Steven Moe, Kris Morrison and Ken Lord recently attended the Perspectives on Charity Law, Accounting and Regulation in New Zealand inter-disciplinary conference held at the end of April 2018 in Wellington, New Zealand. We were involved in the organising committee for the conference, and Steven Moe moderated Session 2 and Session 9. Below are videos of each of the sessions including Q & A’s with the topics covered at this event. These videos are also accessible on our YouTube page (click here) and under the Videos tab on this website.

Session 1: Who are we as a sector, why are we here and what do we hope to achieve?
Speakers: Stewart Donaldson and Roger Holmes Miller

Session 2: Are there too many charities in New Zealand?
Speakers: Sue Barker, Jamie Cattell, Kate Russell, Cheryl Spain, Dellwyn Stuart and Steven Moe (moderator)

Click here to watch session 2

Click here to watch session 2 – Q & A

Session 3: Overview of new financial reporting standards implementation
Speakers: Robert Buchanan, Anthony Heffernan, Raewynne Jacobs, Ceri-Ann Ross, Caroline White and Julia Fletcher (moderator)

Click here to watch session 3
Click here to watch session 3 – Q & A

Session 4: Approaches to public benefit – different perspectives on social housing and charity
Speakers: Andrew Butler, Scott Figenshow, Peter Gunn and Matthew Harding (moderator)

Click here to watch session 4

Session 5: Advocacy by charities
Speakers: Sue Barker, Adam Parachin (via webcast), Andrew Phillips and Matthew Harding (moderator)

Click here to watch session 5
Click here to watch session 5 – Q & A

Session 6: The interplay of judge-made and statute law
Speakers: Jennifer Batrouney QC and Matthew Harding

Click here to watch session 6

Session 7: Tax issues and charity
Speakers: Andrew Babbage, Stewart Donaldson, Denham Martin and Jennifer Batrouney QC (moderator)

Click here to watch session 7
Click here to watch session 7 – Q & A

Session 8: How to build public trust and confidence in the charitable sector
Speakers: Murray Baird, Oonagh Breen, Stephen Reilly and Wayne Tukiri (moderator)

Click here to watch session 8
Click here to watch session 8 – Q & A

Session 9: Funding, social enterprise and the intersection with charities who operate businesses
Speakers: Louise Aitken, Levi Armstrong, Matt Dodd, Michael Gousmett, David Woods and Steven Moe (moderator)

Click here to watch session 9
Click here to watch session 9 – Q & A

Session 10: Charity law and accounting in Te Ao Maori
Speakers: Simon Karipa, Damian Stone and Alex Wilson

Click here to watch session 10
Click here to watch session 10 – Q & A

Session 11: What needs to be done next?
Speakers: Anthony Heffernan, David McLay, Mary Synge and Andrew Phillips (moderator)

[To be added]

Session 12: Future opportunities and challenges
Speakers: Craig Fisher and Matthew Harding

Click here to watch the Q & A discussion session

Keynote
Speaker: Hon Peeni Henare

Click here to watch the keynote address
Click here to watch the keynote Q & A

Three of us (Ken Lord, Kris Morrison and Steven Moe) will be going up to Wellington to participate in this conference. We have been involved in the organising committee for the last 6 months and Steven Moe will be moderating two sessions as follows:

Session 2: Are there too many charities in New Zealand

Cheryl Spain – The Gift Trust
Dellwyn Stuart – Auckland Foundation
Jamie Cattell – Charities Services
Kate Russell – Fundraising Institute of New Zealand
Sue Barker – Sue Barker Charities Law

Moderator: Steven Moe – Parry Field Lawyers

And

Session 9: Funding, social enterprise and the intersection with charities who operate businesses

David Woods – Whai Rawa Fund Limited
Levi Armstrong – Patu Aotearoa
Louise Aitken – Akina Foundation
Matt Dodd – Russell McVeagh
Michael Gousmett – Independent researcher and commentator on charities law

Moderator: Steven Moe, Parry Field Lawyers

The conference is being organised by the Charity Law Association of Australia and New Zealand (CLAANZ), Chartered Accountants Australia and New Zealand (CAANZ) and Parry Field (among others). Charities Services is also supporting this event.
The conference will focus on current topics of interest in fields of charity law and accounting.
The aims of the conference are to:
• inform and educate on important topics for charities
• strengthen links, contacts and collaboration within the sector community; and
• share lessons learnt and best practice that have worked for others, both within New Zealand and beyond.

