Polson Higgs Conference

Net Promotor Score (NPS)

For the past year, we have been running a quarterly Net Promoter Score (NPS) survey to find out how satisfied you - our clients, are with the service we provide. We have received great feedback from you and have gained a better picture as to where we stand. What we do well, and more importantly the areas we need to improve so we can deliver the best service possible to you.

Currently our NPS is 42. To put this into perspective, the financial service industry NPS is 11 and the professional service industry is 14. While we are happy that our current NPS exceeds industry average and is also the “Answer to the Ultimate Question of Life the Universe and Everything”, we want to do better. So next time you see the survey request in your inbox, please take the time to complete it and provide us feedback on how we can deliver excellence to you.

Alternatively, you can simply email your feedback to info@ph.co.nz at any time. Thank you for your continued support.

A Prime Example Of Bad Law

One area which has seen little media coverage but where we see potential issues arising is the change to the main home exclusion under the Bright-line test. Under the old rules the main home exclusion applied where the land was used predominately as a main home for most of the time it was held. This meant that where the test was met no part of the disposal proceeds were taxable. Under the new rules for properties acquired on or after 27 March 2021, the non-taxable sale proceeds will be calculated based on an apportionment of time the land was owned and used as a main home. For example, a property owned for eight years with six as the main home and two years as a rental would be taxable on 2/8th of the net gain.

Since the release there has also been a reasonable amount of media coverage particularly around the potential economic impacts relating to the removal of the interest deduction. Unfortunately little more information can be provided on this at this time as no legislation has been drafted yet.

Putting aside the direct impacts of the interest changes, from a procedural position this is a prime example of one of the worst types of law making. Retrospective law. While the Government might argue this is not retrospective law as they have announced the intended changes, this is simply not true. The overall intent of the changes has been announced but no details. As we noted last time, the “devil will be in the details.” The Government does not expect draft legislation until later this year with the final legislation not due until early next year. This means very little firm advice can be provided. It also means decisions are having to be made now with no idea of how the law will actually apply to those decisions when it is finally written. A prime example of bad law.

Given the fluid nature of the legislation we strongly recommend that you contact your Partner at Polson Higgs before making any decisions with respect to property.

FOOP

Back in February we discussed FOMO, the fear of missing out and the impact it was having on the property market. Buyers were concerned that if they didn’t buy now, they would not get a chance, and miss out. Since late April the property market has seen the appearance of FOOP.

FOOP or fear of overpaying is caused by hesitancy or uncertainty in buyers that the market will continue to rise. They don’t want to be the buyer that purchased at the top of the curve and has paid too much. This leads to a reduction in the bidding wars that were one of the factors driving prices up.

However, just as FOMO was not the sole factor driving prices up, FOOP won’t be the sole factor at play in the current property market. 

When Will The “Property Bubble Burst?”

Last month we posed the question “When will the property bubble burst?” to NZ’s leading independent economist Tony Alexander in a webinar. His short answer was it can’t because there isn’t a bubble. The longer answer is a bubble is a rapid escalation in the market value of an asset without any underlying change in said assets fundamentals. Or as we would describe it, it is FOMO, fear of missing out, on steroids.

Tony explained there are abundance of factors to explain why NZ house prices have soared: record low interest rates, the removal of Loan to Value Ratio rules, net immigration inflows, “travel savings” being used for property purchase etc.

Although Tony does not predict a crash in the housing market, he did advise the current levels of increase are not sustainable, and we should expect prices to level off over the next five or so years. Following that we should prepare for a slight decline as people start to realise there is no longer a shortage in the housing market. 

If you would like to hear the full discussion with Tony, you can listen below. ​

Now this was a bubble!

There have been many “bubbles” in the past, but one of the strangest has to be the Tulip Bubble.

Tulip mania swept through 17th century Netherlands. The exotic botanical sent the country into a frenzy with both rich and poor spending and borrowing money to get their hands on the precious commodity. At its peak single bulbs were being traded for up to 10,000 guilders, which in 1663 could buy you a mansion on the Amsterdam Grand Canal.

Given that a tulip has no intrinsic value, as the value of the asset was determined by the color of the bloom, it could not last. A government ban on tulip trading in 1637 caused an overnight crash in the market and thousands were left destitute.

Budget Announcement

The economy is performing stronger than forecasted, but the property market is still overheated and there is a wide  range of “wellbeing objectives”. Where will the Government prioritize its spending, and more importantly how will it pay for it?

The team at Polson Higgs will be analysing the budget and provide more detail around any major changes in our next newsletter.

HR Legislation Update

There have been some recent changes to leave entitlements that the HR team at Polson Higgs wants to ensure any clients who are employers (or thinking about employing) are aware of:

Bereavement leave 

Recent legislation updates to bereavement leave are now in place to include the unfortunate event of a miscarriage or still birth. The law states that employees now have the right to take 3 paid days bereavement leave if they or their partner experiences a miscarriage or still birth.  Communicating this to staff and then updating employment agreements or policies should now be updated to reflect this.

For more information about this Employment New Zealand has the full wording of this at  https://www.employment.govt.nz/leave-and-holidays/bereavement-leave/ or you can contact our HR team.

Matariki

24th June 2022 will see the introduction of New Zealand’s first Matariki public holiday. The addition of an extra public holiday on our calendars means that employers will need to update their payroll to reflect this.

Thinking ahead

The Government is currently reviewing the Holidays (increasing sick leave) Amendment Bill to increase an employee’s sick leave entitlement from 5 days per year to 10 days per year. The amendment bill is still in its second reading at parliament so has not been introduced yet. In the event it does, employees won’t receive the extra days immediately once the amendment comes into force.  Currently, the Bill is drafted to allow a two-month grace period once it is passed. Any changes are not expected to take effect until at least the middle of next year; however, it is good to think ahead for changes to payroll, employment agreements or policies.

If you need any assistance with any of the above, please contact payroll@ph.co.nz or hr@ph.co.nz.

Congratulations & Welcome

A big congratulations to Maike Zercher and Richard Blair who recently completed theirs studies and became Chartered Accountants.

We also have two new Graduate Accountants join the team: Megan Harland and Sam Massey.

Webpage - Check out Polson Higgs Covid-19 for our COVID-19 resources for you to use.

If you have a question about anything, please don’t hesitate to ask on covid19@ph.co.nz.

Stay safe and keep in touch.

Kind regards

Polson Higgs Team

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