsen.       E-mail: [email protected]       Ph: 029 286 3650

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