We will report back on how it went!

We get many questions from start-ups, charities and social enterprises on what they need to consider when establishing themselves. This made us think – “why not put all our answers in one spot?!”

After the initial buzz of coming up with your great idea, the next practical stage can be quite overwhelming – particularly if this is your first time engaged in a start-up. This toolkit seeks to guide you through the process, informing you on different structures, key contracts, and highlighting the topics people often forget about.

The book covers a range of topics including:

how to set up a company;
specific guidance on social enterprise and not for profits;
fundraising;
liability and ongoing duties;
employment issues; and
includes a template of a non-disclosure agreement.

With the success last year of “Social Enterprises in New Zealand: A Legal Handbook,” we are excited to see the impact this book will have.

To get the ebook, click here.

The book launch, which includes a bit of a busking theme by Kris Morrison and Steven Moe can be viewed here

If you find this resource helpful then please consider joining us in spreading the word to others by sharing this page on social media or emailing the link to one or two other people.

We just released our new free ebook “Start Ups Legal Toolkit 2018” with a super fun and interactive presentation at Ministry of Awesome‘s “Coffee & Jam” in Christchurch, New Zealand – had a busking theme with a bit of juggling thrown in from Steven Moe and Kris Morrison!

For more info on the book click here

(If you’d like a free copy of the startups ebook mentioned here just email stevenmoe@parryfield.com – also check out our other free resources for startups at Parry Field and our other recent book “Social Enterprises in New Zealand: A Legal Handbook” at Change for Good)

Also mentioned during the presentation: Seeds: Talking Purpose Podcast Greenhouse Christchurch & Canterbury NZ

We are on the committee which is helping organise a conference in April at Te Papa called “Professional Perspectives on Charities Law and Regulation in New Zealand Conference”

We thought it would be good to share the details of it which are below. If of interest, please contact Steven Moe at stevenmoe@parryfield.com.

Professional Perspectives on Charities Law and Regulation
in New Zealand Conference

26 and 27 April, 2018
Te Papa Museum, Wellington, New Zealand

The conference is being organised by the Charity Law Association of Australia and New Zealand (CLAANZ), Chartered Accountants Australia and New Zealand (CAANZ) and Parry Field. Charities Services is also supporting this event.

The conference will focus on current topics of interest in fields of charity law and accounting.

The aims of the conference are to:

inform and educate on important topics for charities
strengthen links, contacts and collaboration within the sector community; and
share lessons learnt and best practice that have worked for others, both within New Zealand and beyond.

We hope that this conference will inspire action and innovation, help inform the upcoming review of the Charities Act and improve trust and confidence in the sector.

This conference will cover a range of topics of interest and importance to practitioners and others in Australia and elsewhere in the world and all are strongly encouraged to attend.

Speakers are yet to be confirmed and you can find the proposed programme here . The speakers will include leading representatives of the profession, domestic and international regulators, the academic community and charitable sector.

Registrations will open early next year

Earlybird before 28 February 2018:
– One day: $275
– Two days: $440

Pricing after 1 March 2018:
– One day: $300
– Two days: $500

There will be a conference dinner on the Thursday evening and this is an additional cost.
For more information, please email Steven Moe.

Photo credit: Te Papa external view. Photograph by Michael Hall, ©Te Papa

Some fascinating research has just been released about not for profit boards which is well worth a look.

The work has been done by Dr Jo Cribb who has made the research available at no cost here. A good summary of the research is available in an article here.

The report is a timely reminder that we need to resource and better understand the needs of those serving on NFP boards. As the article notes, “For the thousands of New Zealand directors serving on the more than 100,000 not-for-profit (NFP) boards in New Zealand – that is an estimated one in 40 of us – being on the board is a labour of love.”

