Supporting Volunteer Service Abroad

A tax specialist we work with, Geoff Falloon from BizRescue is taking six months out of his busy business to work as a volunteer with VSA

He is taking up a role as Finance Systems Trainer/Mentor with Kokonut Pacific SI, a social enterprise promoting rural livelihoods in the Solomon Islands.He will be developing a financial processes manual and training staff to manage and maintain the financial systems.

The Solomon Islands ranks among the 30 poorest countries in the world. Some of you will have read about the subject of sustainable development goals. This role addresses (in a small way) three of the sustainable development goals being the alleviation of poverty and hunger and promoting work and economic growth.

VSA works in partnership with MFAT which covers a significant portion of the work but VSA is required to cover 10% of the in-country costs for each volunteer. VSA therefore asks volunteers to raise $1,000 each – a small portion of the assignment cost – to help pay it forward for future volunteers.

If this is something you would like to contribute towards simply follow this link https://give.everydayhero.com/nz/geoff-and-carol-in-honiara and click the “Give Now” button at the bottom. All contributions are welcomed.

Excellence in Bed & Breakfast Hosting – Award Winners

Congratulations to our long-term clients Brian and Anthea Harvey who have just been awarded the 2019 Supreme B&B Business of the Year at the recent B&B Awards

The Awards Programme celebrates excellence in hospitality in the bed and breakfast and hosted accommodation sector.  They provide a benchmark of excellence and inspiration to other bed and breakfast hosts along with showcasing the best of New Zealand hospitality within the B&B accommodation sector.  Rayma Jenkins, President, said “the Awards honour, recognise, encourage and reward our members who are the very best bed and breakfast properties in New Zealand.”

Bed & Breakfast Association New Zealand and Vision Insurance are pleased to announce Bellbird Lodge, Kaiteriteri, owned by Anthea & Brian Harvey, has been awarded the 2019 Supreme B&B Business of the Year.  

The Bed & Breakfast Association Award programme is made up of three Awards – Supreme B&B Business of the Year, Emerging B&B Business of the year (open to those who have been operating two years or less) and B&B Host of the year.

Supreme B&B Business of Year winners Brian and Anthea care for and about their guests.  In their words “it is not about what we think the guests want but what they actually want”. 

2019 Emerging B&B Business of the Year Award Winner is Acacia Heights Gardens, Taupo, owned by Heather & David Bridson.

2019 B&B Host of the Year Award Winner is Morepork Riverside Lodge, Paihia, Barb & Paul Linton.

 “The calibre of entries in all categories this year is extremely high, each one deserves the highest praise,” said Rayma.  “A hallmark of a stay in a hosted bed and breakfast is a personalised experience for our guests.  There is no one formula for operating and this is certainly true of our entrants”.

The programme is judged by Tourism Industry Aotearoa’s Chris Roberts and the Association’s President and Vice President.

Other winners were:

Supreme B&B Business of the Year 1st Runner Up – Whakaipo Lodge, Taupo

Supreme B&B Business of the Year 2nd Runner Up – Morepork Riverside Lodge, Paihia

Emerging B&B Business of the Year Highly Commended – Willows Green, Blenheim

Callaghan Innovation’s R&D Student ‘Experience’ Grants

Callaghan Innovation’s R&D Student ‘Experience’ Grants are now open to help you to access fresh skills and talent to drive innovation in your business.

R&D Student ‘Experience’ grants support students and recent graduates, by funding businesses to engage a student in a R&D activity, giving them the work and technical experience, and in exchange a business will receive new talent, capabilities & fresh thinking to assist you with your R&D endeavours. 

Key Things to Know:
Businesses receive $8,460 (excl. GST) to cover 400 hours of a student’s time to work in your business (equivalent of 10 weeks work);

It’s a great way for a business to bring in a student to add some focus, expertise or blue sky thinking to a R&D project;

Applications for the 2019 student ‘experience’ grant are open between 1 May 2019 – 31 August 2019;

The student must be an Undergrad, Masters or Phd student (note,a student is still eligible if they have recently graduated and their final semester is within 6 months of your application); 

The student’s main area of study must be Science, Technology, Engineering, Design, or Business; 
You can apply now, and then recruit the student later;

and The student can come on-board any time after an application is approved and their work (within the business) must be completed by 31 March 2020.

This year the process is more flexible and faster, and applications are assessed as they are submitted for a faster outcome (approx. 2/3 weeks approval time).  Applications are open for the next 4 months so you can secure the talent you need earlier in the year and before students break for summer.  We recommend that you apply now so you can access and recruit the best talent from around NZ.   
Next steps:
For more information on the R&D Experience Grant and to find out if your business is eligible, please contact Mark Maguire on mark.maguire@nelsontasman.nz.  We will assist and guide you through the process, as well as approving your application, so please contact us now.

