We have come across a really useful tool recently created by the team at Digital Journey.  It’s an online assessment that is free and after answering questions about your website and digital profile will provide you with recommendations of areas to improve.

This is definitely worth checking out!

I spoke with Richard Holstein about why they offer this and he said: “We don’t have a vested interest in selling new websites, specific apps or software products. We’re independent. Our free tools and resources, and paid services focus on helping organisations understand how they can use the Internet, online tools and digital technology effectively to improve how they operate. We believe online tools and digital technology should be easy, affordable and doable for everyone.”

You can access it here.

As we all know technology is become more and more important to understand and be on top of so we think this tool is worth checking out.

Speaking of new technology, here is a short interview recently about our innovative chat bot LISA that we will be talking about at a conference in Auckland in March 2018:

A key characteristic of so-called ‘exponential technologies’ is that they change what is possible extremely quickly – and it can be fascinating to observe how fast or slowly governments react. Lawyer Steven Moe looks at the developing world of space law, and questions whether similar moves are needed for other exponential technologies on our immediate horizon.

 

It is hard to imagine that Captain Kirk worried too much about legislation governing space travel on the Enterprise (apart from the ‘Prime Directive’, which was broken most episodes). Yet here in New Zealand we have some new space laws which have just been introduced in a bid to provide a framework and regulation around this burgeoning industry.

Just a few days before Christmas The Outer Space and High-altitude Activities Act 2017 commenced. Passed earlier in the year, it supports the development of the New Zealand space industry and opens up the possibility for New Zealand to be seen as even more of a world leader in this area than it already is. Many will be familiar with Rocket Lab, founded by Peter Beck, and these new laws are directly related to (and a result of) the success of that company. One of the key purposes in the new Act states it is there to “facilitate the development of a space industry and provide for its safe and secure operation”. When announcing the changes the press release issued at the time said:

 

“The New Zealand Government supports the development of an internationally credible, competitive and well connected NZ-based space economy that can make a difference in our everyday lives. Our regulatory regime is the key to making this happen. It enables the growth of a safe, responsible and secure space industry that meets our international obligations and manages any liability arising from our obligations as a Launching State.”

 

The new Act focuses on introducing rules around space launches and covers a variety of topics that were not previously covered (or had even been thought about before) such as:

  • launches into outer space
  • requirements for launch facilities
  • payloads (eg satellites) and high altitude vehicles (HAVs).

 

It does this through six types of licences or permits (for now, Rocket Lab still operates under a separate agreement it has with the government and will have six months to apply for a licence). The licensing and permit process will be administered by the newly created “New Zealand Space Agency” that sits within MBIE. This legislation has to be among the first to deal with the need to have a mitigation plan in place for orbital debris.

The regulatory impact statement issued in August 2017 makes for interesting reading as it outlines the background, reasons for the legislation and likely activity. For example, how much detail should applicants need to provide when applying for a licence or permit? Requiring too much information might put applicants off, but too little might not lead to well informed decisions. In the end, a pragmatic approach seems to have been chosen after consultation with the industry. It will be a case of watching to see how many applicants come forward or whether there are barriers to their participation. It is clear that the government is looking beyond just being a launch site – the new space agency states: “We believe New Zealand can become a significant player in the global commercial space launch industry. However, the opportunities for New Zealand are much broader than launch activities.”

It is worth pointing out that New Zealand was party to much earlier treaties, such as The Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space from 1969. But it is certainly hard to imagine even a few years ago that we would now have legislation introduced dealing with “celestial bodies”, “space objects” and “high altitude vehicles”, yet here we are. If you had some space ambitions then it is best to read up on the requirements accessible here. There will be a review completed after three years.

 

 

Great, but what next? This is space we are talking about after all…

Of course, one of the next areas to consider will be the law surrounding space and planets – this is beyond just New Zealand of course. But how will the legal system in relation to planets develop? Will the powers that control resources here on Earth end up having more control than others on planets “up there”? After all, how do you legislate over the legal jurisdiction in outer space when it is off world territory – who owns asteroids, planets, the sun? The closest there is at present is the Outer Space Treaty, a multi-lateral international treaty which operates on the idea that space is for everyone. That’s a nice concept but what will it mean when we practically can go into orbit and start a mining operation on the Moon?

