Edmonds Judd

Rural

Calf Grazing: ensuring welfare and legal compliance beyond the farm

Rural, Your Own Business
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With calving season coming to an end, many farmers will soon be sending their calves off to grazing. However, this does not mark the end of your responsibility for their welfare. As the owner, you remain fully accountable for the care of your animals, even while they are under the grazier’s supervision. While day-to-day care may be delegated, it’s crucial to carry out regular checks to ensure your animals are receiving proper attention. Relying solely on weight records or reports isn’t enough. We recommend attending weigh-ins or arranging for a local vet to perform Body Condition Scoring (BCS) to ensure adequate oversight. The cost of these measures is a valuable investment in correctly raised cattle.

Equally important is ensuring that your grazing contract clearly defines each party’s responsibilities and that these align with the Animal Welfare Act and relevant Codes of Welfare. If you’re unsure whether your contract offers sufficient protection, our farming team at Edmonds Judd can review or draft a contract that ensures compliance with your legal obligations.

If you’d like to discuss your responsibilities or receive a copy of the applicable Code of Welfare to go over with your grazier, contact our team.

Fiona Jack, Senior Associate (rural specialist)

Over the fence

House, Property, Rural
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Service tenancies on the farm

Arrangements where an employer provides housing accommodation to their employees, such as where a farm worker who lives on the farm, are known as ‘service tenancies.’

A service tenancy is governed by the Residential Tenancies Act 1986; it must be recorded with a written agreement. Regardless of whether your tenant pays rent for the property, it is still considered a service tenancy. A tenancy agreement may be incorporated into an employment agreement, however it is beneficial if they are two separate documents.

The Act sets out the rights and responsibilities for service tenancies – for both landlords and tenants. As a landlord you must provide the property in a reasonable state of cleanliness, comply with healthy homes standards, smoke alarm requirements, and any health and safety obligations. Your tenants must pay the rent when due, keep the property reasonably clean and have the right of quiet enjoyment.

A notable difference between service tenancy agreements and other tenancy arrangements is the notice period required to end the service tenancy. If you are terminating a worker’s employment, or your employee has decided to leave, both parties must give each other at least 14 days’ notice of the intention to end the tenancy.

In situations where the employment has ended you may give your tenant less than 14 days’ notice if you believe substantial damage will be done to the property if they continue living in the property, or you need the accommodation for a new employee starting in less than 14 days and no other accommodation is available.

 

Checking terms of engagement regarding liability

In farming there are often multiple parties involved in the overall enterprise. In the seed industry, for example, there is often the supplier, grower and cleaner.

The terms of engagement is a legally binding agreement that sets out the rights and obligations of each party in the overall structure. It is important to understand the terms you have agreed to particularly regarding liability so that you know if/when you could be liable for the seed and any damage caused to it.

The terms of engagement can differ depending on the structure of the arrangement. Whether your land is leased by a business to grow seed or whether you buy and grow the seed yourself can alter the rights and obligations. Different parties are liable for the seed from the time it is planted, through to harvesting and cleaning. For example, if the seed is damaged during the cleaning process it is important to know whether you are still liable or whether the seed cleaning company, if outsourced, has assumed liability for the damage.

Understanding your liability under the terms of engagement and ensuring that you have the appropriate cover in place is important. Who is liable, and what rights and obligations are owed differ depending on what process is followed.

 

 

Farm lease coming to an end – what’s required?

Under a farm lease the lessee commonly pays the farm owner (lessor) to run an independent farming operation on the leased land. Such a lease often gives the lessee access to the land, building and other infrastructure on the property or portion of the property.

Although this arrangement is mutually beneficial to both parties, it is not a shared responsibility. Your lessee is responsible for maintaining the land in accordance with the terms and conditions of the lease.

The duration of the farm lease should be included in the lease document. There are also prescribed obligations to comply with when the lease expires. Your lessee often has to ensure that, at the end of the lease, the land is returned in an acceptable state as agreed to in the lease terms, and is also required to remove alterations or additional fixtures they may have installed, and to destock the land.

