Parker David: Taxation (Tax Administration and Remedial Matters) Bill — Second Reading 
Parker David: Taxation (Tax Administration and Remedial Matters) Bill — Second Reading 
[Volume:674;Page:20100] 
Hon DAVID PARKER (Labour) 
: 
 The Taxation (Tax Administration and Remedial Matters) Bill is another example of how this Government rules for the interests of a very very narrow class of New Zealander. The previous speaker Amy Adams rose to her feet and did not address any of the issues that were raised by my colleague Stuart Nash. Already under current law there is no limit on gifts to a charity. Already under current law any person can gift $27000 per annum without paying gift duty; a couple can gift $54000 per annum without paying any gift duty. 
This law creates a number of injustices. Peter Dunne believes in income splitting. The Government said it would not agree to income splitting. Editorials in this country said that income splitting was unfair. This legislation enables income splitting for people who can split assets and therefore the income from those assets. Wealthy people can avoid tax through splitting their assets and dividing their income. 
Mr DEPUTY SPEAKER 
: I would like to hear what the member is saying. 
Peseta Sam Lotu-Iiga 
: Well we don’t. 
Mr DEPUTY SPEAKER 
: That will do; I am on my feet. Just calm it down a little so that I can actually hear the debate. 
Hon DAVID PARKER 
: Everything I have said so far is correct. An even more shameful example—[ 
Interruption 
] Amy Adams knows this; an incest victim in New Zealand can be cut out of a will. It happens quite often. The people who perpetrate the crime against the young person who is an incest victim blame the child sometimes. I have seen this in my own legal career. The Family Protection Act states that that child can make a claim against the estate for a fair share of the estate. This legislation prevents that because in the week or decades prior to the death the older person can gift their estate beyond the reach of that child. They could give it all to the Filipino wife and the incest victim who currently has a remedy under the Family Protection Act is being completely set aside by this Government. This is outrageous legislation. The Law Society came to the Finance and Expenditure Committee and told it that fact and National has ignored it. 
I will give another example. Matrimonial property can be put beyond the reach of the courts through gifting. That is another example of the injustices that can be done under this ill-considered legislation. I will give members another example— 
Mr DEPUTY SPEAKER 
: Interjections are fine but where a member shifts seats—and members know who I am looking at—to gain an advantage that is unacceptable. I ask members again to calm it down. Otherwise I will ask members to go out to the lobbies. 
Hon DAVID PARKER 
: Every one of the examples I have given so far is factually correct. Amy Adams knows they are. There were leading submissions to the select committee. Great injustices are being caused as a consequence of this bill. 
I will give members another example. The Institute of Chartered Accountants and the Law Society came to the select committee and said that the bill would put more assets beyond the reach of creditors. In other words a creditor will have less of a remedy because the assets will have been transferred by gifting. In this situation there are some theoretical rights if it is done 2 years prior to the date of insolvency. If it is done more than 2 years prior to the date of insolvency there are not. If Mr Petricevic started to put assets beyond the reach of creditors more than 2 years prior to his going bankrupt his assets would be beyond the reach of any creditor under New Zealand’s law following the enactment of this bill. That is another example. 
I will give another example of how the tax base is being eroded. At present there are continuity of shareholder requirements in respect of losses in a company so if a company makes a big loss—for example a company might make a $10 million loss on a bad investment—that loss is not carried for the future benefit of shareholders unless there is a continuity of shareholders. That rule can be worked around now because assets can be gifted to that company to take advantage of some of those tax losses. 
That is not the worst example. The worst example here in my opinion is what the Government is doing to an incest victim. 
Hon Members 
: Oh! 
Hon DAVID PARKER 
: National members might deny that but that is what the Law Society told them and it was right. If assets are gifted out of the estate of someone who has perpetrated a crime of incest against his or her children there will now be no remedy under the Family Protection Act. That is what the select committee was told and that information was right yet the Government is pushing on with this bill because it has another objective and that is to serve the interests of the very narrow class of people who will benefit from this legislation. Those are the people who will benefit from income splitting who will benefit from some of the continuity of shareholder rules and who will benefit by effectively reducing their taxes. Bear in mind that if they reduce their taxes someone else has to pay them. Who is that someone else? That someone else is someone less wealthy. 
This legislation is terrible. We heard from Stuart Nash that at the time when death duties were abolished the Government of the day—it was actually a National Government—said it would not abolish gift duty because there were all of these other potential problems with abolishing it. Since then it has done nothing to cure the other problems. National members just come here with a very simplistic logic saying that the Government does not collect much in duty and therefore it is not important. They miss the other important factors: income splitting creditor protection and the protection of estates for people who have been abused by their parents. There are lots of other cases where people have not been abused by their parents but they have fallen out with them for some reason. It might be that a parent has married for the second time and the children do not get on with the second wife and therefore for whatever reason they are disentitled under the estate. That person could have a serious illness there could be a moral duty owed by the deceased the testator to the surviving children and this legislation means that they will not have an effective remedy. 
I have already mentioned the concerns around matrimonial property or other non-matrimonial partnerships. Again this is something that both the Law Society and accountants warned about and it is not even referred to by National in its commentary on the bill. It does not even address the issue. National pretends that the issue does not exist because it does not meet National’s prescription. This is bad law. This Government plainly governs for the interests of a narrow section of the population and it is causing injustice.