New changes regarding law firms are coming into force and they may affect your next visit to us. The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (known as AML/CFT) applies to New Zealand law firms from 1 July of this year.
The legislation aims to ensure New Zealand is a safe place to conduct business. The government wants this country to remain at the top of the list of low risk countries with a reputation for low corruption and strong protocols to prevent money laundering activity.
What is money laundering?
Money laundering is the acquisition, possession, transfer, concealment or the conversion of property knowing it is derived from a criminal offence. There are three stages of money laundering:
- Placement
- Layering, and
- Integration.
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Website privacy falling short
Your business website is a powerful tool for engaging potential and existing customers, and for collecting useful data. Where information collected is personal information, however, you have obligations under the Privacy Act 1993. The legislation contains
12 Privacy Principles which regulate how you collect, use, disclose and store personal information.
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Many New Zealand businesses and trusts must complete registration and understand their reporting obligations.
With the United States Foreign Account Tax Compliance Act (FATCA) regime now in effect, it’s important that all New Zealand entities ensure they are aware of their obligations.
FATCA came into effect in New Zealand on 1 July 2014 – with little fanfare at the time. From 1 April 2017, however, the compliance obligations of the FATCA regime are now live. The FATCA regime classifies all entities (companies, trusts, associations and partnerships) as either a ‘financial institution’, an ‘active non-financial foreign entity’ (active NFFE) or a ‘passive non-financial foreign entity’ (passive NFFE).
The reason for FATCA
The ultimate goal of the FATCA regime is to find US offshore persons or entities who have been avoiding their US tax obligations. This is done by gathering information on any US persons or entities controlled by US persons holding accounts outside of the US.
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Following the abolition of gift duty on 1 October, we publish a special edition of Fineprint here.
You may be considering whether to complete your gifting programme in one fell swoop – or perhaps not.
Everyone has their own reasons for establishing a trust, and your own individual situation will be unique to you and your family. Completing your gifting programme in its entirety may not be the best step for you.
Do get in touch with us so we can talk about the best path forward for you and your particular circumstances.
The Supreme Court has just released its judgment in the ‘Penny Hooper’ case. This case involved two doctors that worked in their own private practices. They then formed companies for which their family trusts were shareholders. Rather than the doctors receiving the full income they generated – they were paid a salary. The IRD said the salary was significantly below market value (i.e. one doctor went from $650,000 income one year to a salary of around $100,000).
The Supreme Court has said that having a salary set at a low rate to avoid paying tax is tax avoidance. However, if the salary is at a low rate for a legitimate reason (e.g. saving income for the purchase of a capital item) then this is not tax avoidance.
A more detailed summary of the decision follows and you can read the full decision here.
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