News
Law changes round-up for 2021
From investment property changes to consumer credit updates, we’ve gathered recent law changes into one place. Check out this summary to see what applies to your business.
Changes to consumer credit laws
When: From 1 October 2021
What: Directors and senior managers of companies that provide consumer credit have to be certified as ‘fit and proper’, to provide this service. This means they’re deemed to be financially sound, honest, reputable, reliable and competent to do the job. There are also new due diligence requirements, which means directors and senior managers now need to take reasonable steps to make sure that if a business is providing consumer credit, there are procedures in place to make sure the business’s obligations under the law are being met.
In addition, there are new requirements around:
- what needs to be disclosed, and when, in relation to consumer credit contracts
- how a lender must assess suitability and affordability when a borrower is entering into a loan, and
- what information lenders must include in their advertising.
Why: To reduce problem debt and resulting consumer harm.
What you need to do: If you’re a director or senior manager of a company that provides consumer credit you must:
- be certified as ‘fit an proper’
- comply with due diligence duties.
Due diligence guidance(external link) — Commerce Commission
Fit and Proper Person certification(external link) — Commerce Commission
Child support changes
When: 26 October 2021
What: It is now compulsory for liable parents who are new (or returning) to child support to have their child support payments deducted from their salaries or wages. Payment of child support by employer deductions does not apply to parents who were already paying child support prior to 26 October 2021, unless they miss future payments and fall into debt.
Why: To simplify child support. The aim of the change is to help paying parents get their payments right from the start and to ensure children who qualify to receive child support, receive it.
What you need to do:
- Deduction notices will be sent electronically, via myIR, or by paper to liable parents and their employers. These notices tell you everything you need to know about deducting child support, including which employee(s) you’re required to make deductions for, when you need to start making deductions and the amount to deduct from each pay.
- You need to make child support deductions for all employees who are newly liable or returning child support customers. You may need to adapt your processes to start making these deductions.
- File Employment Information forms on time. Make sure they’re completed correctly, including making sure the correct pay date is recorded. As soon as a person is no longer employed by your business, provide Inland Revenue with a ceased code.
Deductions from salary and wages(external link) — Inland Revenue
Vaping law changes
When: From 11 August 2021
What: This relates to display, promotion, advice, age information, packaging, safety requirements, annual reporting and returns, fees and levies. The provisions of the Act are being phased in over 15 months, so some provisions are already in effect and some, like the ones mentioned here, are taking effect further down track. From 11 November 2021, the transitional period for retailers ends, meaning transitional specialist vaping retailers will no longer exist. There is a new platform to register/ apply for notifications and retailers. This is called HARP (health advisory regulatory platform).
Why: The aim of these new regulations is to strike a balance between ensuring vaping products are available for smoker who want to switch to a less harmful alternative and making sure these products aren’t marketed or sold to young people.
What you need to do:
- General retailers can only sell tobacco, mint or menthol flavours of vaping products and smokeless tobacco products.
- Retailers can apply to be approved specialist vape retailers.
- By 11 February 2022, all manufacturers and importers of vaping and tobacco products must notify the Vaping Regulatory Authority about the products they intend to sell in New Zealand. You can start the notification process from 11 August 2021.
- The notification process has to be repeated every 12 months.
For further information on what changes are being made and how this might affect your business, the Ministry of Health has guidance on its website.
About the vaping and smokeless tobacco products law changes(external link) — Ministry of Health
Healthy homes standards
When: From 1 July 2021
What: All boarding houses, except those provided by the K?inga Ora or registered Community Housing Providers, must meet the five healthy homes standards. Find out if you’re operating a boarding house.
Are you operating a boarding house?(external link) — Tenancy Services
Private rentals must meet the five healthy homes standards within 90 days of any new or renewed tenancies that start on 1 July 2021 or after this date. All private rentals must comply by 1 July 2024.
Why: To improve the quality of New Zealand’s rental homes and improve the health of New Zealand who rent.
What you need to do:
- Heating standard: Landlords must provide one or more fixed heaters that can directly heat the main living room. The heater(s) must be acceptable types, and must meet the minimum heating capacity required for your main living room.
- Insulation standard: Existing ceiling and underfloor insulations may need to be topped up or replaced.
- Ventilation standard: Rental homes must have openable windows in the living room, kitchen and bedrooms. Kitchens and bathrooms must have extractor fans.
- Moisture ingress and drainage standard: Rental properties must have efficient drainage for the removal of storm water, surface water and ground water. Rental properties with an enclosed sub-floor space must have a ground moisture barrier.
- Draught stopping standard: Landlords must make sure the property doesn’t have unreasonable gaps or holes in walls, ceilings, windows, skylights, floors and doors which cause noticeable draughts. All unused open fireplaces must be closed off or their chimneys must be blocked to prevent draughts.
- Exemptions to the healthy homes standards: In some situations, a property may be exempt from complying with the healthy homes standards of part of the standards.
From 1 December 2020, most new or renewed tenancy agreements must include specific information about the rental’s current level of compliance with the healthy homes standards.
Healthy homes standards(external link) — Tenancy Services
Compliance statement(external link) — Tenancy Service
The Government has announced upcoming changes to the healthy homes heating, ventilation and moisture ingress and drainage standards. These changes are expected to come into effect in April 2022.
Upcoming changes to the healthy homes standards announced(external link) — Tenancy Services
The Raise the Standard website provides a general overview of the Healthy homes standard.
Raise the standard: Landlord(external link) — Raise the standard
Investment property changes
When: 27 March 2021
What: For properties acquired on or after 27 March 2021:
- Legislation has passed that extends the bright-line test from five years to 10 years on residential property.
- The Government intends for the bright-line test to remain at five years for new builds. The Government has introduced legislation that is currently being considered by the Finance and Expenditure Committee in Parliament.
- Legislation has passed that introduced a ‘change of use’ rule. If the sale of your property is subject to the bright-line test, and you don’t use the property as your main home for 12 months or more, you will be required to pay income tax on a proportion of the profit made through the property increasing in value.
- If you sell a property within 10 years of acquiring it (or five years for a new build) and it was your main home for the entire time you owned it, you will not pay tax under the bright-line test on any gain in value.
- Any gain in property value that is considered taxable income (including under any of the bright-line tests) will also affect any other obligations or entitlements you have based on taxable income, such as student loan repayments, child support payments, and Working for Families.
For properties acquired before 27 March 2021:
- The previous bright-line test for five years will continue to apply for properties acquired before 27 March 2021.
- The Government has proposed that interest on loans for investment properties acquired before 27 March 2021 can still be claimed as an expense, but the amount will reduce each year until it’s completely phased out by the 2025-2026 tax year. Legislation is currently being considered by the Finance Expenditure Committee in Parliament.
Fact sheet: Proposed changes to bright-line test(external link) — Inland Revenue
Investment property: law changes and tips for maximising returns
Other law changes in 2021
See other law changes that happened in 2021, which might be relevant to your business.
Source: www.business.govt.nz