Our associate Sarah Jury became a partner of McLeods Lawyers at the beginning of this year. We congratulate Sarah and wish her well. Sarah’s specialities include family law and employment issues.
Eternal Life in Cyber Space
Many of us now have a growing collection of “digital assets” – personal information we have created and stored online as text and photos on social media websites, emails, blog posts and even avatars in online games. Few of us have considered what will happen to our online information after we die.
Many wills note what should happen to a person’s “tangible” personal papers, letter and photographs. If they are not mentioned in the will or if a person dies without a will, the executor makes this decision. A problem could arise if someone dies leaving a collection of digital assets which are password protected or unknown to friends and relatives.
We recommend that if you are making a will, or reviewing your current will, you should consider what will happen to your digital assets. The following simple check list is intended to identify key considerations and can be used for a discussion with your lawyer:
- Identify your “digital assets”. What online accounts and information do you have stored? Which ones are important to you or your family and friends?
- What do you want to happen to each of these assets after your death?
- Email: should anyone have access to your email after your death? Do you want your email contacts notified of your death?
- Social media sites: Do you want someone to notify your online friends of your death? Do you want your profile removed?
- Other online sites: Do you have photos or other personal information stored and which are not accessible anywhere else? What do you want to happen to these?
- If you want your accounts to be accessible after your death, you might consider recording your details (passwords, login, location) in a safe place. Note that providers of some services, such as internet banking, do not permit you to record some details. Check the wording of the agreements you have.
You should check with your particular web service provider as to the terms of your access agreement in the case of your/or your loved one’s death.
For up to date advice on a new will, see Graeme McLelland (09) 407 0179 or Sue Wooldridge (09) 407 0174.
Creating a Culture of Charitable Giving
New Zealanders are considered generous people with approximately 1.3 million Kiwis regularly donating their time, money, goods and services to charities and other non-profit organisations. Our hearts go out to all affected by the Christchurch earthquake. New Zealand is a village. In an effort to further encourage and reward charitable giving the Tax Act 2007 increased thresholds for tax deductions and protocols have been implemented that make philanthropic endeavours easier and more convenient.
Individuals All individuals who donate to charities will be able to claim a 33.33% tax rebate on cash donations. Previously, deductions for charitable donations could not exceed $630 regardless of the amount.
For example, Jack donates $3000 to charities and non-profit organisations in a year. His taxable income for the year is $35,000. Previously, Jack would only be entitled to a deduction of $630. The recent change now means that Jack is entitled to a rebate claim of $1000 being 33.33% of the $3000 donations.
Individuals are also able to donate direct from their pay to their chosen IRD approved charitable organisation(s). In doing so, individuals receive immediate tax credits which decrease their PAYE. Payroll giving is only possible where that service is offered by the employer, and is limited to employers who electronically file their monthly PAYE schedule.
All companies, even those with five shareholders or fewer, are eligible for tax deductions when they donate to approved charitable organisations. Previously, companies could only claim a rebate for up to 5% of their revenue. The 5% limit on deductions has now been removed and companies are entitled to deductions limited only by the company’s net income.
For example, in the 2008/2009 year ABC Ltd made charitable donations amounting to $10,000. Its income before taking into account the donations was $100,000. Previously, the deduction entitlement for the company would have been $5000. From 2009 the company is entitled to a $10,000 tax deduction, which also reduces its taxable income to $90,000.
Incentives for Maori Authorities are much the same as that of companies. These authorities will be able to claim deductions for cash donations made to charitable organisations limited only by the amount of their net income.
Charitable and non-profit organisations play a crucial role in our communities and it is hoped that these changes will encourage and reinforce our culture of giving. The incentives place New Zealand on par with other OECD countries such as Australia and the United Kingdom in terms of tax relief provisions for charitable donations. The Government estimates that donations will increase by $300 million a year from 2009, which will make up for the $16.2 million of lost revenue due to the law change. Deductions currently apply only to financial donations and do not extend to donations of goods or services.
If your charitable organisation needs advice or information, contact Sarah Jury 407 0176 or Graeme McLelland 407 0179.