I recently interviewed Emeline Paat-Dahlstrom for a podcast I host about purpose and understanding what people have learned on their journeys. One of the first people to arrive in New Zealand on an Edmund Hillary Fellowship with a three year Global Impact Visa, Emeline is a co-founder of SpaceBase and co-wrote the 2013 book Realizing Tomorrow: The Path to Private Space Flight.

SpaceBase is aimed at “co-creating a global Space Ecosystem to serve entrepreneurs in emerging space industries – starting in New Zealand. Our goal is to provide access to training, networking, technical services, and investment opportunities where they are needed most.” I asked Emeline about the issue of who will own what up in space. Here’s what she told me:

 

“Really the reason why we are doing this is the democratisation of space, for everyone.  And when we say for “everyone” – today you can really see a bright future with all of the things that are happening in terms of the space technology that is being brought forward in the US and China and Russia – but I am still not quite sure if the rest of the world is actually going to be in the same playing field.  So when I mean a bright future I want everybody – and unfortunately today, you can see that gap widening, and so I don’t want to put that to chance.”

 

These are certainly challenging ideas to think through now in the relatively early days of space travel and exploration. As New Zealand leads the way and becomes a more widely known launch site it would be great if there could be a corresponding advocacy at an international level for a discussion of these other issues as well.

The full interview with Emeline on this and other space-related topics is accessible here.

 

How might this response impact other exponential technologies?

One real point of interest here is the extent to which commercial application of emerging and new technologies can lead to a quick reaction by government. Emerging technologies are coming out all the time now – to become exponential technologies they need to have the characteristic of rapid improvement in price/performance over time. The famous “Moore’s law” is that every 18 months the number of transistors per square inch on circuits will double. Many of these new exponential technologies were highlighted at the SingularityU conference held in Christchurch just over a year ago (some great resources and content including videos from that event are here).  They will be the subject of the next such Singularity conference in this region which is being held in Sydney in late February – for more on that one click here.

The example of the new space law shows that there can be a relatively quick legislative response to new developments – in this case a one month consultation in May with the Act commencing in December. Increasingly, the government will need to keep an eye on developments like Bitcoin which quickly become more than just talk and instead offer new challenges to the way things have been done in the past.

In areas where there are these new emerging technologies or exponential technologies, there is now some policy and legislative catch-up to be done:

 

  • Cryptocurrency: A time traveller from even a few months ago would be shocked at the amount of print devoted to Bitcoin and cryptocurrency. The Financial Markets Authority has issued some guidance about Initial CoinOfferings and services related to cryptocurrencies. But what is still missing is more in depth analysis of how the government itself will react to a new way of trading that doesn’t really involve it in the way that traditional transactions have.
  • Blockchain: Sitting behind cryptocurrency is the real game changer: Blockchain technology. What are the policy and legal changes needed at a national level to deal with a decentralised network of data?
  • Artificial Intelligence: There are many examples but to pick one, the idea of financial advice being given by robots has resulted in consultation which started in June 2017; in October the FMA noted that it “has decided to grant an exemption to enable personalised robo-advice”. In what other fields might advice be given that will need similar changes? How about my own area, the legal industry? This is something I am watching closely as a co-founder of Active Associate, a legal-tech startup improving access to legal information through AI powered conversations.
  • Autonomous vehicles: These are coming, so if I am reading the newspaper (on a device of course), while my car drives me along the road when it swerves to avoid hitting a cat and kills a pedestrian, who is responsible? The Government provided the following comment in this release at the end of last year leaving the question open: “There are no obvious legal barriers to the deployment of autonomous vehicles for testing in New Zealand. Unlike some countries, NZ law has no explicit requirement for a driver to be present. However, autonomous vehicles could raise issues about who is at fault if they were to crash.”
  • Big Data and Privacy: Think about the last time you were asked to click “accept” on some terms and conditions – I would say the chances of actually reading the privacy provisions in those are extremely low.  We are collectively giving up our privacy in exchange for convenience that apps, software and new technology provides. Does the law need to respond – or are we kind of OK with that?

