These
last three points may be added to the purchase price of the property and
depreciation claimed on them, as part of the cost of the property.
Selling the Property or Going to Live
in it Yourself
When
you sell the property, or cease it as a rental and go to live in it yourself,
there are depreciation recovery implications.
That is, you have to declare back as income all depreciation previously
claimed as an expense.
If
you sell the property at a greater price than you paid for it, the depreciation
recovery will be the full amount of depreciation previously claimed.
If
it is for a lesser amount, you should obtain a valuation of the depreciable
assets on which you have previously claimed depreciation, and compare this with
the initial cost of these depreciable assets to establish the depreciation
recovery.
McLean
and Co prepare
Property Investment Financial Statements for a number of clients.
Please
make contact
with us if we can assist you in this regard.
COMMERCE ACT 1986
The
Commerce Act establishes a Commerce Commission (also responsible for
administering the Fair Trading Act) with the purpose of promoting market
efficiency by fostering healthy competition, informed consumer choice and
sound economic regulation. Commission activities include investigating and
determining whether particular trade practices have the effect of restricting
competition (anti-competitive practices) and can result in businesses being
prosecuted where a breach is found. Anti-competitive practices relate to
supplying or acquiring goods and services and may involve an individual, two
or more individuals, a company, or two or more companies acting together.
The
Act prohibits behaviour intended to "substantially lessen
competition" in a market or which has, or will probably have, that
effect. Such behaviour includes arrangements or agreements between
competitors to prevent, restrict or limit the supply of goods and services
from some other competitor and price fixing by competing organisations, except
in the case of joint venture operations where goods are jointly produced or
services jointly provided. The
term "market" means the
New Zealand
market for goods and
services and for other goods and services that can, as matter of fact and
commercial common sense, be substituted for particular goods and services. It
is likely, the Commerce Commission states, that, for example, butter and
margarine would be considered part of the same market for "spreads"
rather than separate markets since the one can be substituted for the other.
Markets exist between wholesalers and retailers and between retailers
and their customers, with some markets being seasonal, others regional, and
others covering the whole country. Parties engaging in prohibited
behaviour can do so on the basis of a formal contract or as the consequence of
a more informal "arrangement". Whether contracts or
arrangements have the effect of substantially lessening competition will
largely reflect the market in question. It is the effect of a contract
or arrangement that is important; it is not necessary to show any intention to
substantially lessen competition to establish a breach of the Act.
Where, following prosecution, a court finds that a contract or
arrangement does have the effect of substantially lessening competition its
provisions will not be legally enforceable.
Similarly,
provisions in contracts or arrangements between or among competitors intended
to prevent or restrict the supply of goods and services to another competitor
are prohibited. Examples given by the Commerce Commission are:
competitors banding together to prevent a supplier supplying other competitors
with goods or services, competing suppliers agreeing to threaten a business so
that it no longer buys from some other supplier, and members of a trade or
profession not accepting businesses in the same trade as members because they
provide their goods and services at a discount. Provisions of this kind
are referred to as "exclusionary provisions" and the prohibition
will also apply where the business or businesses targeted are likely in the
future to be in competition with at least one of the parties who have agreed
to such a provision. However, where a business or businesses are
prosecuted, it is a defence to show that an exclusionary provision did not
have the purpose, effect, or likely effect of substantially lessening
competition.
In
the case of price fixing, this need not necessarily involve agreeing on a
final price but could involve such things as setting a price range or agreeing
on maximum discounts. Price-fixing is considered to be anti-competitive
because it prevents customers from looking for lower prices. Limited
exceptions apply (as in relation to joint ventures). Resale
price maintenance, restricting or eliminating competition on price, is
prohibited. Suppliers of goods and services can issue recommended retail
prices but must make clear that these are only recommendations and need not be
followed. They cannot set a minimum price, either an actual or a
discounted price. The same applies to third parties who may not hinder
or prevent someone from acquiring or supplying goods until that person or firm
agrees not to sell below a specified price.
Businesses
or persons with a "substantial degree of market power" are
prohibited from using that power to prevent competition. Market power must not
be used to restrict entry, prevent or deter competitive conduct, or eliminate
competitors or potential competitors from the market in question or from any
other market.
A
number of exceptions apply in respect to anticompetitive practices, including
any such practice that is specifically authorised by legislation and clauses
in employment agreements or in contracts between sellers and purchasers of
businesses that prevent the employee or seller from setting up in competition
in the same area with their former employer, or with the purchaser, for a
period of time (although overly restrictive clauses have on occasions been
rejected by the courts).
The
Commerce Act also covers acquisitions and mergers and should there be concern
that a business acquisition might breach the Commerce Act, the person
proposing to acquire the assets of the business or shares may seek
authorisation from the Commission. The Commission must decline clearance for
any acquisition or merger it believes would result in a substantial lessening
of competition.
In
investigating complaints, the Commerce Commission has a right of entry power
and can compel businesses to provide information to assist in proving the Act
has been breached. Where it considers this necessary, the
Commission can ask the Serious Fraud Office to carry out an investigation.
MINIMUM
WAGE FROM 1 APRIL 2004
From
1 April 2004 the minimum wage increases as follows:
* For youths aged 16-17 the wage becomes $7.20 per hour, $57.60 for an 8
hour day and $288 for a 40 hour week
* For adults aged 18 and over the wage becomes $9.00 per hour, $$72 for an 8
hour day and $360 for a 40 hour week.