More Natural Disasters
In our last newsletter we highlighted the need for insurance cover for risks of all kinds following the September 2010 earthquake in Canterbury. This message has been underscored following the latest devastating Christchurch earthquake, major recent flooding in many parts of New Zealand and Australia, cyclone Yasi in Far North Queensland and bushfires in Perth. These natural disasters have destroyed many properties and in light of this here are some key points to keep in mind if you are a tenant, landlord or home-owner.
The Residential Tenancies Act 1986 allows both the landlord and tenant to terminate the tenancy following a natural disaster where a home has been so damaged that it becomes uninhabitable, no rent is payable until the home is reinstated so that the tenant can re-occupy it. Alternatively, the landlord or tenant may wish to terminate the tenancy. If a tenant wishes to terminate the tenancy, the landlord must be given at least two days notice. Where a landlord wishes to terminate the tenancy, the tenant must be given at least seven days notice. In situations where the home is partially damaged, the rent may be proportionately reduced or either party may apply to the Tenancy Tribunal for an order terminating the tenancy.
The Auckland District Law Society (ADLS) lease, the most commonly used commercial lease, allows for the termination of the lease following a natural disaster. Where the damage renders a property uninhabitable, the lease is terminated immediately. Where the damage is partial, rent is reduced and the landlord must use insurance proceeds to repair damage as quickly as possible. If a building consent is unobtainable or the insurance payment is inadequate to allow restoration, the lease is terminated. If the premises are uninhabitable and require demolition or reconstruction, the landlord may cancel the lease giving the tenant 20 working days notice.
If there is no formal lease, the Property Law Act 2007 provides similar remedies in the case of specified natural disasters. Landlords may be able to recover rental losses through their insurance providers if they are covered for loss of rent and outgoings.
If an earthquake or specified natural disaster occurs, homes, personal possessions and land are automatically covered by the Earthquake Commission (EQC) provided home-owners have pre-existing private and fire insurance policies. The EQC provides cover for:
- damage caused to homes (up to $100,000);
- loss of most personal possessions (max $20,000); and
- loss of land value (based on a professional valuation.)
Any value over and above these amounts may be covered under existing private insurance policies. Claims to the EQC need to be made within 30 days of the damage occurring but claim periods may be extended to three months in certain circumstances.
Make sure your risks as a property owner or tenant are adequately insured; see Sue Wooldridge (09) 407 0174 or Sarah Jury (09) 407 0176.
Changes to the Holidays Act 2003
If a business has an annual ‘shutdown’ period and a public holiday (such as Christmas) falls on a day that an employee would normally work, the employee is entitled to be paid for the public holiday even though it occurs when the business is closed.
As of April 2011:
- employees will be able to exchange up to one week of annual holiday for cash provided their employer agrees to the request,
- employees will be able to transfer the observance of a public holiday to another predetermined working day with the employer’s consent,
- for employees who have irregular hours and/or pay, the payment for sick leave, bereavement leave, public holidays and alternative holidays will be based on the average gross earnings for the previous 52 weeks or whatever lesser period the employee has been employed,
- employers will be able to request proof of sickness within the first three days of an employee being away on sick leave. Employers are to cover reasonable costs, such as doctor’s fees.
A guide to the changes will be available at www.dol.govt.nz before April 2011.
Email disclaimers have become the norm for many businesses and organisations. But are they legally binding?
The Electronic Transactions Act 2002, Section 8, validates all electronically transmitted data/information and gives it the same standing as a written document. Arguably there is no reason, in theory, why a properly constructed email disclaimer could not be legally enforceable.
To increase the likelihood of legal enforceability, the disclaimer must be worded appropriately and must be practical in the sense that it is ‘sufficiently drawn to the attention of the recipient’. The text size, font and placement/format of the disclaimer in the email are relevant. Placing a disclaimer at the top of an email rather than at the bottom will enhance its effect.
Disclaimers are unlikely to have legal force unless they contain confidentiality obligations. The inclusion of confidentiality and legally privileged clauses is strongly recommended as it gives the disclaimer more weight by placing the reader ‘on-notice’. In situations where sensitive information is sent to the wrong recipient, a court order may be sought, requiring the recipient to delete the email and/or prohibiting publication.
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 on this information.