If your lessee does not comply with these lease terms, they may have to pay the costs and expenses associated with removing fixtures.

 

If you would like some guidance on any of these topics in Over the fence, please contact us. We are here to help.

 

 

 

 

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.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

The future of indoor pig farming

Rural
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Concerns that policy is threatening indoor pig farming

Concern has been expressed by industry body, New Zealand Pork (NZP), that the National Policy Statement for Highly Productive Land (NPS-HPL) is threatening the future viability of indoor pig farms. It believes the NPS-HPL is preventing current indoor farms from increasing in size and is blocking new indoor farms from being established on productive land.

So what is the NPS-HPL, how does it affect current and future indoor pig farms, and what (if anything) is projected to change in the future?

The NPS-HPL was introduced on 17 October 2022. It was designed to protect productive land from encroaching urbanisation, such as housing, by restricting infrastructure development.

The NPS-HPL introduced a regime requiring regional councils to identify, map and protect land defined as ‘highly productive’ for use in ‘land-based primary production.’ Such identification relies on the Land Use Capability (LUC) system, which categorises land into eight classes of productivity. Land classified as LUC 1 is the most versatile and productive, and has the fewest limitations which makes it best suited for food and fibre production. LUC 8 is the least versatile and productive, and has the greatest number of limitations. LUC classes 1, 2 and 3 are protected by the NPS-HPL as ‘highly productive’ land.

 

Initial consultation on the proposed NPS-HPL suggested that the intention was to protect highly productive land for ‘primary production’ purposes. This was supported by NZP, but the published version of the NPS-HPL changed the wording from ‘primary production’ to ‘land-based [our emphasis] primary production’.

‘Land-based primary production’ is defined under section 1.3(1) of the NPS-HPL as, “production, from agricultural, pastoral, horticultural, or forestry activities, that is reliant on the soil resource of the land [our emphasis].”

 

Implications for indoor pig farming

NZP is concerned that while indoor pig farming is an intensive primary production activity that requires access to arable land, indoor pig farming is being interpreted by the Ministry for the Environment (MoE) and regional councils as being an ‘inappropriate land use’ under the NPS-HPL due to it not directly relying on the soil resource of the land. NZP states, “This interpretation of the policy will make it hard for new pig farms to be established and for existing farms to grow or change the way they do things.”

Farmers have expressed concern that there are no clear consenting pathways for building new, sector-specific infrastructure on highly productive land, nor are there pathways for the development of structures used for intensive indoor primary production and greenhouses.

Adding to that concern is that current indoor pig farmers may have to double their building footprints to comply with  code of welfare changes. One pork farmer stated that two-thirds of commercial pig farms in New Zealand are situated on land classified as ‘highly productive’ under the NPS-HPL. The National Animal Welfare Advisory Committee has proposed changes to the code for pigs, including increasing the amount of space where young pigs live.

As such, NZP has identified that it could be difficult for pig farmers to construct new buildings on productive land to meet any new welfare rules. The pork farmer indicated that his business would need to build another five new indoor sheds to meet the welfare code changes.

 

The future

NZP has asked the government to change the NPS-HPL to make sure it protects good farming while still allowing for indoor pig farming.

The MoE and the Ministry for Primary Industries have consulted stakeholders about amendments to the NPS-HPL that would provide more clarity around what can be built on highly productive land. Consultation closed in October 2023, and ministers are due to seek Cabinet approvals to changes later this year. It is unclear exactly what changes are being proposed.

On 4 July 2024, however, Minister of Housing Chris Bishop unveiled six changes the government plans to boost housing growth. The minister said the changes would free up land for development, remove unnecessary planning barriers and “ensure abundant development opportunities in our key urban areas” by making it easier to build new houses. These proposed changes seem to contradict the NPS-HPL, but may well resolve the issues that indoor pig farmers face under it.

We will keep you informed of how the proposed changes progress.

 

 

 

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.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Budget 2024

Latest news, News, Rural
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What was in it for the rural sector?

