Foss Craig: Taxation (GST and Remedial Matters) Bill — Second Reading 
Foss Craig: Taxation (GST and Remedial Matters) Bill — Second Reading 
[Volume:669;Page:15773] 
CRAIG FOSS (National—Tukituki) 
: 
 I acknowledge the points the previous two speakers have made the Minister who led the second reading and the first half of David Cunliffe’s speech on the Taxation (GST and Remedial Matters) Bill. 
I endorse the comments about the Finance and Expenditure Committee which dealt with this bill. It was quite early on in the piece that we identified two or three pertinent points that occupied a lot of the committee’s time. We see those points reflected in the bill’s commentary. I may if time permits address some of the matters that the previous speaker David Cunliffe brought up in the second half of his speech but we will see how we go for time. 
In this second reading speech I will make a quick commentary on what happened at the select committee and what we did. The bill is relatively unchanged from when it was sent to us but there are a couple of areas with some quite serious changes. As the Minister noted essentially it is a better bill than what was sent to the select committee. 
I summarise by saying that after the bill was sent to our select committee and we opened consideration on it we had 15 submissions on it. We enjoyed advice and assistance from officials around the table from the Inland Revenue Department from drafting and from our independent adviser Therese Turner who assists us greatly. I acknowledge them. I think all members acknowledge the assistance and the helpful pointers they give us when we deal with what seem to be many tax bills. They seem to go into one after a while. Even as I was looking through this one I started to think about another bill. 
Anyway these are all good tax improvements. The select committee honed in on a couple of key points. We started to go down a particular road but we took ourselves back to ask ourselves what the original intent the main primary intent of this bill was. It was to address the so-called phoenix transactions and structures. As we were wondering about some of the burdens of proof on some of the issues of vendor or supplier of services etc. and around bank accounts—I will touch on the access to joint bank accounts and things in a minute—the committee went back to the first principles. 
If we look at the Minister’s first reading speech we see that from memory it was all about phoenix schemes. Essentially there has been the ability of two parties to have different GST invoice times. One could be cash and the other could be invoice-based or 6-monthly or whatever. If in the midst of a transaction—a property transaction involving land—one of those companies collapses collapses itself or is encouraged to collapse and liquidate and if one entity is left in credit of GST but the entity owing the GST collapses at the end of the day the taxpayer is at a loss. In these constrained times—in fact even in the best of times—that is not a fair burden on the rest of the taxpayers. We spent a bit of time on that. 
I acknowledge Sir Roger Douglas in particular who picked up a couple of points in and around which entity had the burden. I think the other speakers talked about nominee companies that may be involved in land transactions. We spent a lot of time learning about the definition of land. But if an innocent party enters a transaction there comes a time when it or its nominees has to ask the right questions of the vendor or the entity responsible for organising the land—for example whether or not they have the right paperwork regarding GST being registered and whether they have gone through the correct hoops. We had quite a bit if discussion about that and we came to the conclusion that we should put a few more parameters around it. Again I acknowledge Sir Roger. He picked that up and made an issue of it to the point where members can see the changes in the bill under the supply of goods the supply of land in the commentary and in the various definitions. 
Another point that occupied our time a little bit was student accommodation. To cut to the chase we spent a bit of time defining what student accommodation was. Could it be the hostels up the road a boarder at home or one’s own son or daughter boarding? One can see how complex that can get. Again we went back to the first intent which was to not add complexity to the situation. We can see what we considered reflected in the commentary of the bill. Very importantly if members look at the last paragraph in the commentary they can see that we received assurance—and it is in writing—from the Inland Revenue Department and Treasury that they are monitoring the practical application of the changes to the definitions to guard against inconsistent or unfair treatment of boarding houses and boarders. 
Sitting suspended from 6 p.m. to 7.30 p.m.