Some highlights identified in the article are the following:

“NFP board members generally had little training for their board role relying instead on the experience they bought to the table from other roles. Those interviewed would welcome opportunities for practical hand-on opportunities to learn, including mentoring from experienced directors.”
“A consistent strength of NFP governance was the board’s focus on achieving the NFP’s mission and vision. All boards interviewed were focused on achieving the best for those they served. We all should celebrate this dedication and determination.”
“The research also questions the role of New Zealand’s governance community in valuing and supporting governance in this sector. A vast percentage of governance that happens in New Zealand, happens around a NFP board table. Investing in improving NFP governance will make an important contribution to strengthening our communities. NFP governance could be more widely discussed as part of governance conversations and a wider range of training, development and mentoring opportunities offered.”

The above are just a few highlights but the entire report is worth looking through for those operating in this area.

Dr Jo Cribb offers other information on her website here www.jocribb.co.nz and it is well worth checking that out as well.

Social enterprises are everywhere right now. But what are they? And how do we make sure they are not just businesses exploiting a trendy term? Lawyer Steven Moe outlines how social enterprise can become a legitimate force for good.

When the poet Robert Frost published his most famous poem ‘The Road Not Taken’ in 1916, he certainly did not have the New Zealand social enterprise sector in mind. Yet the words that end the poem seem particularly apt in the post Social Enterprise World Forum environment that we find ourselves in:

“Two roads diverged in a wood, and I —
I took the one less travelled by,
And that has made all the difference.”

Social enterprises seek to make a change in the world by combining both profit and purpose. Anecdotally there is definitely a move towards this new way of thinking being applicable for both existing businesses and new startups.

But what does the social enterprise road actually look like and how do we know if we are even on it? What shape will the social enterprise sector now take here in New Zealand, after having its profile raised by the 1600 participants who journeyed to Christchurch from all around the world?

I think there are five critical questions we need to be asking to find the answers we need – whether we are participants, advisors, regulators or just curious (or cynical) about social enterprise.

What does it actually mean to be a social enterprise?

It’s one thing to raise your hand and say you want to be a social enterprise but quite another to take active steps towards becoming one. Because there is currently no special purpose legal structure for social enterprises (see below) there is no clearly marked out road, and no criteria that have to be met before you can start using that label. Yet surely we can agree it is more than just saying you are one that is needed – something more than mere spoken words.

I think we need to empower people who do want to make a proactive decision to set up (or transform into) a social enterprise by educating them about what that might involve. In my view there are three key elements that should be present:

First, an identifiable and explainable purpose beyond profit (it can be diverse – social, environmental or economic);
Second, a mission lock of some kind (the organisation has demonstrably committed to that purpose and communicates it clearly to others); and
Third, reporting on the actual tangible benefit to that mission/purpose (through distribution of profits, engagement with a particular disadvantaged group, fulfilment of purpose).

If you have those three elements in place then it is more likely that you are on the social enterprise road. Empowering people to take active steps to understand what being a social enterprise is will involve education. Australia is further down the road and has an excellent resource here.

What we really need is to develop our own resources in New Zealand, personalised to our situation. My own small attempts to kick-start the process have been a podcast (more details at the end) where I interview social entrepreneurs about what they do and why they do it, and a legal handbook and more tools for social enterprises here .

How do we ensure people don’t misuse the label ‘social enterprise’ to simply sell more stuff?

This fits with the answer to the last question like a puzzle piece. It’s all about education so that people can understand what the road less travelled looks like to ensure they are on it. There is a real danger that social enterprise becomes the latest trendy phrase used to sell more things which will damage the credibility of the sector. The world forum was excellent for shining a light on the individuals and organisations who are trying to do things a bit differently. We don’t want the ship to be hijacked by opportunists who add the phrase social enterprise to their existing business without having any of the three key elements described above. We also need to ensure that consumers learn to both ask questions and ask for accountability from those who are telling their Social Enterprise story.

How do we attract and educate investors about social enterprise?

