Hudson BrettTAXATION (NEUTRALISING BASE EROSION AND PROFIT SHIFTING) BILLIn CommitteeDebate resumed from 14 June.Part 2 Amendments to Tax Administration Act 1994 (continued)BRETT HUDSON (National): Thank you Madam Chair. It's a pleasure to rise and speak on this bill. I think the bill has broad support across the House. I particularly want to talk about clauses 54 and 55 and I have some questions for the Minister. If we have a look at the departmental report and have a look at the submissions I think submitters raised some very valid points such as: Taxpayers should not be exposed to criminal penalties for the acts/omissions of another group member over whom they have no control." That was ASB Corporate Taxpayers Group EY Russell McVeagh. And I do note that in the departmental report the officials said they agree. They agree with the submitters and the recommendation was that the submissions be accepted.There's one in particular that I'd like to ask the Minister about and that is I think the New Zealand Law Society who raised an extremely good point in their submission. And theirs was that "it should be a defence under sections 143 and 143A that the member charged with the offence did not have the knowledge that the requested information was in the knowledge possession or control of another member of the group." Taking a look at those two sections in the Tax Administration Act it is my read of that Minister that the offence is committed if the knowledge or possession is in the hands of that other member of the group. The person being charged whether they have the knowledge or not as to whether someone else in say the multinational has the knowledge or possession of the information is irrelevant. And that cuts across therefore still in my view—it doesn't take on board the submission from the New Zealand Law Society.So I would like the Minister to stand and take a call and tell us given the departmental report says that the submissions be accepted how it is—given that the bill itself now just strikes out the provisions the clauses that relate to 143 and 143A of the Tax Administration Act. So how is it therefore—given the sections as they currently stand in the Tax Administration Act where knowledge of the person actually being charged with the commission of the offence knowledge of what the person elsewhere in the world in the group has or doesn't have isn't actually part of or doesn't appear to be part of the test or the concern as to whether or not an offence has been committed. So I look forward to the Minister—and I see the Minister turning to officials looking to get some clarity around that—taking a call and just sharing with us how that has been addressed because I do note that officials did say in their report that the submissions be accepted.The other matter I'd just like to touch upon is clause 53 which is the same general matter but about civil penalties. And I'm particularly interested here in the rationale from the Minister as to why—and this is a submission from Westpac. Westpac said that "imposing a civil penalty liability that exceeds the available criminal sanctions is equally inappropriate—particularly if its intent is to avoid the need for Inland Revenue to bring civil proceedings." And they note "There are no equivalent civil proceedings in the Act relating to comparable failures;" That's from Westpac. And there are; there are quite substantial differences in the amounts payable under the criminal versus civil penalties. Civil penalty has a maximum of $100000. So clearly I imagine there was a reason for officials and for the Minister therefore in seeking to continue with a regime where the maximum civil penalty is quite substantially greater than the fine at least for the criminal offence. So unless the entity has pretty clear confidence that Inland Revenue aren't going to charge them greater than the penalty they would otherwise incur then perhaps that creates something of a disincentive to settle effectively out of court. So I would just like the Minister to comment on that.I would sort of pre-empt that I don't think trusting the Inland Revenue—while we all might do; we might have great faith in them as an entity—not to apply a penalty which others might see as a bit unfair—I don't think that's really where we could be on this. So I'd just like to hear from the Minister on those two areas: the part I raised around sections 143 and 143A around the criminal penalty and also about how the civil penalty is higher or can be higher than the criminal penalty. I look forward to that Minister."