Under the new TGRM legislation, however, if a Sale & Purchase Agreement does not correctly record the GST position, heavy repercussions fall on you as the buyer. Before settlement you must provide a written statement to the vendor confirming your GST position and the vendor is entitled to rely on your statement. The REINZ Sale & Purchase Agreements now include those GST statements and those details should be completed at the time of forming the contract. Incorrectly treating a supply of land under the TGRM as zero-rated when GST is in fact payable can result in you having to fund an extra 15% of the purchase price, so it is important that these GST statements are properly completed. A property with a purchase price of $500,000 would have $75,000 GST for you to pay to the IRD, plus any use-of-money penalty interest if the GST is not paid on time.

Not all land transactions are zero-rated. A GST-registered person must zero-rate (ie: 0% rate as opposed to 15%) a whole or part supply of land if the supply, is made to another GST registered person, the recipient acquires the goods with the intention of using them for making taxable supplies, and the supply is not to be used as a principal place of residence of the recipient or their relative.

For example, sales of residential properties used for ‘short term’ rental purposes qualify for GST zero-rating as short term renting accommodation is a taxable activity. Similarly, the sale of a commercial property subject to a commercial lease is an instance where compulsory GST zero-rating should take place. To avoid nasty GST surprises get in touch with us before your Sale & Purchase Agreement is signed.

Simply put, you should elect Option A if your partner owned most of your relationship assets and has not made adequate provision for you in their Will.

You should consider Option B if you own most of the relationship assets or take them by survivorship, such as where property is held as joint tenants between yourself and your spouse.

This is, however, a simplified summary. When reviewing your Wills and personal affairs, if you have assets structures in place such as a family trust, children from a previous relationship, or you have separated from your spouse or partner and are in a new relationship, then do talk with us. It’s important that when reviewing your Will or deciding to enter into relationship property agreements you should ensure that you are meeting your legal responsibilities to provide for your family after your death. Ensuring you provide for all your family can be a delicate balancing exercise, but with the right legal advice you can avoid family disharmony after you have gone.

If you’re finding yourself in financial difficulty with the possible prospect of a mortgagee sale, contact your lender as early as possible. They may be able to help you sort out your financial problems faced especially if you are still managing to keep up your loan repayments.

The Credit Contracts and Consumer Finance Act 2003 makes provision for a customer to request a change in the terms of their contract with the bank to help them meet their obligations under their mortgage. Sections 55 and 56 of the Act set out the grounds in which a request can be made which includes illness, injury, loss of employment and the end of a relationship and what terms of the contract may be changed to help the customer. Ultimately, it is the lender’s decision on whether to agree to a request for a change in the contract terms. The Quick Guide to Mortgagee Sales can be found at www.bankomb.org.nz

If you are thinking you would like to own property or assets with your spouse, partner or friend (or several others) you will need to decide on the form of ownership that will best suit the circumstances; both forms have major implications.

During a joint tenancy or a tenancy in common all owners obtain the benefit of shared ownership and use, dependingon any agreements they may enter into with each other.

Joint tenancy

A ‘joint tenancy’ is a method of owning a property or an asset with another person or with several people, whether or not it includes a spouse or partner. This means that when you die, your share of the property or asset automatically transfers to the other joint tenant/s rather than under the terms of your Will.

The right of survivorship

If all the joint tenants have died at the same time then the Simultaneous Deaths Act 1958 converts the joint tenancy into a tenancy in common in equal shares which means that each tenant’s shares become part of each tenant’s estate.

Getting out of a joint tenancy

There are several ways you can sever your joint tenancy agreement. You may unilaterally convert ownership from a joint tenancy to a tenancy in common in the case of a property. In other cases, a bankruptcy situation for example, the bankruptcy will automatically sever the joint tenancy arrangement. It can also be terminated by the mutual agreement between the joint tenants.

Tenancy in common

A ‘tenancy in common’ exists when two or more people hold shares in land or property. Commonly applied to land and buildings, a tenancy in common is also used to hold life insurance policies and other assets where the asset owners want to leave their share of the jointly owned property or asset in accordance with their own Will, usually to their own family.

Business partners, for example, will generally own their land and buildings and various other assets used in the business as tenants in common in the same shares as their shares in the partnership in which they operate. In the case of a company, however, this is not needed as each business partner can simply hold their own independent shares in a company.

A tenancy in common is recommended for friends who, for example, have formed a share group, when one of them dies, they do not wish their share to pass to the others. When establishing their ownership structure the friends will either enter into a partnership agreement determining their respective shares as tenants in common or, they will have a simple document signed by all of them indicating an intention that they hold their interest as tenants in common in those shares.

The implication of a tenancy in common is that each tenant may deal with his or her share separately under the terms of their Will.

Common uses of tenancy in common

A couple with children may want to protect their one half share of the family home following either of their deaths.

By holding the property as tenants in common, if the surviving spouse or partner enters into a new relationship or marriage, the deceased partner’s share is protected for their children. Each party, under their Will, can provide for the surviving spouse or partner to have the use and enjoyment of their half of the house during the surviving spouse or partner’s lifetime. This provision generally includes the right to sell and buy an alternative property or properties, the right to build an alternate property and the right to use the proceeds of sale and enjoy the income during their lifetime. This means that a future spouse or partner cannot benefit from at least half of the house.