The most critical factor for most new businesses is capital investment and social enterprises are no exception to that rule. As we move towards a world where companies combine purpose and profit, investors will increasingly take notice of the impact their investment can have. They even have a special term; “impact investors”. Yet there are differences to a traditional investment which is focussed on more than just returns on capital. What should they expect to see in terms of reporting and information about non-financial returns?

Helping investors to understand the right questions to be asking is yet another example of the education that is needed in this sector. One recent initiative announced at the Social Enterprise World Forum was the Impact Investment Network. It is intended as a way for people to learn more, connect with others, share news and events and provide tools and resources on the website here (free to join).

How do we advocate for new legal structures?

I think we need a tailored legal structure that takes the best of a company structure and the best of a charity structure and looks at other jurisdictions and we mix it all up to create something new. Rather than expand on that in detail here have a read of this earlier article to find out why, what and how this might be done.

I hope the new Government will exercise some real thought leadership in this area by seriously looking into this option, as it is a way to promote real change and would transform the scene for Social Enterprises.

Why is any of this important?

The world forum was akin to a mountain top view and now we get back to life back in the valleys where the wind doesn’t blow as strong to clear our thoughts and give us focus. Every kite felt like it would fly up there on the mountain. Why ask these sort of hard questions and not just stay living on the memory of the mountain top instead? Because this is the time where the hard work needs to kick in and we see if those kites will fly when we come down from the high places.

It is vitally important to answer each of the question above well, so that we can ensure that the Social Enterprise sector is constructed in a way that has strong foundations. If we fail to consider and work out what the answers are, then there will be lack of clarity from the beginning over what we are even talking about. Those of us involved in the Social Enterprise sector want to take that road less travelled, but we need to be clear about what being on that road actually involves in order to ensure we are traveling on it. Robert Frost ended his poem with the reflection, “that has made all the difference” – asking these questions and discovering the answers will ensure that in coming years we can offer the same conclusion.

Steven Moe is a lawyer at Parry Field Lawyers who has a podcast interviewing social entrepreneurs called “Seeds: Talking Purpose” and a legal handbook that is available for free if you email him at stevenmoe@parryfield.com.

This article by Steven Moe originally appeared on The Spinoff

Social enterprises often operate as limited liability companies, but new legal structures to govern them have been introduced in a number of countries. Lawyer Steven Moe argues we need these options in New Zealand.

In the classic children’s story by Hans Christian Andersen, an emperor is given new clothes which are invisible to those who are unfit to see them. So no-one dares tell him he isn’t wearing anything at all. That’s a bit like the current legal structures available for someone who has an idea to start a new venture which incorporates purpose beyond making profit – they are faced with a difficult choice. Do they become a company, which carries assumptions that it is for profit, with less focus on social good? Or a charity, which carries assumptions that it is not-for-profit, focusing on helping others.

Neither really fit a “social enterprise” the term used to describe businesses that act for both profit and purpose. Social enterprises combine entrepreneurial spirit with a strong dose of ‘heart’ as they work to make a real difference in our world. And it is not just part of a temporary trend. The 1,600 people who assembled last month in Christchurch at the Social Enterprise World Forum demonstrate that.

But how should social enterprises set themselves up? Would a legal structure created for these ventures help?

Let’s walk for a minute down each of the usual roads taken to map out that answer. Choosing a company structure has advantages because it is well known, and provides a return of profit to the founder through dividends or selling shares. Investors are easier to attract, although they probably won’t understand a business that exists for more than profit. And, in fact, directors may feel a legal obligation to maximise shareholder returns. While the purpose-driven company may solve a critical social or environmental problem, otherwise addressed by expensive government programmes, it will be hard to access any funding from that source as they will not be a charity, which is usually required.

Down the other fork in the road, a charity may offer the ability to access grant funding, although the danger is that it may come or go. People assume a charity is doing good, and an advantage that flows from such an assumption (if it meets strict charitable purposes) is that donations are tax deductible. However, despite years of a founder’s blood, sweat and tears – which every new venture requires – the founder will not be able to have private gain, apart from a market rate salary.