As the region’s economic development agency, one of our core roles is to connect our clever businesses and people with opportunities to grow and innovate.
 
The Regional Business Partner (RBP) Network is designed to make it easier for NZ businesses to access early-stage support to innovate and grow. This national network is made up of 14 ‘Regional Business Partners’ and is supported by New Zealand Trade and Enterprise (NZTE) and Callaghan Innovation – the government’s business innovation agency. 

The Nelson Regional Development Agency is the ‘Regional Business Partner’ for the top of the south.  We provide information, advice, funding and connections to local businesses seeking support for their growth journey.  

The ‘Cloud’ without a silver lining

Many businesses are turning to the cloud for their IT services. The cloud provides reasonably priced access to the latest software and technology without the need for a business to make significant investments themselves.

There are numerous cloud suppliers including firms like Microsoft, Amazon, Apple, Xero, One Net, Spark etc. The list is huge and ranges from giant companies to quite small, niche operators. It’s estimated that by 2019 83% of data traffic will be cloud based (currently it’s at 65%).

But, while the cloud provides its customers with some huge advantages, there are also inherent risks that need to be considered along the way:

  • Typically cloud service providers will limit their liability through the contract their customer signs. Quite often this limitation will be very tight and will afford the customer little or no rights of recovery against a cloud service provider. In the event that a customer of a cloud provider suffers a loss because of a loss of data/operations then the chances of making a financial recovery from the cloud provider will be limited at best
  • Cloud customers are liable for their data irrespective of where it is stored. A breach of data stored on the cloud will still be the responsibility of the owner of the data and not the cloud provider. So any legal liability, fines, notification costs will be the customer’s irrespective of the cause or location of the data breach
  • Cloud service providers give customers access to the most up-to-date security. However; the weakest links in all IT systems are the operators. No matter what the level of security there is no software-based answer to human error such as sending e-mails to wrong addresses, inadvertently disclosing confidential information or passwords, etc.
  • In the event of a data breach caused by the cloud provider’s customer’s actions i.e. the negligence of an employee then the chances are the contract terms will exclude any liability at all on the part of the cloud provider
  • With the limited protection afforded under the cloud service contract it is unlikely that a customer would be able to recover costs incurred by their business if there was a cyber event or data breach

– even if it’s in the cloud. So costs such as business interruption, restoration of data and public relations are not going to be recoverable without resorting to litigation against the cloud provider and perhaps, not even after that

  • The cloud provides access to the latest editions of security tools such as fire walls and anti-virus software. However, the security can only respond to known threats. Hackers are discovering new software weaknesses every day and exploit what are known as zero day vulnerabilities to attack systems before any protection can be deployed. Even with their enhanced security cloud service providers are vulnerable to these attacks
  • Because of the success of the cloud it’s become a target for hackers. So while data in the cloud is often better protected, it is also more exposed because it’s seen as an attractive target for the bad guys
  • There are legal implications of where data is stored. Where a cloud provider hosts their data isn’t always disclosed and is quite often not in New Zealand. A breach of confidential data stored by a

cloud provider could expose their customer to the laws of the country where the data is hosted and these may not be as favourable as NZ laws resulting in extended liability

Most of the Cyber Insurance products in the market extend to cover the Insured for an event or breach on a cloud network. CyberSAFE defines a computer network to “also include a Computer Network that is under the operational control of a Service Provider”.

With CyberSAFE a breach occurring on a cloud based network would be an insured event and, subject to policy terms and conditions, will give the insured access to:

  • Cover for legal liability to third parties
  • Cover for fines & penalties for privacy breaches
  • Defence costs
  • Business Interruption costs
  • Public Relations costs
  • Data restoration/recovery costs
  • Ransom monies

Even if the cloud service provider is liable for the cause of the cyber event/data breach it is extremely unlikely that they will indemnify their client for any costs or liability and, even if they do, it may be for a limited amount and the management of the recovery/defence will be outside of the customer’s control.

Visit: www.crombielockwood.co.nz/cyber-insurance for more on CyberSAFE.

