Spring 2012 Newsletter

The Accident Compensation Corporation

There has been a lot of discussion in the news about ACC recently following the difficulties ACC has experienced with release of personal information, and budgetary issues affecting ACC. New Zealand’s ACC system is unique in the world and means that the culture of suing people for personal injury, as shown in many American, English and even Australian television shows, is not possible here. So why is there no right to sue for personal injury in New Zealand? and how does it work?

What is the ACC?
The Accident Compensation Corporation (‘ ACC’) is a New Zealand Crown Entity set up under the Accident Compensation Act 2001 (‘the Act’) that is responsible for providing accident insurance for all personal injuries. The ACC scheme is administered under a ‘no fault’ system, which means that a person is covered for an accident regardless of how the accident occurred or who caused it. This system effectively means that individuals give up the right to sue others for damages following an injury in return for receiving personal injury cover. ACC’s main purpose is to promote injury prevention measures, provide rehabilitation and compensation to those eligible under the Act.

Eligibility
ACC cover is available for personal injuries ( being physical injury, death due to physical injury and mental injury caused by physical or certain criminal acts) sustained by all New Zealanders and visitors to New Zealand, regardless of the injured person’s employment, status or age. Cover also extends to New Zealand residents returning from overseas with an injury, provided they have not been out of the country for more than six months (some exceptions to the six month rule can apply where an individual has been overseas for work purposes).

Effect of cover
If an injury is covered under ACC there are two consequences:

  1. ACC will provide support in respect of the injury. The support may include treatment, ancillary services (such as transport and accommodation), rehabilitation, fair compensation (including weekly compensation for loss of earnings and lump sum payment when permanently impaired), and death benefits.
  2. There is no right for the injured person to sue anyone in respect of the injury, no matter how it was caused. There may still be adverse consequences arising from an accident, but these relate to injury that has been deemed to occur to society or other breaches of duty. For example there may be prosecutions under:

For more information about the ACC and its services, please visit the ACC website.

The Rise of Look Through Companies

Background
In 2010, the Look-Through Company LTC was introduced to replace the former Loss Attributing Qualifying Company (‘LAQC’) and Qualifying Company (‘QC’).

What is it?
A LTC is similar to a limited liability company, however its income and losses are treated differently for tax purposes. The tax structure of an LTC allows the company to transfer income and expenditure to its shareholders directly. The shareholders of an LTC become liable for income tax on the company’s profits while also being able to offset the company losses against any other income.

Key Features of the LTC Regime
LTCs are governed by subpart HB of the Income Tax Act 2007 (‘the Act’). Some of the features and requirements for an LTC are:

Companies can elect to become an LTC, and existing LAQCs and QCs can elect to become an LTC without a tax consequence in the income years commencing 1 April 2011 and 1 April 2012. All shareholders of a company must elect for the LTC rules to apply in order for the conversion to be effective.

Advantages
Some of the advantages of using an LTC as opposed to other business structures (including partnership, sole trading, or trust) are:

For advice on the best structure for your business please contact Louise Smith (09) 407 0175 or Graeme McLelland (09) 407 0179.

Snippets

McLeods Lawyers is pleased to support Hospice Mid Northland and the valuable work they do in our local community. Hospice Mid Northland wants to get the word out about their exciting new fundraising initiative: maybe you can help? Hospice describes how it works below.

Farming Initiative to Support Hospice
We are very thrilled and fortunate to have two amazing volunteers leading this initiative, Bill King and Terry Nicolle who between them have decades of experience in the farming sector. The programme entails Bill and Terry identifying farmers who are happy to partner with Hospice to “grow” and graze livestock on our behalf. They will purchase the animals on our behalf; the animals are tagged as Hospice animals and are co-mingled with the farmers flock or herd. When the animals are slaughtered or on-sold the proceeds come to Hospice to enable us to continue to provide our free specialist palliative care service to our community. The Board approved the seed funding to kick-start the project but it is hoped that farmers will also donate additional animals. We are pleased that we have already had two steers donated and we have also received financial contributions to purchase additional animals. We will also be encouraging our supporters, members and community groups to “buy an animal” for Hospice. Working with the agricultural sector is not restricted to animals and grazing and we hope that in due time we may also be able to work with horticulturalists and vintners in our region. Our thanks go to all who have worked on this wonderful initiative and we look forward to many more innovative ideas to help us meet with confidence the future requirements and demands on Hospice Mid-Northland. Don’t hesitate to contact one of the Board or our Fundraising & Awareness Manager or General Manager if you would like more information, would like to help, or indeed would like to buy an animal. Phone (09) 407 7799 or email fundraising@hospicemn.org.nz

Staff At McLeods Lawyers
2012 has been a year of change for us at McLeods Lawyers as we have welcomed several new staff members. We also have a Kerikeri High School student, Jackson Lee, helping us in the afternoons (and helping to even up the male to female ratio), Welcome Jackson.

Super Gold Card
McLeods Lawyers now offers 10% off all wills and powers of attorney to Super Gold Card holders.

Website and Facebook
If you haven’t checked out our website, it is worth having a look www.mcleods.co.nz. We are also on Facebook, and make an effort to regularly post links to articles and snippets that may be interesting to our clients. Please like us on Facebook to receive notifications of these links.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

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McLeods Lawyers — 21 Hobson Avenue, Kerikeri, Bay of Islands, New Zealand — Phone +64 9 407 0170 — Email law@mcleods.co.nz

The information on this site is not comprehensive legal advice. Please contact us for advice and information suited to your needs.