June 2013

FINANCIAL REPORTING FOR COMPANIES

Financial Reporting Bill

The Financial Reporting Bill is intended to repeal and replace the Financial Reporting Act 1993 and amend a number of other statutes containing financial reporting obligations. 

The impending legislation introduces an “opt in” process for small and medium sized companies with less than 10 shareholders, where shareholders who have at least 5% of the votes will be able to require the company to prepare financial statements, have them audited and prepare an annual report.  Small and medium sized companies with 10 or more shareholders will have an “opt out” process, where the company will be required to continue to prepare financial statements, have them audited and prepare an annual report, unless shareholders opt out by a 95% majority vote.

“Large companies” which have total assets (including subsidiaries) of over $60m, or total revenue (including subsidiaries) for the two preceding accounting periods, of over $30m, will have to prepare financial statements in accordance with the obligations under the Bill and have the financial statements audited.  Shareholders may, however, opt out of the auditing requirement by a 95% majority vote.

In addition, New Zealand branches of overseas companies and “large companies” which are 25% or more overseas owned will continue to be required to file audited financial statements.

ANTI-MONEY LAUNDERING AND COUNTERING FINANCING OF TERRORISM

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML Regime) comes into effect on 30 June 2013.  Whilst there are key differences, the AML Regime has substantial alignment with the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006, bringing the regulatory ties of Australia and New Zealand closer in this area, and importantly, making the regulatory environment easier for Australasian businesses.

Financial institutions, casinos and others prescribed by the legislation, such as certain financial advisers, and trust and company service providers, are responsible, on a regular basis, for satisfying their obligations under the AML Regime.  For example, an entity must conduct standard customer due diligence when it establishes a new business relationship with a new customer, which includes such things as identification and verification.  In relation to transactions that occur outside a business relationship, an entity for example, which receive a wire transfer of more than $1,000.00 or a transaction involving a currency exchange of an amount of $1,000.00 or more, must satisfy its obligations under the AML regime such as identification and verification.

In addition, an entity must have a compliance programme in order to detect and deter money laundering and the financing of terrorism, adopt the recommendations issued by the Financial Action Task Force, and contribute to public confidence in the financial system. 

TAX

Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill

The Bill which is likely to become law later this year proposes new rules, amongst other New Zealand specific matters, which:

  • amends the tax treatment related to mining of gold, silver and ironsands so that it is broadly consistent with the rules that apply to other business activities;
  • amends the tax treatment of foreign superannuation so that gains will be taxed when distributions are received by New Zealand citizens or New Zealand residents; and
  • require the amount of imputation credits attached to a dividend received from an Australian company that can be offset against New Zealand tax, to be calculated on the basis of the residents foreign investment fund income from the company, if the dividend exceeds the amount of foreign investment fund income.

SUPERANNUATION

Trans-Tasman Retirement Savings Portability Arrangement

The Governments of Australia and New Zealand have come to an arrangement for the portability of retirement savings between the two jurisdictions.  The Trans-Tasman Retirement Savings Portability Arrangement (Arrangement) will be effective from July 2013.

The Arrangement establishes a scheme to enable Australians and New Zealanders to transfer their retirement savings when they move between Australia and New Zealand, while preserving the integrity of the retirement savings systems of both countries.

In particular, the scheme assists Australians and New Zealanders to streamline their financial affairs, consolidate their retirement savings in their country of residence and avoid paying unnecessary fees and charges on multiple accounts held in the two countries.

If you have any questions on the matters discussed in this update please contact the New Zealand Mackrell Partner, Brian Joyce at Clendons North Shore by email to brian.joyce@clendons-ns.co.nz or phone +64 9 377 8419.

Disclaimer

This publication is necessarily brief and general in nature. You should seek further information before taking any action in relation to the matters dealt with in this publication.