HAMISH KENT
GROUP BROKING MANAGER
+64 3 543 8693 |  +64 27 836 2553 | crombielockwood.co.nz
hamish.kent@crombielockwood.co.nz

Mainzeal – Directors & Officers Liability Insurance

The Mainzeal decision

Justice Cook in the High Court awarded $36 million damages against four Mainzeal directors including ex-Prime Minister Dame Jenny Shipley. The judge ordered Mr Gomm, Mr Tilby and Dame Jenny to pay compensation of $6 million each and Mr Yan, a shareholder of Richina Pacific which owned Mainzeal, $18m. The $36m awarded is approximately one third of the total loss to creditors which was $110m

The liquidators, Brian Mayo-Smith and Andrew Bethell of BDO argued the directors breached their duties and were negligent in allowing the company to continue trading while insolvent. The Judge agreed. In a statement following the release of a 178-page judgment, the High Court said the Mainzeal directors were “reckless [and] had adopted a policy of trading while insolvent”, and “used money owed to trade operators, particularly sub-contractors, as working capital”. Although “Mr Yan had acted honestly and was genuinely committed to Mainzeal, he had induced the other directors to breach their duties, including by making misleading representations to them,’” the judge said.

Mainzeal went into liquidation in early 2013, owing unsecured creditors about $110m. Some $45.5m of that amount was owed to unpaid sub-contractors including tradespeople working on Mainzeal projects. Richina Pacific (Mainzeal’s parent company) had extracted more than $42m from Mainzeal.

This is a watershed for directors’ obligations and duties even when acting in good faith. Perhaps unlike the failure of the finance companies after the GFC where directors’ behaviour was brought into question, the Mainzeal directors were acting honestly but ultimately were still held liable for their wrongful acts.

Directors need to spend appropriate time and attention on governance responsibility and management of risk – including scanning and focusing on the operating environment, particularly when complex risks are in play. Directors had to make sure that if they have an overseas parent company, those arrangements should not impact on their governance responsibility.

Directors & Officers Insurance Liability response

The ex-directors of Mainzeal had in place a Directors Liability Policy including Defence Costs, however we understand the Limit of Liability is considerably less than the $36m awarded. Therefore the directors are likely to be personally liable for any shortfall.

This judgement is a timely reminder of the need for adequate Directors’ & Officers’ liability policy protection both in terms of Limit of Liability and scope of coverage. The construction industry is particularly under pressure from financial failure at present as we have seen with recent high profile collapses, but every director of every company has duties, obligations and responsibilities which they need to be aware of and carry out diligently.

It is also worth noting that the litigation landscape in NZ is changing and we are seeing the arrival of litigation funders who are so prevalent in Australia. Litigation funders band together a group of creditors and fund their legal costs to bring a class action against either the directors and/or the company. If the plaintiffs are successful, the funders take a percentage of the award as their fee.

If you have any questions or require any assistance with Directors & Officers Liability insurance, please contact:

HAMISH KENT
GROUP BROKING MANAGER
+64 3 543 8693 |  +64 27 836 2553 | crombielockwood.co.nz
hamish.kent@crombielockwood.co.nz

International Automatic Exchange of Information

New Zealand has signed up to the Automatic Exchange of Information (AEOI) – a global OECD initiative to combat tax evasion.

Inland Revenue has been running an AEOI awareness campaign since 9th June 2018 with a primary focus of this campaign being to generate awareness among New Zealand tax residents most likely to have offshore accounts or financial interests, so they can take steps to determine if their tax affairs are in order and disclose if they identify issues. New Zealand tax residents with complex international tax affairs should contact us for support or advice.

This awareness campaign has included online advertising on relevant websites and via Facebook. These ads include a link to IRD’s campaign landing page.

As part of AEOI financial institutions will provide Inland Revenue with information about foreign tax residents with financial accounts in New Zealand, in line with the Common Reporting Standard (CRS).

IRD are now exchanging information with many other countries so it is vital you tell us about any income or assets you may have in other countries, if you don’t then chances are IRD will find out about it and that may cause you a few problems, something no one likes happening with IRD

The requirement of New Zealand Tax Residents to report world-wide income hasn’t changed, but IRD are now more likely to find out about it even if you don’t declare it. Please make sure information regarding ALL overseas income, bank accounts or assets is provided to us for your tax return preparation, even if you think it’s non-taxable income!

Accountants to comply with AML/CFT legislation

Some time ago New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT).

The purpose of the law reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community.

The first sector required to comply with this legislation was the Finance sector (Banks, Financial Planners etc), lawyers are required to comply with the requirements of the AML/CFT Act from the 1st July 2018 and recent changes to the Act mean that from 1 October 2018 accountants are required to comply too.

The intent is for the entire professional services community (lawyers, accountants,banks, etc) to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice so even though the vast majority of our clients are honourable people we know well, and have had a long relationship with, this legislation requires us to do a number of things with regards to every client

The law says that we must assess the risk we may face from the actions of money launderers and people who finance terrorism as well as identify potentially suspicious activity and that means more paperwork for us and a requirement for you to supply us with more information.

