Previously we noted that the Kawarau Falls case had been appealed to the Supreme Court and we were awaiting its decision (Kawarau Village Holdings Ltd v Sun [2017] NZSC 150). 

To recap on this case: in September 2016 the Court of Appeal held that in circumstances where an 'off the plans' project could not be completed and the Agreement for Sale and Purchase had been cancelled by the developer, the developer had to pay purchasers back their deposits. 

Although this result appeared to set a favourable precedent for purchasers, a purchaser's rights became uncertain when the Court of Appeal decision was appealed to the Supreme Court.

On 6 October 2017, the Supreme Court of New Zealand released its judgment . The majority of the Supreme Court agreed with the lower court and found that the deposits must be refunded to the purchasers, and dismissed the appeal.

The rights of purchasers, in circumstances where they have bought off the plans and the project cannot be completed, are now clearer.

What this means for your residential rental property if purchased to run your business...

You are probably now well aware that the bright-line test has been extended to five years.

If you own a residential rental property or a holiday home, changes to the bright-line test may mean you have to pay more tax. The current law came into effect 1 October 2015 and states that if any residential rental property, or a holiday home, is sold within two years of being purchased, you have to pay tax on any profit from the sale. This timeframe has now been extended to residential rental property sold within five years for property purchased on or after 29 March 2018. There's more detail on how this will work here.

Former residential property purchased for the purposes of running a business may be exempt from the bright-line test if it's no longer considered to be residential property. If, however, you buy residential property and then convert it into your business premises within the bright-line test period, it may be deemed a sale from you to your business and subject to this tax on that basis.

The bright-line rules are complex and strictly enforced by Inland Revenue. If you're in any doubt about what to do, please contact us.

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. Read more…

What is the Process?

When your employee becomes ill, or has an injury, with long-term effects, it takes not only a toll on them of course, but also on you as their employer as there is sometimes quite a disruption to your business. Read more…

How might this impact you?

As much as we like to think we are living in the modern day, there are still a large number of relationships that follow the more 'traditional' practice of having one party act as the 'homemaker', while the other acts as the 'breadwinner'. If the relationship breaks up, economic disparity is likely to be an issue. Read more…

Is your business infringing existing intellectual property rights? Do your homework.

A trade mark can be a valuable asset which can help your business to develop a reputation in the market and distinguish your goods and/or services from others. It's risky, however, to not consider existing third party intellectual property rights before you start to trade. Read more…