Robertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Taxation (Residential Land Withholding Tax GST on Online Services and Student Loans) Bill — In Committee[Sitting date: 12 April 2016. Volume:713;Page:10395. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): Thank you very much Mr Chair—[Interruption] A silent colleague to my left there but I am sure—[Interruption] Thank you. I am sure Jacinda Ardern will take a call shortly. I want to pick up Jami-Lee Ross’s observation about the purpose of Part 2 being about the tax obligations of offshore people and those people paying their fair share. It is a noble goal and one that the Finance and Expenditure Committee had in its mind as we worked our way through the Government’s policy to introduce a residential land withholding tax for offshore persons.If only such noble goals were part of the Government’s overall tax policy and offshore people paid their fair share for instance through trusts. Then we would actually have a tax system that New Zealanders could look at and as my colleague Jami-Lee has just said see that everybody pays their fair share. But there was a complete failure by the Government to have that kind of consistency as we have seen in the last few days and it all gets murkier. We now see that the Prime Minister has got deposits in companies that specialise in offshore trusts.David Bennett: Oh come on. Get on the bill.GRANT ROBERTSON: It gets murkier by the moment Mr Bennett. That is what happens when you do not front up and go to New Zealanders with information about your tax affairs. Mr Bennett might not care about that but other New Zealanders do. They want to see fairness in the tax system—just as Jami-Lee Ross said he thought this part of the bill was aimed at.It was disturbing in the select committee as we worked through the residential land withholding tax issue that we were correcting mistakes made in legislation passed only a matter of months earlier. We did that twice once when covering Part 2 and once when covering Part 4. Essentially that came down to the fact that the various new definitions that the Government had come up with to put in both the Income Tax Act and the Tax Administration Act did not fit when it came to a residential land withholding tax issue.In this part of the bill we are looking at the definition of “offshore person”. I do support what Jami-Lee Ross said which is that the committee did come to the conclusion that the definition was far too broad when it came to being able to implement a residential withholding tax in a meaningful and sensible way. The officials from the Inland Revenue Department came to the committee and said that if we kept the same definition for “offshore person” as we passed in the previous piece of legislation we would find that almost impossible to implement. They gave us an example of a trust or a partnership where the partner with a 1 percent share could make the entire partnership into an offshore person and that would then put in place a set of obligations that would have been difficult both for that entity and for the Inland Revenue Department to follow up.So we on this side of the House accepted that change and agreed to it on the grounds that what we are trying to do is create a basis by which those who do invest in New Zealand from offshore have an understanding of what the requirements on them are. That should not be read as members on this side of the House believing that we do not think those who are offshore persons have obligations because we do. They should have obligations that make them part of a globally transparent system.Although in this particular aspect of the definition of “offshore person” we can see sense the Minister in the chair might want to take a call here and talk about the consistency now of the obligations of offshore people across the Income Tax Act. What we are setting up I believe as a result of the changes that we are making here is a system where we are putting certain obligations on offshore persons with regard to the residential land withholding tax and then completely ignoring making those obligations tighter for instance around foreign trusts. The Minister might want to stand up and let us know whether he thinks we are being consistent. Yes we are changing and amending the legislation to make it different from the two previous pieces of legislation that we passed but is that consistent across all of the tax legislation that we have?The other point that I want to pick up here is whether or not we can use the term “offshore person” at all. That was an amendment that we made again in the committee. So we now have in the Act an “offshore person” and now under clause 45(8) an “offshore RLWT person”. The Government has got itself in a position where it is trying so finely to define within this part exactly who will be covered by the new residential withholding tax that it has had to create a new class of person within the Act. [Bell rung] Mr Chair—The CHAIRPERSON (Hon Trevor Mallard): Grant Robertson.GRANT ROBERTSON: I will not take a full second call on this but I just want to make the point that this level of complexity around what the Government thinks it is trying to achieve with the brightline test highlights to me the fact that it did not think through all of these particular policies together. This is the third bill in a series of three.At each part of the select committee process the large accounting firms in New Zealand have come to the committee and said “The Government’s policy position is confusing us because we have now had a series of changes”—I am using clause 45(8) to highlight this—“where we have different definitions and different meanings.” The accountancy profession which for various reasons is getting a bit of a hauling over the coals at the moment was telling the select committee and telling New Zealanders that it does not believe that the Government has consistent policy here or policy that is easy to follow.My fear is that this will not be the last time possibly even this year that we end up amending legislation we have only just passed. That really comes down to poor work by the Minister in my view in not having a decent and consistent plan for how we are going to be able to do this. So we now have an offshore residential land withholding tax person alongside an offshore person and a definition of “offshore person” that we have changed as well. We are making those three changes all in one go because the Government basically could not get its act together.I just wanted to make those points on Part 2. I am going to returnshortly in a later call to the other change that we have made around bank account requirements for offshore persons. This is largely dealt with under the Tax Administration Act provisions that fall under Part 4 but it does bear mentioning that these clauses within Part 2 also indicate where the Government has not been able to get its act together and have a coherent policy.