 

Such ideas demonstrate the importance of considering again where we are, and where we want to be. The new laws around space have been introduced fairly quickly which shows what is possible. Maybe it is time that some of the other technologies mentioned above were looked at again and a proactive and world leading approach was taken to ensure their full potential can be reached here in New Zealand.

 

This article by Steven Moe originally appeared on The Spin Off

We have all come across disclaimers of some sort. Whether a ‘use at own risk’, ‘don’t try this at home’ or ‘check with your doctor/lawyer before acting upon this information’, the concept isn’t new to us. Yet how much can we really rely on these? At what point can people disclaim their own liability, and when do they have to take responsibility for their actions and advice?

 

 

Where do you start?

A core starting point begins with section 9 of the Fair Trading Act 1986 which disallows anyone in trade, from engaging in conduct which is misleading or deceptive or likely to mislead or deceive. If someone can show that they merely passed on the information, with no reason to believe that it was misleading or deceptive, then such a disclaimer may be relied upon.

 

What are some examples?

In the case of Goldsboro v Walker, Mr Oborn wished to buy a motel. He was initially declined but he tried again, but named his mother-in-law as the purchaser, and forged her signature. His solicitor, Mr Fleming, sent the agreement to the solicitors, but Mr Oborn never completed the purchase. In the Court of Appeal, Mr Oborn was found to be in breach of section 9 as he was not merely passing on the information, but represented that he was acting for the mother-in-law. It did not matter that he thought the assertion to be true.

 

What if you just “convey” information?

This is where the concept of passing over information comes into play. The case law suggests that if someone clearly communicates that the information they are giving has not been assessed by them, but is merely passed on, they can exclude their liability.

The Supreme Court in Red Eagle Corporation Ltd has emphasised that unless it is clear that the information has been passed on from another source, the conveyor takes the risk that the information will be understood to be personal knowledge. Informing the recipient gives them the opportunity to seek further advice and information.

Conveyors should be careful not to get involved in the information if they wish to keep the safety of the disclaimer. In Watson v Gilbert, despite putting a disclaimer in the financial information, the defendant was held to be more than a mere provider of information as he introduced the plaintiff to the investment programme and encouraged the investment.

 

What does that mean for us?

If you are receiving information that comes with a disclaimer, you will generally have to accept that they have distanced themselves from liability. It will be your responsibility to do further research. However if they haven’t clearly explained that the information they are giving to you has been sourced from elsewhere, and that they haven’t been involved with it i.e. edited/added to the words, included the words in their own pamphlets etc., then you may be able to consider it as personal knowledge. If the information turns out to be incorrect, then you may be able to make a claim against them.

It is also worth keeping in mind that there may be specific rules that apply to you based on the type of industry you are in.  For example, Real Estate Agents are subject to rules around their conduct and it is difficult for them exclude those professional duties.  If you are uncertain about what applies and what you can exclude by way of a disclaimer then we would be happy to discuss with you to clarify.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Steven Moe at Parry Field Lawyers (348-8480) stevenmoe@parryfield.com

Sustainability is a word being thrown around a lot lately. Many businesses now use the term as a marketing tool, as customers are asking for more socially responsible goods and services. But what does the term actually mean?

 

 

The UN has set out their list of goals on sustainability, which may be of interest for businesses and not-for-profits when thinking about strategic direction. Read more about it here.

 

  1. End poverty in all its forms everywhere

Despite extreme poverty rates being cut by more than half since 1990, there are still too many who live just above this line. How can businesses help to alleviate these statistics both at home and overseas?  Are there education scholarships that can be given out? Are living wages granted to workers, producers and farmers?

 

  1. End hunger, achieve food security and improved nutrition and promote sustainable agriculture

Sustainable food sources can provide nutrition, generate income and help protect the environment. How can food production and consumption in your workplace be developed?

 

  1. Ensure healthy lives and promote well-being for all at all ages

Life expectancy is on the up, but many diseases and ongoing health issues need more attention for all people of all ages. How is the well-being of workers throughout your whole production line being cared for?

 

  1. Ensure inclusive and quality education for all and promote lifelong learning

Quality education can be the foundation of improving a person’s life in a sustainable way. What are some ways your business can be encouraging and improving the standards of education for those who don’t have access to it?