On 30 May 2024, the Minister of Finance, Nicola Willis, presented her first Budget. The government is focussed on rebuilding the economy, easing the cost of living, delivering better health and education services, and restoring law and order.

Of course, within all those subsections, there is an underlying reliance on agriculture, the highest contributing sector to our economy. So, what did the Budget provide for the rural sector, and is there anything that farmers can look forward to over the next three years?

 

Drilling down to detail

After the Budget was presented, the Minister of Agriculture, Todd McClay said, “[It] places our trust back in farmers and growers by cutting public spending and reducing red tape, while also driving the efficiencies required to increase value and place the sector’s success at the forefront of New Zealand’s economic recovery.”

 

Practically speaking, the government intends to do that by:

  • Doubling exports by delivering strong frontline services, cutting red tape and reducing regulatory costs
  • Minimising the administrative burden on farmers caused by duplication, red tape and regulatory blocks on things such as irrigation, water storage, flood protection schemes and stock exclusion rules
  • Replacing the National Policy Statement for Freshwater Management 2020 (Three Waters) and delivering better resource management legislation for the primary sector
  • Taking an independent review of agricultural biogenic methane science by providing clear advice on New Zealand’s domestic 2050 methane targets
  • Committing $27 million for the removal of woody debris in Tairawhiti that will restore and help prevent further damage to vital infrastructure in local communities in the region
  • Committing $36 million over four years to catchment groups that back farmers’ efforts to improve land management practices, and
  • Driving innovation that will ensure farmers and growers remain global leaders in challenges, including reducing on-farm emissions.

 

The government considers its Budget will back the sector’s continued growth by providing support and professional resources to the frontline, and boosting research and innovation.

 

Should we be optimistic?

No one would expect the rural community to feel particularly inspired by this Budget and its overuse of words ‘innovation’ and ‘growth’ that do not necessarily translate to practical implementation.

The Budget is clearly focusing more on the bigger election promises such as infrastructure, education, and law and order. Although the Budget was more or less neutral on agriculture, the sector will nonetheless be pleased to see a focus on legislative repeal that was going to create a suffocating amount of red tape and make farming financially unviable (for some) in the near future.

It was a tight Budget that intends to put New Zealand’s books back into the black. The deficit is forecast to continue through to 2025 with a surplus expected to be reached in 2027–28. The government will continue to rely on revenue from the rural sector, but it seems unlikely that those at the farm gate will notice any positive economic changes for several years.

 

 

 

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.


Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Over the fence

Property, Relationships, Rural, Your Own Business
0

Contract grazing

Contract grazing is one of the ways you can farm that does not require land ownership. It is an arrangement where land ownership, livestock ownership and organising the grazing can all be managed separately.

Any species of livestock that are bred for meat or dairy (for example: cattle, sheep, goats or deer) can be the subject of contract grazing arrangements.

When involved in contract grazing, it’s imperative that you have a written contract that ensures a mutual understanding and definition of the obligations and responsibilities amongst the parties.

It is also important to include an animal health programme ensuring the animals’ welfare is protected and maintained, including the day-to-day management, health management, animal arrival obligations and reproduction requirements. The contract should include how and when payments should be made, and how any conflicts could be resolved.

The arrangement can involve up to a maximum of three separate entities each carrying out a specific role – the landowner, the livestock owner and the grazier (grazing manager). The grazier oversees the grazing activities and provides management expertise to the land and livestock owners.

If you are involved in contract grazing, don’t hesitate to contact us when you need to organise the contract.

90-day trial periods available again for all employers

As it had indicated pre-election, the government reinstated the 90-day trial periods for all employers. The 90-day trial period has had something of a flip-flop history.

First introduced in 2008, trial periods were initially applicable for employers with 19 or fewer employees; the overarching idea was that it would reduce the risks that employers face when hiring a potential employee. In 2010, the 90-day trial period was extended to all organisations – whatever their size. In 2018, the Labour coalition amended the law back to being applicable to only employers who had fewer than 20 employees. However, since December 2023, the 90-day trial periods have been reinstated for organisations of all sizes. There is ongoing debate that the 90-day trials diminish the risks for employers and increases the uncertainty for employees.