Second and subsequent marriages or relationships commonly involve a mixture of joint tenancies and tenancies in common. Often couples who have been in a relationship for some time will want certain assets such as furniture, cars and some bank accounts to pass to the other automatically on their death and for this purpose they will hold those assets as joint tenants.

There are, however, the more significant assets that each party brings into the new relationship which they, more often than not, wish to protect eventually for their children of their first relationships. By holding those assets as tenants in common in shares with their new spouse or partner they can use their Wills as estate planning documents providing for the use, where applicable, of some or all of those assets during the surviving spouse or partner’s lifetime or for a specified period of time. In this arrangement the ultimate beneficiaries of the share under the tenancy in common are that person’s children or, where they do not have children, other family members.

The use of family trusts is commonly used to protect assets either received by way of inheritance or the person’s share of a relationship property settlement. Often both parties to a new marriage or relationship will have established their own family trust for the protection of themselves and their own family. It is common, therefore, for those trusts to buy assets together and each of the trusts will own their share under a tenancy in common. If those trusts contribute 50% each to the purchase of, for example, a family home then the home will be owned by the trusts as tenants in common in equal shares. If one trust contributes two-thirds and the other trust one-third then the title will have recorded on it that the one trust holds the property as to a two-thirds share and the other as to a one-third share as tenants in common in those shares.

To conclude

For most people, the family home and holiday homes will be the major asset or assets of a relationship. It is important when buying those assets that a decision is made as to whether they are bought as joint tenants, or as tenants in common in equal or unequal shares. In fact, the purchase of any asset requires an estate planning exercise to be undertaken so that you can decide whether the asset is to pass to the other person or persons by survivorship or whether an alternative provision will be made in that party’s Will.

If you do decide on a tenancy in common arrangement, it is important to have a specific provision in your Will as to what is to happen to your share of a tenancy in common asset, that is – to whom is it going to be left after you die.

If you don’t make a provision in your Will, the asset will pass to the residuary beneficiaries named in the Will, who may not be the people to whom you want to leave it. If you have created a tenancy in common and don’t have a Will, there are no residuary beneficiaries. In this case you would be dying intestate. Depending on who is still alive, your asset will go to your spouse or partner, children or grandchildren, parents and other relatives.

There’s more information about forests and the ETS on http://www.climatechange.govt.nz/emissions-trading-scheme/participating/forestry/

Recording of deaths, losses or exports of live cattle or deer with NAIT will be mandatory. There’s more information at www.nait.co.nz

The delayed share purchase scheme for the 2011-12 year may be chosen as part of the end of season elections.

For more information, go to http://tiny.cc/q4ljbw

The future ownership of the Crafar farms is now up in the air pending the Ministers reconsidering the application as directed by the High Court, and any potential appeals. The High Court’s decision, however, is more far reaching than the Crafar farms. Unless there is a successful appeal or legislative change, applications by overseas persons to buy farm land in New Zealand will have to be approached in a different way in the future.

The legislation has always prescribed the criteria that must be met before an overseas person can receive consent to buy farm land in New Zealand2. One of the relevant criterium is that the acquisition must be of substantial and identifiable benefit to New Zealand.

In the past, a ‘before and after’ (status quo) approach was applied to the assessment of whether the acquisition would be of substantial and identifiable benefit to New Zealand. The Crafar farms were in poor condition. In applying the ‘before and after’ approach in that case, the Ministers as decision-makers considered that the foreign buyer would deliver substantial and identifiable economic benefits by investing capital in the farms and improving production.

The High Court said that to best serve the legislation a ‘with and without’ approach should be applied rather than ‘before and after’. The ‘with and without’ approach takes into account what may happen if the transaction does not proceed, in particular that a notional domestic buyer may buy the land if the foreign buyer cannot. The reasoning was that the Crafar farms would be sold, whether to an overseas buyer or a New Zealand buyer, and “any solvent purchaser can be expected to bring their production up to its potential.”

In future applications where an overseas buyer seeks consent to buy New Zealand farm land, the following question will need to be considered. Can the foreign buyer establish that it can bring substantial and identifiable benefits to New Zealand, which are greater than the benefits that a notional domestic buyer may bring?

This is an interesting question to think about – what is of the most benefit to New Zealand?

 1 Tiroa E and Te Hape B Trusts & Ors v Chief Executive of Land Information & Ors (HC, 15/2/2012; Miller J, Wellington, CIV-2012-485-101) [2012] NZHC 147

 2 Overseas Investment Act 2005, referring to sections 3,14,16 and 17

The Biosecurity Act 1993 is now 17 years old and the legislation has not kept up to date with the evolution of biosecurity challenges in New Zealand. New markets are opening, imports are increasing, there is potential harm from discharge in New Zealand waters of ballast water from vessels travelling the globe as well as the introduction of exotic pests.