 

  1. Achieve gender equality and empower all women and girls

Providing women and girls with equal access to health-care, education, work opportunities, and representation at a political level creates a greater impact than just for the individual. With the opportunity to benefit society at large by investing in women, what can your business be doing to assist in this?

 

  1. Ensure access to water and sanitation for all

Water scarcity and poor water quality can negatively impact food security and health standards. How are you ensuring others get access to clean water? How can you be preserving and avoid polluting the water in your own situation?

 

  1. Ensure access to affordable, reliable, sustainable and modern energy for all

Sustainable energy has the potential to change lives, economies and the planet. Are there ways you can be using more sustainable energy sources? Can you be supporting others to do the same?

 

  1. Promote inclusive and sustainable economic growth, employment and decent work for all

How can you be providing sustainable jobs which support your workers, the environment and the economy? How can you ensure this endeavour won’t burn out, leaving others without work?

 

  1. Build resilient infrastructure, promote sustainable industrialisation and foster innovation

Quality infrastructure is foundational for the success of many communities. How can you promote inclusive and sustainable industrialisation, while supporting small-scale industries and enterprises?

 

  1. Reduce inequality within and among countries

Inequality includes financial, social and environmental factors. What policies have you implemented that seek to reduce inequality within your own country and overseas?

 

  1. Make cities inclusive, safe, resilient and sustainable

These days, cities are facing congestion, lack of funds for basic services, a shortage of adequate housing and deteriorating infrastructure. How can you provide services that enhance the city, rather than strain the resources currently available?

 

  1. Ensure sustainable consumption and production patterns

In order to reduce pollution and waste, and increase quality of life, how can you aim at “doing more and better with less”?

 

  1. Take urgent action to combat climate change and its impacts

Are there actions you can be taking now to decrease your greenhouse gas emissions or even become carbon neutral?

 

  1. Conserve and sustainably use the oceans, seas and marine resources

How can you reduce your impact on the oceans? What fishing practices do you engage with? What are you putting into the waters?

 

  1. Sustainably manage forests, combat desertification, halt and reserve land degradation, halt biodiversity loss

How are you adding to the forests? How can you help support the ecosystem?

 

  1. Promote just, peaceful and inclusive societies

How can you help support countries affected by war and corruption? How can you establish an inclusive society in your own neighbourhood?

 

  1. Revitalise the global partnership for sustainable development

How do you support global sustainable development? How do you choose to trade with?

 

While the above are all just topics to think over, any business wishing to be sustainable should seriously consider how they respond to these topics.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation, please contact Steven Moe.

Parry Field Lawyers (03 348-8480) stevenmoe@parryfield.com

There has certainly been a lot of buzz recently about crypto-currencies, Bitcoin, Blockchain and the opportunities they represent. Having done a lot of reading on this subject we thought it would be helpful to give an overview about them and, more importantly, what sits behind them that is so disruptive. We have also set out below links to the articles and commentary that we have found the most useful in this area.

 

 

What are they?

Cryptocurrencies are a potential disruptor to the traditional ways of thinking about money. They are probably best described as ‘tokens’ that exist in digital form and are traded via online exchanges. The most famous at present is Bitcoin due to its surges in price recently. In some ways it is like the heady days of old when gold rushes would sweep through and tales of vast wealth being found on the side of a river. In this case, the most prominent story stems from the fact that in April 2013 the Winklevoss twins (who got a settlement from Mark Zuckerberg as they claimed he stole the idea for Facebook from them) – bought $11 million dollars of Bitcoin (at $120 per coin). Do the math quickly and that makes them now Bitcoin billionaires.

 

What is going on now and why all this sudden interest?

There is a huge element of FOMO involved here (fear of missing out) and the reality is large volatility is seen with huge price fluctuations, delays in transactions being processed and rumours of hacking. All this in an environment where no one country has issued this new form of currency – that gets around some issues but creates others such as who stands behind it. There is a lot of talk about it being a classic bubble that will one day burst – but no one knows when that may happen and in the meantime millions more investors are getting in on this due to the seemingly endless rises of hundreds of percent. What is going to happen? If I knew I wouldn’t be writing this article! But be wary of anyone who looks to make a quick gain without the usual hard work. That can happen but more often than not it is the owners of the grocery stores that sold the products to the gold miners who actually made money.