A 90-day trial period can be used for your employees if they have not previously worked for you. For you to include a trial period when hiring a new employee, you and your prospective employee must agree to the trial period before they start work. The trial provision must be included in their employment agreement to be able to terminate within that trial period. If you want to dismiss your ‘trialled’ employee, it’s essential the correct steps are taken during the process.

You should note that your dismissed employee is not entitled to bring a personal grievance in respect of the dismissal if it is within the trial period. It’s important to be aware, however, this does not prevent your employee raising a personal grievance on other potential qualifying grounds such as discrimination or bullying.

We strongly recommend you talk with us early if you intend including a trial period or using a trial period to dismiss your employee. Getting it wrong can cause much distress for them, and a great deal of money and time for you.

Minimising phosphorus in waterways

Most farmers work hard to manage the water quality on their properties. They change grazing arrangements, manage their fertiliser applications, fence riverbanks and wetlands, plant trees and place sediment traps.

Dairy farm fertiliser effluent contains phosphorus that may enter freshwater from run off or leaching from paddocks. Although phosphorus is essential for plant growth and crucial for food security, it leaves a devastating footprint on the environment. A key ingredient in synthetic fertilisers, the damaging impacts are seen when phosphorus contaminates lakes, rivers and (ultimately) the ocean. Phosphorus can encourage the growth of algae in fresh water that pollute and degrade the health, mauri and wairau of our water. It means our waters may not be suitable for swimming, fishing and drinking, and affects its biodiversity.

The good news is, however, that in many areas the amount of phosphorus in our waterways is declining. All farmers should minimise the impact of phosphorous leaching by stock exclusion, creating riparian buffers, undertaking planting and preventing runoff from critical source areas.

The National Policy Statement for Freshwater Management (NPS-FM 2020) provides guidelines for monitoring and managing dissolved reactive phosphorus in rivers and how freshwater should be managed. Farmers are recommended to apply phosphorus to paddocks only if necessary. An increase in plant productivity could lead to a decrease in run off and less erosion. Using a phosphorus index ensures you can find paddocks that have high potential for phosphorus loss and therefore avoid using that fertiliser.

 

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.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Live animal exports

Latest news, News, Property, Rural, Your Own Business
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Government intends to lift the ban

In April 2023, following intense pressure from animal welfare organisations, the Labour government banned live animal exports. The basis of the ban was centred on an independent review that New Zealand’s international reputation was being damaged by its live animal export programme because of animal welfare standards being breached.

The government’s plan

With the ongoing pressure from SAFE (Save Animals From Exploitation) and other animal welfare organisations, the government is proceeding with caution. It intends to introduce amendments to the Animal Welfare Act 1999 that will impose strict regulations and ensure a ‘gold standard’ of care. This includes fit-for-purpose live export ships and certification regimes for the livestock and their destination country. The government believes these regulations will protect animal welfare and safety.

The government has not indicated the timing for these proposed legislative changes.

 

The good . . .

The answer is obvious – revenue. In 2022, before the ban on live animal exports, revenue of $524 million was generated for the farming sector. Reports say the ban resulted in a loss of between $50,000– $116,000/year per farm[1] that, in the current economic climate, is significant to those who have lost this source of revenue. The return of live animal exports may bring some financial relief to farmers. With the level of red tape involved, the actual benefit of live animal exports is unclear.

 

The bad . . .

No animal, except of course those of the aquatic variety, is designed to sustain long journeys by sea. Exporting live animals to China, for example, can take anywhere between 15–40 days and, during that time, the animals have endured rough seas, long periods of standing in their own excrement, heat stress and injuries. The conditions during the journey are aggravated further because once the ship docks, there are no assurances of continuing animal welfare and safety on land. Many importing countries lack the minimum welfare standards that New Zealand enforces.