Neither option truly suits our social entrepreneur, a conclusion explored in detail in the recent Ākina Foundation paper about the inadequacy of current legal structures (check it out here). What would help is a “Social Enterprise Company”, a new legal structure which takes the best of both roads described above, as well as a dash of learning from Scotland, Canada and the USA where these structures already exist. Increased legitimacy would result as the purpose is baked into the DNA through clear statements in the constitution, reporting on how it is travelling (to prevent abuse), and the ability to return capped dividends to shareholders so profits go back into the purpose.

What’s the pitch to government on the case for change? We will end up with tax paying companies, that are also uniquely positioned to give back to their communities in ways that improve the environment, or care for disadvantaged social groups as they combine both making profit and acting with purpose. This new legal structure would ensure that when that light bulb moment happens, social entrepreneurs don’t need to reach for the number 8 wire in order to adapt, and then make do with the ill-fitting legal forms that currently exist. Social enterprises need ‘new clothes’ that fit better than the current legal structures we have.

All of us want to lead lives of purpose and meaning, and more businesses are seeking to position themselves in that direction as the old paradigms are tossed off the throne that profit and private wealth creation is king. New Zealand has the chance to be a true world leader through a new social enterprise legal structure that other countries would look to as an example, and which the next generations that follow us demand.

Steven Moe has a free e-book available, Social Enterprises in New Zealand. For a copy email stevenmoe@parryfield.com

This article by Steven Moe originally appeared on The Spin Off

State Integrated Schools are a kind of school recognised by New Zealand’s education system, but their structure can be confusing to understand.

What are State Integrated Schools?

New Zealand’s education system allows for a range of different types of schools. The four main categories are State Schools, State Integrated Schools, Charter Schools and Private Schools.

State Integrated Schools are a kind of special character school that allows for collaboration between the government and a private proprietor in a way that preserves the special character of the proprietor and the school.

Every state integrated school has an integration agreement between its Proprietor and the government which sets out various details about the intended operation of the school, and includes a description of the particular or general religious or philosophical beliefs that provide the framework for the education at the school.

Types of Special Character Schools that have been established in New Zealand include Catholic, Anglican, Methodist, Presbyterian, Adventist, Jewish, Muslim, Steiner, Montessori and non-denominational Christian schools.

Often the parents of children at a state integrated school struggle to understand who is responsible for leading and operating a state integrated school. It can be confusing when information and invoices relating to the school come from a variety of different sources.

Who governs State Integrated Schools?

The governance structure for Integrated schools can be confusing because they have more than one person or body with decision making power. The main decision makers are:

The Board of Trustees

Each state school (including state integrated schools) has a Board of Trustees, which is a body corporate incorporated under the Education Act 1989, and is a Crown entity under the Crown Entities Act 2004.

The Board of Trustees is the governing body of its school, and is responsible for the governance of the school, including setting the policies by which the school is to be controlled and managed. Its primary objective in governing the school is to ensure that every student at the school is able to attain his or her highest possible standard in educational achievement.

The Board of Trustees is required under the Education Act 1989 to ensure that the school is a physically and emotionally safe place for all students and staff; and is inclusive of and caters for students with differing needs. It must have particular regard to any statement of National Education and Learning Priorities, and must comply with specified obligations in the Education Act 1989 relating to curriculum statements and national performance measures, teaching and learning programmes, and monitoring of student performance. if the school is a member of a community of learning that has a community of learning agreement, it must comply with its obligations under that agreement.

The Board of Trustees is made up of the principal, several parent elected representatives, a staff representative, a student representative. In the case of state integrated schools, the Proprietor of the school has the right to appoint a number of trustees to sit on the Board of Trustees along with the other trustees.

The Board of Trustees of a state integrated school operates in mostly the same manner as the Board of Trustees of any other state school, but must operate in a manner that reflects the special character of the school, and must consult with the Proprietor on various matters.

The Principal

The school’s principal is the chief executive of the Board of Trustees in relation to the school’s control and management.