 

How does The Blockchain fit in?

Underlying the different cryptocurrencies (Bitcoin is just the most famous) is the real disruptor – the Blockchain. This is a technology that allows cryptocurrencies to exist. It acts as a decentralised ledger (so no government controls it) on a network – so changes made to it are public and viewable. So a transaction begins by being requested and once it is validated it is a new “block” which gets added to the blockchain. The real point of interest is how the Blockchain can be used in other areas e.g. contracts, health care, energy, home ownership, voting etc.

This 6 minute video helps to explain it, or this shorter one.

 

This is all new and disruptive, do I still need to comply with “old world” rules on securities?

Yes. The FMA has issued guidance about this (see below) and it is worth talking through with your adviser before you set yourself up as a provider of services relating to crypto-currencies. It may be disruption but there are still implications of trading Bitcoin or other currencies.

 

I want to know more – where do I go?

For those who do want to dive deeper we recommend you have a look at the following resources online by clicking on the links below – is there something we have left out? Email me at stevenmoe@parryfield.com and we can add more in.

The New Zealand Financial Markets Authority has released this guidance on crypto-currencies and initial coin offerings.

This commentary has just been released by the SEC in the United States and offers a very helpful overview as well as some questions investors should ask when buying a crypto-currency

Reserve Bank of New Zealand commentary

Report by PwC

 

We have been helping a number of people with their questions about Bitcoin and crypto-currencies and the Blockchain. Let us know if you would like to discuss.

 

Steven Moe

03 348 8480
stevenmoe@parryfield.com

 

Recently the new Government announced the issue of a Ministerial Directive Letter to the Overseas Investment Office.  From mid-December 2017 the Letter applies to both current and new applications. The Directive Letter serves to outline the Government’s policy approach to overseas investment in rural land, while the rules regarding the acquisitions of significant business assets remain unchanged. Overseas investors must now demonstrate that their investment will benefit New Zealand in order to obtain consent to acquire sensitive land.

 

Some of the key changes are:

Rural Land

The Letter states that certain factors will be of high relative importance for overseas investments of rural land larger than five hectares (which does not include forest land). These include:

  • The jobs factor – that the investment will create new job opportunities and/or retain existing jobs in New Zealand
  • The new technology of business skills factor – that the investment will result new technology or business skills
  • The increased exports receipts factor – that the investment will increase export receipts in New Zealand
  • The increased processing of primary products factor – that the investment will result in increased processing in New Zealand of New Zealand’s primary products
  • The oversight and participation by New Zealander’s factor – that the investment will provide for significant participation and oversight by New Zealanders

Forest Land

Factors of relative high importance for overseas investments in forest land include:

  • The increased processing of primary products factor
  • The advance significant Government policy or strategy factor

Overseas Person

An overseas person intending to reside in New Zealand indefinitely is not required to show that their investment in sensitive land is likely to benefit New Zealand. To meet this intention to reside criterion, an overseas person will generally:

  • Hold a residence class visa or an entrepreneur work visa; and
  • Show actions and plans, with supporting evidence, consistent with an intent to reside in New Zealand within 12 months

This is a tighter restriction than the previous letter. Other changes include that the sponsorship of community projects and donations is now generally of low relative importance.

 

Overall, this new policy directive sets out to welcome high quality overseas investment that:

  • Generates high levels of benefits to New Zealand
  • Creates new productive assets
  • Is environmentally sustainable, minimising adverse impacts on the natural environment, and is likely to create positive and long lasting environmental benefits
  • Provides economic, environmental, social and cultural benefits to regional communities
  • Significantly increases value added activities in New Zealand
  • Provides for significant participation and oversight by New Zealanders

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. We have experience with OIO applications in New Zealand and have assisted our clients from overseas through the process., please contact Steven Moe at Parry Field Lawyers (348-8480) stevenmoe@parryfield.com

 

 

 

This article by Steven Moe was published by the Spinoff December 4 2017

With the rise of China, Japan has taken something of a backseat in trade discussions. Lawyer Steven Moe says New Zealand’s relationship with the world’s third largest economy is still going strong, but may need some TLC.