And the ugly

While petitions have been submitted and lobbyists are in full force in New Zealand, elsewhere in the world live animal exporting continues to be practised. Earlier this year, 2,000 cattle and 14,000 sheep spent two weeks enroute from Perth to the Middle East, only to be turned around and returned to port at Fremantle where they remained on the ship for almost six weeks while the exporter attempted to obtain a new export permit. The Australian government is now under immense pressure to follow through with its own election promise to ban live animal exports.

Will our government follow through on lifting the ban?

That remains unknown. Each side of the argument will continue to pressure the government to make what that side believes is the right decision.

There remains a strong belief that live animal export represents such a small share of agricultural revenue (0.2%)[2] since 2015 that the damage to New Zealand’s ‘clean’ reputation is far worse than the benefit of the export receipts.

What farmers can certainly expect is that if the live animal export ban is overturned, there will be stricter regulation and more red tape, and the costs associated with those increased regulations may be onerous. Farmers can expect an update to this process this year.

[1] Livestock Export New Zealand.

[2] Ibid.

 

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.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Significant Natural Areas

Latest news, News, Property, Rural
0

Suspended while government overhauls RMA

Associate Minister for the Environment, Andrew Hoggard, announced on 14 March 2024 that the government will suspend the Significant Natural Areas (SNAs) requirements while it overhauls the Resource Management Act 1991 (RMA). It comes as a timely announcement after the Greater Wellington Regional Council’s (GWRC) unsuccessful prosecutions[1] of two rural landowners due to the council having wrongly identified wetlands on private farmland.

So what are SNAs, how do they currently affect our rural landowners and how will they be addressed in the future?

Defining an SNA

SNAs are areas containing ‘significant indigenous vegetation’ and ‘significant habitats of indigenous fauna’ that must be protected to ensure ongoing biodiversity. The basis for defining and identifying SNAs is in section 6 of the RMA:

‘6 Matters of national importance

In achieving the purpose of this Act, all persons exercising functions and powers under it, in relation to managing the use, development, and protection of natural and physical resources, shall recognise and provide [our emphasis] for the following matters of national importance:

. . .

(c) the protection of areas of significant indigenous vegetation and significant habitats of indigenous fauna: . . . ’

 

While the RMA is nearly 33 years old, it was only in August 2023, when the National Policy Statement for Indigenous Biodiversity came into force, that a mandatory standardised approach and criteria were introduced to protect SNAs under s6. In practical terms, the Policy Statement required regional councils to identify and map SNAs within their territory (including on private land) and include them in their district plans by August 2028.

 

Implications for rural landowners

Once an SNA has been identified, it means that the area is noted on the council’s records. The use to which that land can then be put is more controlled. That doesn’t necessarily mean that existing uses of that land will be stopped – although it could. It does mean, however, that generally speaking existing activities are unlikely to be able to be intensified and new activities are likely to be subject to tighter controls – if permitted at all.

There is no direct government compensation for a landowner who has an SNA identified on their land. The SNA identification process has been somewhat controversial. This is partly because the RMA does not define ‘significant’ and, as a result, it has been left to each council to interpret this, largely using case law and ecological guidance.

Regional councils’ interpretation and identification of areas to protect under the RMA has recently been highlighted by the GWRC’s two unsuccessful prosecutions of rural landowners, one of which has been labeled by the Court of Appeal as a ‘miscarriage of justice.’

In both cases, the GWRC was found to have incorrectly identified wetlands on private farmland. Although the GWRC’s prosecutions were unsuccessful in both cases, they illustrate how severe the penalties can be under the RMA. In one case, Mrs Crosbie was fined $118,742 as the owner of the property, and Mr Page was sentenced to three months’ imprisonment (which he had already served prior to the Court of Appeal hearing).

The future of SNAs

The message from this government has been very clear – stop mapping and imposing SNAs for three years while it reviews the RMA. Mr Hoggard has said that quickly suspending the SNA requirements was to ensure councils did not waste resources and efforts on requirements that were likely to change. He has also asked officials to review existing SNAs.

The suspension, however, will not change the need for councils to protect areas of national importance under s6 of the RMA. Arguably, regional councils could still identify areas on private land to protect, and they may impose restrictions on private landowners on the use of such land. Nevertheless, with the clear message from the government to not waste resources in this area, it is unlikely that we will see regional councils identifying new areas to protect until the government provides further guidance to those councils or new resource management laws are passed.