For most of our clients we will be asking for certain information when you bring in your annual accounts work, while we need to have compliant processes in place by the 1st October we have a year or so to collect this information about all clients. New clients will need to provide the information BEFORE we can carry out any work.

To complete the risk assessment we must obtain and verify information from prospective and existing clients about a range of things. This is part of what AML/CFT calls “customer due diligence” (‘CDD’).

CDD requires us to undertake certain background checks before providing services to clients or customers. Accountants and other professionals must take reasonable steps to make sure the information they receive from clients is correct, so we need to ask for documents that show this and we need to keep the information on file for a minimum of five years.

If your business activities change significantly then we may need to update the CDD

The minimum information we will need to obtain from you and verify to meet these legal requirements includes:

  • your full name; and
  • your date of birth; and
  • your address.

To confirm these details, documents such as your driver’s licence or your birth certificate, and documents that show your address, such as a current bank statement will be required.

If we complete work for a company or trust we will need information about the company or trust too, including the people associated with it (such as directors and shareholders, trustees and beneficiaries).

We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you; in most cases it will be business advisory and annual accounts/tax work.

We may need information confirming the source of funds for certain transaction to meet the legal requirements and we may also need to ask you for further information depending on a range of variables required by the legislation.

If we are not able to obtain the required information from you, it is likely we will not be able to act for you.

Before we start working for you, we will let you know what information we need, and what documents you need to show us and let us photocopy.

While we may shake our heads at some of the requirements, the Act is bringing New Zealand into line with other countries and if you have any queries or concerns please contact our Practice Manager, Neil Hodgson, who is our AML/CFT Compliance Manager.

From our business perspective there is a huge amount we need to put in place, including various compliance programmes and reporting systems, staff training programes all of which will be audited every two years (NOTE – this is not an audit of you, it is an audit of our systems). We need to keep records regarding AML/CFT for a minimum of five years and this will be held in individual client files as well as in our various compliance documents.

And just so you know they aren’t picking on you we even have to carry out Department of Justice checks and credit checks on our staff as part of our compliance programme.

Hopgood’s & Co win big

We are delighted our client, Hopgood’s & Co, has had huge success at the Silver Fern Awards. They were named Best Restaurant in New Zealand, Aaron Ballantyne was named as the Best Head Chef and they won the award for Best Dish in the competition.

Think about all those top restaurants in Auckland and from other parts of New Zealand and you will realise just how special this achievement is.

Hopgood’s & Co chefs Aaron Ballantyne, left, and Kevin Hopgood

Congratulations to Kevin Hopgood, Arron Ballantyne and the rest of the great team at Hopgoods.

Here are some links to articles about both Kevin and Aaron that Neil Hodgson wrote for his Taste of Nelson column, their extensive backgrounds, hard work and total commitment to quality have rightly been recognised with these awards..

 

 

 

 

 

Get the IRD payment dates right

We would like to remind everyone to make sure that when you are making tax payments to IRD they check that you have selected the correct tax type (e.g. INC for Income Tax, GST for Goods & Service Tax, DED for employer Deductions that include Kiwisaver contributions as well as PAYE etc).

Also, it’s very important that you select the correct period and year that the payment is going to. Most banks have a ‘Pay Tax’ or ‘Pay IRD’ tab in their on-line banking facilities so we suggest you follow the steps using this rather than setting IRD up as a regular payee.

Potential consequences of getting it wrong:

For example, if you are a company and you accidentally pay 2018 provisional tax to the 2017 year, and your 2017 annual accounts have not yet been completed, IRD will not allow this payment to be transferred to the 2018 year unless we fill out additional paper work, it will be applied to the 2017 year and that means it will show as overdue in your 2018 income tax account.  So please chose the year carefully.

Information about IRD’s provisional tax advertising campaign

You may have seen the recent IRD advertising campaign about changes to provisional tax. We think the ads are misleading.

There are no changes to who is required to pay provisional tax, a tax payer will still be required to pay provisional tax if your tax at the end of the previous year was more than $2,500.

The changes are simply an introduction of a new method of how and when to pay. The new method is called the Accounting Income Method (AIM) and will be available for tax payers using Xero, MYOB or other approved accounting software.

The new rules will require taxpayers using AIM to make tax payments more often, in line with GST filing dates. A Financial Statement of Activity will be required to be filed from the software with IRD on or before the AIM instalment date. As always there are eligibility criteria to be met and exclusions that apply.

The new method will be available from the 2018-19 income year. We will provide more information closer to that time.