In recent years New Zealand has suffered from the incursion of pests and organisms such as the Psa outbreak in kiwifruit, the varroa bee mite, didymo, painted apple moth and the southern saltmarsh osquito. The responses to these incursions have had a cost to our economy. Those costs, however, would pale into insignificance compared with, for example, the funding required to fight an outbreak of foot and mouth disease or fruit fly.

The Biosecurity Law Reform Bill will extensively amend the 1993 Act, to allow the biosecurity system to respond to anincreasingly challenging environment1. The Bill had its second reading in Parliament in August last year. The Bill seeks to extend New Zealand’s biosecurity regime to its full Exclusive Economic Zone and enables New Zealand to assess the biosecurity risk of vessels and economic activity, for example. oil rigs operating in that zone.

The proposed legislation addresses the potential biosecurity harm to our acquaculture industry caused by the discharge of ballast water from vessels. The craft risk management standard espoused in the Bill will set out the requirements for craft coming into New Zealand waters.

There is provision for the making of national and regional pest management plans and pathway management plans (‘pathway’ meaning the movement of goods or craft in and out of and through New Zealand which has the potential to spread harmful organisms).

In the area of pest management, the Bill introduces the concept of a government-industry agreement between stakeholders and the government to boost New Zealand’s biosecurity response to unwanted pests and diseases.

The government and primary industries will make joint decisions about the preparation for, and response to, the arrival of a harmful pest/organism/disease. With joint decision-making comes the obligation of cost-sharing for this biosecurity readiness.

A further innovation in this Bill is the concept of ‘good neighbour’ rules in relation to pest management. The rules are intended to manage the spread of a pest that would cause damage or cost to occupiers of adjacent or nearby land. This is significant because for the first time the State is bound by the good neighbour rules as well as the private landowner. Currently the Crown is not required to comply with regional pest management strategies in relation to pests or weeds escaping from Crown land, for example: DOC land or railway reserves, on to neighbouring land.

The private landowner has therefore traditionally had to meet a higher standard of pest management and weed control than the Crown.

A biosecurity database containing information about land for the purposes of the Act will be established.

Further changes may well be made before the Bill is finally passed and becomes law. We will keep you up to date with developments.

1 Noted in the Purpose of the Act

You will have all sorts of things on your farm: dogs, stock, water reservoirs, effluent ponds, fires, weeds, emergencypetrol supplies, children, compost heaps, bird scarers, etc. Some of those things are valuable and you will want to keep them. Some of those things you would most likely prefer to get rid of. But in all cases, what you don’t want to happen is for those things (or the smell, noise, or vibrations they make) to escape your property. Here are a few reasons why.

You have a right to enjoy your land but so does your neighbour

A fundamental principle in land law is a property owner’s (or lessee’s) right to enjoy their land. You might think that that means that you can enjoy your land as you like. After all, it is yours.

Sometimes, however, the way in which you ‘enjoy’ your property can lead to your neighbour being less able to enjoy their own property. For example, you will have less enjoyment of your property if it’s flooded by water escaping from your neighbour’s man-made water reservoir. A free-range farmer will enjoy her property less if a neighbour’s dog sneaks through the fence and kills her prized hens. An organic farmer would not take kindly to having crops sprayed with chemical spray drift from the neighbouring property.

The law balances your rights against your neighbours’ rights

There are many relevant laws which relate to things escaping or being somewhere they shouldn’t be. Not only can these laws erode or place conditions on a property owner’s right to enjoy their land, but also they can also lead to liability. Here are just a few examples:

» The Health Act 1956 makes it an offence to allow conditions to exist on land or premises where flies and mosquitoes could breed

» Under the Litter Act 1979, you could be fined a hefty $20,000 if you’ve deposited litter on private land without the consent of its occupier

» The Forest and Rural Fires Act 1977 says you can be liable for costs incurred in fighting a fire caused by you, as well as for damage done to property. Imagine how expensive that may be if you light a small fire to burn off a few weeds and the fire spreads to your neighbour’s pine tree plantation, and

» For situations where there is not a specific statute applying, the law of nuisance developed from case law is likely to fill in the gaps. For example, where a person brings onto or keeps on their land something which is likely to cause mischief if it escapes (such as artificial water reservoirs), that person is liable for damage which is the natural consequence of that escape.

Reap what you sow

You don’t have to lock yourself in the house waiting for an angry knock on the door from your neighbour. Here are a few things you can do:

» It always pays to know what your obligations and rights are, and comply with them

» A tidy farm will reap benefits. For example, that sturdy number 8 fencing wire fence, built in accordance with the Fencing Act and kept in good repair, may prove to be a very worthwhile investment in preventing escape, as well as preventing trespass by your neighbour’s stock, and

» Talk to your neighbours (and possibly the council) about what you are doing. Sometimes, your neighbour may be willing to put up with a nuisance for a short period, knowing that you may return the favour at some point in the future. Or alternatively, you may be able to agree on some measures to mitigate the nuisance.

You will acknowledge that you can’t always prevent every accident. You should, however, take practicable steps to ensure you’re doing your best to prevent an accident. Make sure you have appropriate insurance in place and know what it covers, and what it doesn’t (as every insurance policy has exclusions).