Recent Legislative Changes for Business

There have been a number of key legislative changes announced recently which have an impact on businesses and trusts within New Zealand. They are: changes to gift duty, simplified reporting for SME's and a anti-money laundering code.

The abolition of gift duty will be good news to many. Previously, the liabilities of a trust could be forgiven at a rate of $27,000 per year, or $54,000 per couple, without incurring tax duty. However, from 1 October 2011, gift duty will cease. Gift duty created unnecessary compliance costs and we're glad to see it go. As New Zealanders are some of the highest users of family trusts in the world, we're pretty sure that many others will also see this as a positive move.

Another move that we're in favour of is reducing the financial reporting compliance for small and medium businesses. Under the new scheme, entities which have revenue less than $30 million or assets of less than $60 million will be required to produce targeted reports for tax purposes only. They will not be required to produce financial statements under the Companies Act. We're interested in any measures which reduce compliance costs for small businesses. The key to making it work is also ensuring that financial reporting standards are maintained and that NZ doesn't once again become the cowboys of the financial reporting world as in the 1980's and prior to the Financial Reporting Act 1993.

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 will come into force on 30 June 2013. Money laundering is the way that criminals disguise the illegal origins of their money to avoid detection. Financial institutions can protect the identity of people providing and receiving the funds. Financial institutions and casinos will need to establish and implement their programme to comply with the Act before the 30 June 2013 deadline. What this means, is that customers of these institutions can expect more stringent identity checks in the lead up to the Act coming into force. We expect that this will be a public relations challenge for financial institutions as many of their customers wish to retain a high level of privacy about their investments.

It is election year after all and we know to expect good news from the governing party as part of their election campaign. There's no doubt that the National government have limited options given the current economic environment. However, we are supporters of 'Keynesian economics' ie increasing money flow into the economy as a way of helping us work through the current difficult environment. While these regulatory changes are positive, they will have little impact on stimulating the economy.