Summer 2018 Newsletter

Anti-Money Laundering and Countering Financing of Terrorism Act 2009

 

Why we need to ask you for information

This information has been provided by the New Zealand Law Society

New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“the AML/CFT law” for short).

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. Recent changes to the AML/CFT Act mean that from 1 July 2018 lawyers must comply with its requirements.

Lawyers must do a number of things to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice. The AML/CFT law does this because the services law firms and other professionals offer may be attractive to those involved in criminal activity.

The law says that law firms and other professionals must assess the risk they may face from the actions of money launderers and people who finance terrorism and must identify potentially suspicious activity. To make that assessment, lawyers must obtain and verify information from prospective and existing clients about a range of things. This is part of what the AML/CFT law calls “customer due diligence”.

Customer Due Diligence Requirements

Customer due diligence requires a law firm to undertake certain background checks before providing services to clients or customers. Lawyers must take reasonable steps to make sure the information they receive from clients is correct, and so they need to ask for documents that show this. We will need to obtain and verify certain information from you to meet these legal requirements. This information includes: your full name, your date of birth and your address.

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

If you are seeing us about company or trust business, we will need information about the company or trust including the people associated with it (such as directors and shareholders, trustees and beneficiaries). We may also need to ask you for further information.

We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction may also be necessary to meet the legal requirements.

If you cannot provide the required information

If we are not able to obtain the required information from you, it is likely we will not be able to act for you. Because the law applies to everyone, we need to ask  for the information even if you have been a client of ours for a long time. 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.

Please contact the lawyer who will be undertaking your work, if you have any queries or concerns.

 

Subdividing Land – What to Expect

If you are considering purchasing land with the intention of subdividing or if you are simply looking to increase the value of your existing property by adding an additional house, there are a couple of things that you will need to understand before taking the leap, so to speak.

A subdivision involves the conversion of one large property, whether it be a parcel of land or a building, into two or more parts, to enable those parts to be sold or split into separate ownership.  To do this, a specific kind of resource consent, called a “subdivision consent”, is required from the relevant local Council.

The statutory requirements governing subdivision are contained in the Resource Management Act 1991 (the Act). This Act enables the district and city councils to oversee and manage all subdivisions through district plans and resource consents, thereby controlling any adverse effects on the community and environment that the subdivision may have.

A range of different subdivisions are possible: fee simple, unit title or cross lease. A fee simple subdivision creates a new allotment from an existing allotment. A new certificate of title is created for this new parcel of land and this is independent of the original parent title. This is the most common form of subdivision and will be the focus of this article.

Anyone that is thinking about subdividing should be aware of the length of time involved in the subdivision process, whether it be in a rural or urban area. The length of time depends on the size and complexity of the subdivision project. The council, surveyors, Land Information New Zealand, and lawyers are each required to provide their input and sometimes this means that the length of time required is longer than anticipated.

Below is a summary of the stages involved in a subdivision process.  The times indicated will vary depending on the complexity and size of the subdivision but a typical subdivision process can take some 5-6 months in total: sometimes, more.  It is essential that whoever is undertaking a subdivision project plans well in advance for matters such as interest rate changes, holding costs, and the need for certificates of title to be issued before mortgages and sales of the new titles can be secured.

The subdivision process can be summarised into five stages.

  1. Subdivision consent
  2. Survey plan approval
  3. Section 224c certification
  4. Lodgement with Land Information New Zealand
  5. Certificate of title

 Stage 1: Obtain Council Approval

Almost always, anyone wishing to subdivide will need to obtain a resource consent. Even in situations where the proposed subdivision is a permitted activity, a certificate of compliance will be required.

 Stage 2 – Approval of Survey Plan

The subdivision consent obtained under Stage 1 above must be ‘given effect to’ within five years of the grant of the consent. This is done by obtaining approval of a survey plan from the relevant city or district council.

The council will assess whether the survey plan conforms with the subdivision consent or certificate of compliance, including determining whether the conditions of consent have been or will be satisfied. If the survey plan is compliant, the council must approve the survey plan. If the survey plan is not compliant, the council must decline to approve the survey plan.

 Stage 3 – Section 224(C) Certification

Before a survey plan can be deposited, a certificate must be lodged with the Registrar-General of Land confirming that the relevant council has approved the survey plan and that all of the conditions of the subdivision consent have been complied with to the satisfaction of the council.

 Stage 4 – Land Information New Zealand

The penultimate stage of the subdivision process requires the lodgement of the legal title documents and the survey plan with Land Information New Zealand for approval.

 Stage 5 – Certificate of Title

Once Land Information New Zealand’s approval under Stage 4 above is received, the subdivision process concludes with the cancellation of the existing title and the issue of new certificates of title for each new parcel of land shown on the survey plan.

 

When You may have to Pay Tax selling a Property

When the bright-line test commenced, it affected residential land bought and sold from 1 October 2015.   If you sold the property within a two-year period, then depending upon your circumstances residential land tax may have applied.

From 29 March 2018, the two-year period has increased to five years.

Tax may become payable if you have bought property with the intention to re-sell it and the tax paid would be based on any profit you make when it is sold.

Although the bright-line test may not apply when selling the property after the five year period has lapsed, tax may still be payable if the intention test is applied.

Residential land withholding tax will apply to the sale of your property if it is residential land, sold within five years from 29 March 2018, or you are an person buying from offshore.  For more details refer to: https://www.ird.govt.nz/property/brightline-qa.html

 

 

Our office will be closed from 5pm on Friday 21 December 2018

& will reopen at 8:30am on Wednesday 9 January 2019


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.