The Principal must comply with the law of New Zealand and the Board of Trustees’ general policy directions, but otherwise has complete discretion to manage as the principal thinks fit the school’s day-to-day administration.

The Principal of a state integrated school operates in mostly the same manner as the Principal of any other state school, but must manage the school in a manner that reflects the special character of the school and, if the school has a religious special character, may be required to have willingness and an ability to take part in religious instruction appropriate to that school .

The Proprietor

The school’s Proprietor owns or leases the land and buildings used by the school and is responsible for any loans or funding in relation to the land and buildings. The Proprietor must plan for and ensure that the buildings and facilities are brought up to at least the minimum standard specified by the Secretary of Education for state schools.

The Proprietor has the right and the responsibility to supervise the maintenance and preservation of the education with a special character provided by the school and to determine what is necessary to preserve and safeguard that special character.

If the Proprietor believes that the special character of school has been or is likely to be jeopardised it can exercise various powers under the Education Act, including a power to cancel the integration agreement with the government (but it must consult with the government before doing so).

The Board of Trustees and Principal must give the Proprietor access to the school at all reasonable times to ensure that the special character of the school is being maintained.

Who Owns State Integrated Schools?

The land and buildings of a state integrated school are owned and maintained by the Proprietor, which is often a charitable trust or Church or other religious organisation. The day to day operations of the school are funded by the government through the Ministry of Education. The government pays staff salaries and an operations grant for the running of the school, and gives some funding directly to the proprietor for maintenance and improvement of the buildings.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions. Copyright © Parry Field Lawyers 2017.

What is a Foreign Trust?

A foreign trust is one where there has never been a New Zealand resident Settlor. (a
“settlor” is usually the person who creates the trust by putting their personal assets
into it).

A non-resident can settle a trust that has non-resident beneficiaries, but has a New
Zealand resident Trustee. These trusts can be trust-effective in certain offshore
jurisdictions. However, such trusts are not treated as New Zealand trusts because New
Zealand taxes trusts based on the residence of the Settlor, not the Trustee, as do other
jurisdictions.

The Trustees are only taxable in New Zealand on income that has a New Zealand
source. However, the Trustees will only be eligible for a tax-exemption on the Trust’s
foreign-sourced income if they register the Trust with Inland Revenue.

Historical Perspective

Over a year ago foreign Trusts became a “hot potato” following the release of the
“Panama Papers” regarding New Zealand’s involvement in the foreign Trust “industry”.
The furore over the foreign Trusts in the past couple of years and the suggestion that
they were used as a ‘tax dodge” was clearly misdirected because such Trusts in general
do not have New Zealand sourced income and therefore have no exposure to New
Zealand tax. However, the way in which New Zealand tax law is applied to foreign
Trusts, coupled with New Zealand’s legal environment and previously minimal
disclosure requirements, made New Zealand attractive to wealthy foreigners seeking to
hold assets through offshore Trusts, and so avoid their tax obligations in their country
of residence. The Panama Papers highlighted the reputation/risk this has caused to
New Zealand.

New Zealand does in fact have a substantial foreign trust industry. Inland Revenue
records indicate that approximately 12,000.00 foreign trusts with a New Zealand
resident trustee have filed an IR607. The Department estimates that the New Zealand
foreign trust industry generates approximately 24 million in revenue per annum,
although this may be as much as 50 million per annum.

Accordingly, substantial changes to foreign trusts were introduced over 10 years ago
and since 1 October 2006 the New Zealand resident Trustees of foreign trusts have had
to disclose certain information to Inland Revenue within 30 days of the creation of the
Trust or a Trustee’s arrival in New Zealand. This is achieved by the use of form IR607-
“Foreign Trust Disclosure” and must include the following information:

The name or other identifying particulars of the Trust.
The name and contact particulars of the resident foreign trustees.
Whether the Settlor is a resident in Australia; and
If relevant, the basis of which a Trustee claims to be a qualifying resident
foreign Trustee.

