Burns Brendon: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
Burns Brendon: Taxation (GST and Remedial Matters) Bill — In Committee Speaker Recalled In Committee Procedure Third Reading 
[Volume:669;Page:16164] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to take a call on Part 6 of the Taxation (GST and Remedial Matters) Bill which concerns amendments to stamp and cheque duties. The first thing I will do is commend the Minister in the chair the Minister for Courts for the fact that this part has no relationship to the onerous 70-page Supplementary Order Paper 187 which was made available to us parliamentarians in only the last 48 to 50 hours. What this part relates to has at least been through the appropriate process in terms of consideration by the Finance and Expenditure Committee of all the changes that the Government was seeking to make. 
These changes relate to the Stamp and Cheque Duties Act 1971 which is a period not familiar to some members and reference an exemption under a double tax agreement. The history of that as some members will know is that the recently concluded tax treaties with Australia and also with the United States include a new exemption from source-country tax for interest derived by banks so together with clause 79 in this bill clauses 102 and 103 clarify the circumstances in which someone is eligible to pay an approved issuer levy. The approved issuer levies make it clear that a borrower can pay the levy in order to qualify for the exemptions under the double tax agreement even if paying the levy makes no difference to the way in which the transaction is dealt with under domestic law. 
So this measure addresses some uncertainty that exists around the treatment of interest paid to foreign banks operating through a branch here in New Zealand. It is an appropriate move but I ask the Minister in the chair to take a call to relate to us the difference between the stamp duty regime here and those in other parts of the world. I am particularly interested to know about Australia’s. I understand that stamp duty still applies to property there and at quite a high level. I believe that it is up to about 2 percent or more in some Australian states. It will be interesting to know whether the Government has ever given any consideration to that issue in terms of any of the tax changes it is bringing through in the course of this Parliament. 
The approved issuer levy is a domestic law mechanism that can provide relief from the non-resident withholding tax on interest paid. The non-resident withholding tax on interest paid to an unrelated foreign member can be reduced to nil if the borrower agrees to pay a 2 percent levy. Borrowers agree to do this where the lender would simply demand more interest to cover the non-resident withholding tax. 
We have those newish treaties in place now—tax treaties with Australia and the United States. They are a good thing. They make it easier for businesses to operate across the Tasman and across the Pacific through to the United States. Goodness knows we need businesses to be better able to operate in what has been the most difficult business environment in living memory. We want to see the tax treaties with Australia and with the United States operate at the best possible level to ensure that businesses are able to operate efficiently and effectively without any extra costs attached. So what this measure does is include an exemption from source-country tax for interest derived by banks. For interest derived from New Zealand the availability of the exemption depends on the borrower paying the approved issuer levy unless the borrower is not eligible to pay the levy or there is no such levy or the rate exceeds 2 percent of gross payments. 
These proposed amendments attempt to clarify the circumstances in which someone is able to pay the approved issuer levy. They make them clear and the Finance and Expenditure Committee considered these issues in some detail. That is how the process should be. When we are dealing with issues as complex as these we need to focus on them in the select committee rather than their being passed by way of a Supplementary Order Paper. These are complex matters. They can relate to large sums of money in which New Zealand has a very keen interest. Obviously we want to make sure that when we introduce technical amendments of this type we do so in the most appropriate fashion. That is done here in Part 6 where clauses 101 102 and 103 introduce amendments in relation to the Stamp and Cheque Duties Act 1971. That is the appropriate place.