Whenever foreign investment or overseas strategies are mentioned in New Zealand boardrooms these days it is most likely that the topic is China and its growing influence. As a result it is sometimes easy to forget that Japan and New Zealand have had a very long relationship which goes back many decades and which continues today. But what shape does that relationship take now, and what are the unique characteristics of it – and where do the opportunities lie for further growth?

The Japan New Zealand Business Council met recently in Osaka for its annual conference to discuss these and other issues. The council started in 1974, and is a member-based organisation promoting the growth of business relationships between Japan and New Zealand. This was the 44th conference, with the next one to be held in Auckland in November 2018. Participants came from large corporations, small and medium sized businesses, government and service providers. I was one of the 61 New Zealand representatives who flew to Osaka from New Zealand, out of more than 130 attendees.

 

 

To give a sense of the scale and depth of the relationship, it is first important to note that Japan is still the third largest economy in the world. Japan also is one of the top five markets for New Zealand, and is an important trading partner with New Zealand Trade and Enterprise (NZTE) at the conference putting the figure on two way trade at over NZD $7 billion.

This can be broken down further to NZ exports of $3.86 billion for the year ending December 2016, while from Japan to New Zealand the total was $3.55 billion. Dominating the trade from the New Zealand side are various natural and food products such as dairy, beef, fish, wood and aluminium, with an increasing focus on tech exports as well. From Japan, the goods mainly include vehicles, equipment and electronic goods. There is also a lot of direct investment into New Zealand by Japanese companies and approximately 100,000 Japanese tourists per year. For more on these and other aspects of the relationship some recent research called “Through the Japan Looking Glass” by The New Zealand Story Group is worth a look here.

The topics covered at the conference included the current economic outlook, infrastructure, manufacturing, trade and the potential for a free trade agreement, agriculture, science and technology. The uniting theme was sports, since the Rugby World Cup will be held in Japan in a few years, followed by the Olympics in 2020. One of the other themes to emerge in each of these sessions was the similarities faced by both Japan and New Zealand in each of these areas.

 

 

Beyond the statistics and trade figures there is something else going on though – both countries share many similarities and deep connections. Perhaps due to both being islands, each culture has a strong sense of identity and independence from the rest of the world. Both have similar landscapes with active volcanoes, rivers, lakes, forests – and earthquakes.

Unfortunately, the world’s eye on the Christchurch earthquakes in 2011 shifted across the Pacific Ocean to the major quake that hit Japan just a few weeks later. I was living in Tokyo at that time and vividly recall flying back from helping my parents clean up their house in Christchurch only to be in Japan (on the 22nd floor of a skyscraper) for the Japan earthquake.

As well as all these connections, it is also worth remembering that Japanese became one of the first Asian languages offered in New Zealand schools, and there is a generation of Kiwis who learned it. Many young people have gone on the JET programme teaching English, while others have gone there on a one year working holiday visa.

But what does all this actually mean? Perhaps it is time that Japan was placed back on the agenda at Kiwi board meetings that discuss overseas strategies. There is a ready market in Japan for quality goods, and particularly those that are foods with health benefits – but also increasingly from our world leading (and growing) tech sector. It would certainly pay to keep Japan in the picture going forward, as there are real opportunities for New Zealand businesses to explore there when they look to grow their overseas business or first start developing that strategy.

 

Steven Moe is a lawyer based in Christchurch at Parry Field Lawyers who recently returned to New Zealand after 10 years at an international law firms in London, Sydney and Tokyo. He works with Kiwi companies going offshore, as well as foreign companies looking to invest in New Zealand. He has a podcast Seeds: Talking Purpose where he interviews entrepreneurs and social enterprises about their journeys.

stevenmoe@parryfield.com 

03 3488480

 

 

 

 

 

New International Tax Legislation

 

Under FATCA (Foreign Account Tax Compliance Act), adopted by New Zealand in 2014, the United States aims to detect and prevent tax evasion by US citizens and tax residents on their worldwide income from financial assets owned by an offshore entity, which they control e.g. a family trust or company settled/incorporated in New Zealand.