Current legal position

Following disclosure of the Panama Papers, the “Shewan Report” was commissioned by
the Government, which recommended administration and disclosure changes for
foreign trusts. These have now been incorporated in the Taxation (Business Tax,
Exchange of Information, and Remedial Matters) Act (21 Feb 2017), which requires the
following additional information to be supplied to Inland Revenue:

Details of each settlement made on the Trust (other than “minor services”
provided to the Trust for less than market value);
The name, address, jurisdiction and tax identification number of every Settlor,
and every person with a power to add or remove Trustees or beneficiaries;
Details of beneficiaries; and
A copy of the Trust Deed and details of any alterations.

The above details must be properly registered with Inland Revenue (using IR 607A and
900A) within 30 days of the Trust being established at a cost of $270.00 and future
annual returns must be filed at a cost of $50.00.

Where the New Zealand tax Trustees of a foreign Trust do not comply with either the
registration or annual return requirements, the foreign Trust will be subject to a New
Zealand income tax on its worldwide income. However, if the breach was inadvertent
and was corrected immediately, then this sanction will not apply.

Foreign trusts in existence as at 21 Feb 2017 needed to register by 30 June 2017. If
not, provided certain conditions are satisfied, the registration period is extended a
further 4 years from the date the trust was established.

The current sanctions for intentional non-compliance (a fine of up to $50,000.00) will
continue to apply. Extreme care and vigilance is therefore needed.

Taxation

Determining, and accounting for, distributions made by a foreign trust can be
extremely complex. What beneficiary distributions are taxable and which are tax-free
is subject to an “ordering rule”, which says that distributions are treated as coming in
first from taxable reserves before they can be applied against non-taxable reserves.

As the accounts of such a Trust are not always prepared with this ordering rule in mind,
which is especially the case when dealing with New Zealand resident beneficiaries of a
trust established overseas, this can be very difficult. That difficulty is compounded
because often the trust’s accounts are not prepared in English.

Immigrating Settlors – what happens if one arrives in New Zealand and stays?

When the Settlor of a foreign trust becomes a New Zealand resident, the trustees have
12 months to elect that the Trust be treated as a “qualifying trust”. If no election is
made, the Trust becomes a non-complying Trust with significant additional tax payable
by its beneficiaries on asset distributions to them (i.e. 45%).

Conclusion

A lack of care by trustees of a foreign trust may quickly result in non-compliance with
our tax laws. If you haven’t already done so, we strongly urge all trustees of a foreign
trust to engage legal and accounting advice immediately, and if you have, to ensure
regular annual trustees’ meetings occur with both your trust’s legal and accounting
advisors present.

Every situation is unique so please discuss your particular case with a professional advisor who can provide you with a tailored solution. Please contact Pat Rotherham at Parry Field Lawyers patrotherham@parryfield.com or 03 348 8480

Professional Perspectives on Charities Law and Regulation
in New Zealand Conference

26 and 27 April, 2018
Te Papa Museum, Wellington, New Zealand

What are State Integrated Schools?

Who governs State Integrated Schools?

The Board of Trustees

The Principal

The Proprietor

Who Owns State Integrated Schools?

What is a Foreign Trust?

Historical Perspective

Current legal position

Taxation

Immigrating Settlors – what happens if one arrives in New Zealand and stays?

Conclusion

Christchurch CBD

Christchurch

Rolleston

Hokitika

Professional Perspectives on Charities Law and Regulation in New Zealand Conference

26 and 27 April, 2018 Te Papa Museum, Wellington, New Zealand

Social enterprises often operate as limited liability companies, but new legal structures to govern them have been introduced in a number of countries. Lawyer Steven Moe argues we need these options in New Zealand.

What are State Integrated Schools?

Who governs State Integrated Schools?

The Board of Trustees

The Principal

The Proprietor

Who Owns State Integrated Schools?

What is a Foreign Trust?

Historical Perspective

Current legal position

Taxation

Immigrating Settlors – what happens if one arrives in New Zealand and stays?

Conclusion

Christchurch CBD

Christchurch

Rolleston

Hokitika

Professional Perspectives on Charities Law and Regulation
in New Zealand Conference

26 and 27 April, 2018
Te Papa Museum, Wellington, New Zealand