[1] Page v Greater Wellington Regional Council [2024] NZCA 51 and Greater Wellington Regional Council v Adams [2022] NZEnvc 025.

 

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.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Postscript

Commercial, First Job, House, Property, Rural, Your Own Business
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Incorporated societies: must reregister by April 2026

The clock is ticking for New Zealand’s 24,000 incorporated societies to reregister by 5 April 2026. Under the Incorporated Societies Act 2022, if your incorporated society does not reregister by this time, it will automatically cease to exist.

During the next two years, every existing incorporated society must decide whether to retain its incorporated status by seeking reregistration. If it opts to reregister, it must check that its constitution (the rules of the society) comply with the requirements of the new Act. This will almost always involve amendments being made to the constitution and, in a significant number of cases, an entirely new constitution being adopted.

There is quite a list of requirements to reregister. To learn more, go to:

www.is-register.companiesoffice.govt.nz If you need advice on any aspect of reregistering, please don’t hesitate to contact us.

Minimum wage increases

 On 1 April the minimum wage increased. This covers:

  • Adult minimum wage increased from $22.70 to $23.15/hour
  • Starting-out and training minimum wage rose from $18.16 to $18.52/hour

Remember that all rates are gross and before any lawful deductions such as PAYE, student loan repayments, child support, etc.

Make sure your payroll people, HR/finance teams and your accountant are all aware of these changes.

Before you dig

Whether you want to replace a fence around your property, are a contractor installing a new cable along a street or a new gas pipe, or are working for the council in resurfacing the road, it is vital that you check there are no cables or pipes below ground.

beforeUdig is an online service which enables anyone undertaking design and excavation works to obtain information on the location of cables, pipes and other utility assets in and around any proposed dig site.

It provides a ‘one stop shop’ for contractors to communicate about their planned activities with utilities and asset owners.

To find out more, go to www.beforeudig.co.nz/home.

 

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, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Do I still need a trust?

Commercial, Estate, House, Property, Retirement, Rural, Trusts, Your Own Business
0

Thousands of Kiwis have, over the years, established family trusts for a variety of reasons. However, it’s well worth considering whether those reasons are still relevant today and evaluating whether your trust may have outlived its usefulness.

You may have established your family trust for:

  1. Avoiding estate duty: before 1992 it was common for high value assets (such as farms) to be transferred to a trust so your personal estate would not have to pay estate duty
  2. Eligibility for the residential care subsidy: trusts were often settled to increase the likelihood of being eligible for the residential care subsidy; the Ministry of Social Development (MSD) only considered assets you owned personally when considering eligibility for the subsidy
  3. Minimising tax: Fluctuating tax rates over the years have sometimes provided a lower tax rate for trusts than the highest rate of personal tax
  4. Creditor protection: Transferring your personal assets to trust ownership means that your personal creditors may have more difficulty accessing those assets to recover personal debts you owe
  5. Estate planning: Children may make claims against their parents’ estates where they believe their parents have made no, or inadequate, provision for them. Transferring assets to a trust during one’s lifetime leaves little or nothing for children to claim against on your death. Trusts also allow assets to be ring-fenced to help with the care of differently abled children
  6. Relationship property: settling a trust, either before your relationship is ‘in contemplation’ or afterwards (provided a contracting out agreement is also signed), is one way to help remove assets from the potential pool of relationship property that would be available for division if your relationship ends.

Things have changed

These days, however, estate (and gift) duty is no more, the top personal tax rates will soon be realigned with trust tax rates, and MSD takes a closer look at trusts when considering residential care subsidy applications. There has also been increasing court action on trusts where it is believed they may have been used to avoid creditors, claims by children and relationship property claims.

In addition, there are further consequences in settling trusts in New Zealand if you are an American citizen, from the UK (even though you may be tax resident in New Zealand), or if you are tax resident in Australia.

