Goff Phil: Melanesian Trusts (Income Tax Exemption) Amendment Bill — Second Reading Third Reading 
Goff Phil: Melanesian Trusts (Income Tax Exemption) Amendment Bill — Second Reading Third Reading 
[Volume:646;Page:15305] 
Hon PHIL GOFF (Labour—Mt Roskill) 
: 
 I move  
That the Melanesian Trusts (Income Tax Exemption) Amendment Bill be now read a second time and a third time 
. On behalf of the Melanesian Mission Trust Board I thank the Finance and Expenditure Committee for its unanimous support of the bill. I also acknowledge the members of the Business Committee and the parliamentary parties for supporting the bill and agreeing to take its second and third readings as one question. The Finance and Expenditure Committee reports that the facts and purposes of the bill as set out in its preamble were proven to the satisfaction of the committee and recommends that the bill be passed with a small amendment. 
To recap on the bill’s purpose it is designed to give certainty that the Melanesian Mission Trust Board’s income including its business income is exempt from income tax. The trust is actually a product of legislation that has been passed by New Zealand Parliaments going way back to 1862. The objective of successive pieces of legislation has been to apply income from land owned by the trust in New Zealand for charitable religious and educational purposes in Melanesia. 
The trust provides 94 percent of the income of the Church of Melanesia which utilises this funding mainly in the Solomon Islands but also in Vanuatu and New Caledonia. It runs schools vocational training centres medical centres a centre for assisting victims of domestic violence and a mothers union helping with family life life skills and literacy training. The church runs nine schools in the Solomons and 10 in Vanuatu educating approximately 4600 pupils and employing around 210 teachers. It runs seven vocational training centres for 620 students employing about 46 teachers and also provides theological training for 80 students. The Church of Melanesia also runs two medical clinics in the Solomons employing 23 staff. 
The trust has always been exempt from the requirement to pay income tax or at least that is what was thought until a New Zealand Court of Appeal decision in  
Dick v Commissioner of Inland Revenue 
 in 2002. That raised uncertainty about the trust’s status. If it was required to pay tax that would result in a $2 million reduction in money available for its charitable work or about 30 percent of its overall income. That would contradict the broader objective of the Government which is working through New Zealand aid to assist the Solomon Islands in exactly the areas that the Melanesian Mission Trust Board is contributing to. 
I do not personally have any association with the Melanesian church but given my interest in the Solomon Islands the trust approached me with a request to sponsor a local bill to clarify that its income continued to be as it was in the past exempt from paying income tax. This bill therefore amends the Melanesian Trusts Act 1974 to ensure that from the commencement date of the principal Act income derived by the Melanesian Mission Trust Board including any income from business and distributions of income by the trust board are exempt from income tax. I welcome the select committee’s acceptance of the need to do this. 
I support the small amendment proposed by the committee in new section 4A(2)(c) to be inserted by clause 5 which provides that income derived by the trust board and distributions of income by the trust board are treated as exempt income under the Income Tax Act 2007. That ensures that the exemption is comprehensive. 
The committee also raised a concern that the tax status of other charitable trust boards that were of a similar nature to the Melanesian Mission Trust Board remains unclear. It suggests that the Government to save the time and money of such trusts and indeed of Parliament should deal with the general effect of the Court of Appeal’s decision rather than through individual Acts of Parliament. That issue is beyond my remit as the sponsor of this bill but I am sure it can be considered by the Inland Revenue Department and its Minister to see whether there is a need for it and whether there is an advantage in doing so. However I understand that there may not be many other charitable trusts in the same position if any at all. Most charitable trusts rely on exemptions in sections CW34 and CW35 of the Income Tax Act 2004 which exempts income from tax if the income is non-business income or if it is applied to charitable purposes in New Zealand. The Melanesian Mission Trust Board is unusual in that it does receive income that could be characterised as business income under the  
Dick 
decision and it applies almost all of its income for charitable purposes outside of New Zealand. There may therefore given the uniqueness of this position not be a need for further legislation beyond this bill. 
The bill is supported by the Minister of Finance the Minister of Revenue and the Minister of Foreign Affairs. Once again I thank the Finance and Expenditure Committee for its careful consideration of the bill and I thank members for the support that they have shown in progressing the bill through its final stages today. I commend the bill to all parties in the House for their support.