Additionally, from 1 July 2017, New Zealand endorsed the OECD’s standard Automatic Exchange of Financial Information in Tax matters (AEOI), which incorporates the Common Reporting Standard (CRS),a global version of FATCA. New Zealand is 1 of 101 OECD nations to have signed a multi-lateral agreement to combat offshore tax evasion on a global scale. All citizens of these countries are subject to the same level of tax scrutiny in New Zealand and the other member or participating countries, as are Americans under FATCA.

All entities (family trusts, companies and partnerships, but not individuals) have to comply with this legislation. Al professionals, such as ourselves, accountants, investment fund managers/advisors etc. needs to advise their “entity” clients of their obligations under this complex and far-reaching legislation.

Is your trust/company/partnership (“entity”) a Financial Institution under FATCA or CRS?

It is important to know whether or not your entity (trust, company, partnership) is either a Foreign Financial Institution (FFI) under FATCA or a Financial Institution (FI) under CRS, both or neither. If your entity is a FFI then it needs to register on the United States’ Internal Revenue Services (IRS) site. If your entity is a FI under CRS then when the IRD site is up and running next year, your entity will have to disclose to IRD all financial information and personal details for those trustees and beneficiaries who are residing overseas in one of the 100 other participating jurisdictions combating offshore tax evasion.

We are in the process of corresponding with all of our trust clients and providing them with a form to assist the trustees decide whether or not their trust has to register on the US site and ultimately, report to our IRD under CRS. If you are a trust client of ours, and you have not yet received this form, please contact us urgently.

Can this legislation be ignored?

Unfortunately, registration on the IRS site under FATCA is compulsory even if your trust is not “controlled” by any US tax resident or citizen, provided:

(a) It has some financial assets (shares, bonds, term deposits) managed by an investment advisor/fund manager OR an FFI, such as one of our corporate trustees is one of the trustees of your trust AND

(b) More than 50% of the trust’s gross income for the proceeding calendar year comes from financial assets (excluding rental from property).

Unfortunately, (b) above will be satisfied even if the only income-producing asset of the trust is a bank account which earns minimal interest. However, if the trust or other entity earns the majority of its income from residential rentals, it will not satisfy (b) above.
Once registered, no further personal information disclosure is needed, if there is no such “control” by a US tax resident or citizen. By contrast, registration on the IRD site under CRS is required only if your entity is “controlled” by anyone who resides overseas (but not the US).

What if my entity is not a FFI or FI?

If your entity is neither a FFI or FI then it will, by default, be a NFFE (Not a Foreign Financial Entity) or a NFE (Not a Financial Entity). As such, your entity will not have registration requirements, but may have reporting obligations to other FFI’s/FI’s such as a bank with which your entity has funds or an investment house/advisor with whom your entity has a share portfolio. Such institutions are in the process of sending, and will continue to send, to their customers/clients Self-Certification forms similar to those we are sending to our client trusts. If the completion of these forms conclude that your entity is a passive NFFE/NFE then it must, on request, disclose details of US and other overseas controlling persons to the entity’s bank or investment advisor etc., which report to IRD. If however, less than 50% of your entity’s gross income for the past calendar year is from passive income (including rental from property) then it will be deemed an active NFFE and will have no reporting obligations, even if it is “controlled” by a US or other overseas resident person.

These are complex matters, but compliance is mandatory with not unsubstantial fines able to be imposed on those who breach their obligations under this legislation.
Should you have any query regarding these matters and how they may affect your trust, company or partnership, then please consult with us because to ignore this legislation is clearly, not an option.

 

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance, please contact Pat Rotherham at Parry Field Lawyers (348-8480) patrotherham@parryfield.com

This article is part of an Innovation Series by Andrew King for Lawfest NZ. This series interviews legal professionals with experience in innovation and technology in the legal sector. You can read more here.

 

 

An interview with Steven Moe, Senior Associate, Parry Field Lawyers

What has been your experience or interaction with legal innovation and technology?