Notwithstanding the above, trusts are still very useful vehicles, particularly for creditor protection, estate planning and relationship property purposes.

Trust deeds, however, should be carefully drafted and have the correct documentation in place around them. Excellent legal, accounting and tax advice is needed to ensure that your trust will do the job you want it to.

If you have a family trust that may no longer be fit for purpose, or you think you need an asset protection plan, please talk with us about the options available to you.

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, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Over the fence

Property, Relationships, Rural, Your Own Business
0

Family home v homestead: implications for relationship property

When a relationship breaks down, it is always difficult dividing up your joint assets.  It is important when deciding the division of relationship property under the Property (Relationships) Act 1976 (PRA) following a separation, or when forming a contracting out agreement, to accurately classify the home in which you and your partner/spouse live. The overall structure of the property will define whether your home is classified as the ‘family home’ or a ‘homestead.’

Family home: The PRA defines the family home as a property, including all land, buildings and improvements, which a couple generally, or primarily, reside in as their family residence. The property within the whole title must be used for the benefit of the relationship to be classified as the family home. In this case, all land under that title must be shared equally in a separation situation unless you as a couple have a contracting out agreement specifying the division of the property.

Homestead: Where only part of the property within the whole title is used for the benefit of the relationship, the portion attributable to the relationship may be considered the ‘homestead’ instead of the ‘family home.’ In this case, the remainder of the property may not be subject to the PRA principles of equal sharing, particularly if it is owned by a third party such as parents of one of the parties.

A family home will be considered a homestead if a portion of the property within the title is used by a couple as their general, or primary, family residence but the remainder of the title is used for the overall economic gain of another entity. This is more common in the rural context where couples reside on the farm but only a portion of the overall title contains the family home and the remainder is used for the economic gain of their rural business.

In this case, only the portion of the title considered to be the homestead would be considered in the division of relationship property, with the remaining property possibly not subject to the equal sharing principles of the PRA.

 

Road user charges and when to pay them?

The government imposes taxes on fuel through a road user charge (RUC) to collect funds for the maintenance and development of our roads. For most people, this tax is included in the petrol price.

Some vehicle owners, however, must pay the RUC and their fuel separately. If you own a vehicle weighing more than 3.5 tonnes, or a vehicle weighing less than 3.5 tonnes that runs on untaxed diesel, you must pay the RUC.

Your RUC licence is paid in advance to allow you to travel the distance purchased – usually in blocks of 1,000 kilometres.

You must always display the appropriate RUC licence on the inside of the passenger’s side of the front windscreen of your vehicle. Once your vehicle has travelled the distance covered by the RUC licence, you must renew your licence.

Owners must keep records of their vehicle use and have a hub odometer installed to accurately measure the distance it travels. Most vehicles that are subject to RUCs are sold with a hub odometer pre-installed.

Electric cars (EVs) do not currently incur RUCs. The new government, however, has indicated that EVs will pay the RUC from 1 April 2024 onwards.

 

Casual employees v seasonal workers

Seasonal workers are employed in certain sectors (particularly agricultural and horticultural areas) with the exclusive purpose of doing seasonal work, usually to assist with an increase in seasonal production requirements. Although seasonal work is temporary by nature, employers must be aware of the minimum entitlements for seasonal workers. There is a distinction between ‘casual’ workers and ‘seasonal workers’ in general. The Employment Relations Act 2000 requires specific clauses in employment agreements for these workers.

Casual employment: a casual worker is employed to work on shifts that are offered and accepted. There is no requirement for them to accept work you offer. In between periods of work, this worker is not considered to be employed by you.

Seasonal work: generally speaking, a seasonal worker is employed to work the entire season. These people are permanent employees on a fixed-term basis who are likely to be employed under a fixed-term agreement[1]. It is important that your seasonal worker’s employment agreement is drafted according to the specifics of the job.

If you need help with employing this summer’s casual and seasonal workers, please don’t hesitate to contact us. It’s vital to get these employment agreements correct – both for you and your employees.

[1] Section 66, Employment Relations Act 2000.

 

 

 

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