 

I returned to New Zealand after 10 years working for an international law firm (Norton Rose Fulbright) where I was one of 3,800 lawyers in 55 offices.  That role took me as a corporate lawyer to work for several years in each of Tokyo, London and Sydney.  So I’ve seen first-hand how the biggest law firms operate and push the boundaries by adopting new technology and trying new things.  On returning to New Zealand last year I was really keen to explore what that might look like here too.  The context for that exploration has been keeping this great quote from Joshua Gan at the front of mind:

“Successful firms that are disrupted are not complacent or poorly managed. Instead, they continue on the path that brought them to success.”

 

What changes have you seen in your firm, team or organisation recently?

 

At the end of last year I got really tired of reading about disruption in every article but often with only speculation left as the takeaway about ‘what next’.  So we investigated for ourselves what it might actually mean for a medium sized firm like ours (8 Partners, 40 staff).  The direct result was this year taking concrete action and forming a joint venture company with software developers who had developed AI chat bots before.  This software start-up has been a wild yet fun ride of learning and growth.  It’s called Active Associate and it is developing an AI-enabled customer engagement solution for law firms. This solution is addressing some serious pain points for medium size firms such as a high amount of time spent on non-billable work and difficulties in maintaining a client base that can support their billable targets.  Consumers are able to access the solution 24×7 via Facebook Messenger and ‘widgets’ on a firm’s website from their phones, tablets or laptops, and interact with it using natural language to get quick helpful answers to their legal questions. While helping future and current customers, the solution captures user information which can then be delivered to the law firm increasing workflow efficiencies and reducing the wasted time dealing with tire kickers. We’ve had a warm reception from forward-looking law firms in NZ and Australia who have already become our Innovation Partners and those that are about to join the Programme (we are open to a few more at this stage).

 

What challenges or barriers do you face when innovating or looking to use new tech?

 

Understanding what is hype and what is reality – it’s a grey mist you have to really squint to see through.  For example the term “AI” conjures up images for some people of robots taking our jobs when for the foreseeable future it is better to think of it as a description for natural interaction with consumers.

 

What opportunities do you see with legal innovation?

 

The next generations are first going to turn to their phones before they walk through the physical doors of an imposing looking law firm.  It will be critical for those law firms who want to survive that they prepare and are ready to interact with that next gen thinking.

 

With greater adoption of tech and more innovation, how do you see your role evolving in the future?

 

My hope is that we focus more on the true value add that we can offer as professionals and get less tied down with the routine tasks that none of us really enjoy.

 

LawFest is focused on innovation and tech in the legal profession, why do you think it’s important for legal professionals to attend an event like LawFest?

 

It’s vital to stay in touch with the latest trends and developments and LawFest offers a great opportunity to hear from the best innovators in the field.  By having a representative attend they can then go back and challenge the assumptions and old ways of thinking that will doom a law firm to irrelevance by just continuing to do what has worked in the past.

The Financial Markets Authority has just released the first statistics relating to crowdfunding in New Zealand.  It shows that beyond any doubt this is an option for people to consider in order to raise funds for their new venture.  A compelling story and provable business case is all that may be necessary to raise the amounts needed to take a business to the next level.

 

Some of the key highlights that stood out to us are:

  • A total of $74.2 million in total was raised all by investor crowdfunding;
  • In relation to peer to peer lending there are 7 such entities registered and in the year ending 30 June 2017:

a) $259.9 million is currently loaned to individuals; and

b) $29.5 million loaned to businesses.

  • Interestingly the average value for new loans was just $8,771.

In relation to crowdfunding it is worth quoting the relevant part with the key statistics:  “Of the eight licensed crowdfunding providers, 5 facilitated offers during the reporting period. There were a total of 50 offers, with 34 successfully meeting their funding target. 263 potential issuers were declined. 1,597 investors invested in crowdfunding for the first time, with 2,331 investing through the crowdfunding system in the year.”

That picture is consistent with something we have seen recently which is some social enterprises choosing to raise money in this way – for example Cultivate Christchurch with their “Broccoli Bonds” and Kilmarnock Enterprises with their crowdfunding campaign.

If you are looking to raise money for your venture then it is worth considering these options.  Keep in mind as well the restrictions on seeking funding from others – for an overview on this see our other articles here.

For more information on the FMA’s announcement and the statistics they have published you can visit here.