Cullen Michael: Income Tax Bill — Second Reading 
Cullen Michael: Income Tax Bill — Second Reading 
[Volume:616;Page:11789] 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Income Tax Bill be now read a second time 
. In so doing I note with some relief on behalf of the Clerk that the practice for the Clerk to read the bill at that particular point has long since ceased—as the bill is some 2154 pages long. As members will have noted I have referred Supplementary Order Paper 195 to the Finance and Expenditure Committee for its consideration. The Supplementary Order Paper amends the bill to incorporate the changes made to the 1994 Act by the Taxation (GST Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 and to enhance the consistency of the drafting. The purpose of referring the Supplementary Order Paper is so that the select committee can assure itself that there are no policy changes incorporated within that Supplementary Order Paper. 
The bill represents a third stage in the progressive rewrite of the Income Tax Act which has been going on for some considerable number of years. It introduces rewritten legislation contained in the first five parts of the Act and re-enacts the remainder of the Act leaving about half of the Act to be rewritten in future stages. The three most frequently consulted parts of the Act those setting out the rules for calculating net income are amongst the parts that have been rewritten for this bill. The purpose of the rewrite of this Act which is one of the most consulted Acts in the country is to produce tax law that is clear plainly written and structurally consistent. That will make it easier for users to find all the provisions they need and to understand what they read which ultimately saves time and money. 
Tax is of course a notoriously complex subject so it is all the more important that the law governing it be as clear and easy to use as possible. A plain-language drafting style has been used to rewrite the legislation. It seeks to present ideas clearly concisely and directly and to avoid legalese archaic terms and repetition. Throughout the redrafting process the paramount aim has been to make the rewritten legislation as clear as possible without substantively changing the policy content of the current Act. To this end the rewritten legislation has been the subject of constant consultation and review since drafting began several years ago. This has involved public and private sectors alike professional associations and a wide range of people and organisations. 
Since 1995 an advisory panel consisting of the Institute of Chartered Accountants the Law Society and tax policy officials has been overseeing the rewrite of the Act. It has ensured that procedures have been in place to identify policy issues arising in the course of the rewrite. As a further safeguard the Government has assured the public that it will introduce remedial legislation to correct any problems arising from the new Act’s producing a different outcome from that intended under the present Act. Any amending legislation would apply from the date of effect of the new Act. 
In its examination of the bill the Finance and Expenditure Committee was also concerned to make certain that no unintended policy changes had arisen in the course of rewriting the law. It therefore sought further testing of several key parts of the rewritten legislation and that was undertaken by eight leading tax professionals. This was a major exercise and extended the committee’s consideration of the bill by some 6 months. Perhaps I could say to the member who is collecting what I think he thinks is a copy of the bill that that is only the first volume; there is a second one as well. As a result of that lengthened consideration the committee has recommended that the date of application of the new legislation be deferred by 1 year to the 2005-06 tax year. That will give interested parties including tax practitioners and tax publishers more time to prepare for the changeover to the new Act. 
The committee has also recommended that new transitional provisions be included in the bill. These make it clear that no change in the effect of the law was intended and that the old law should be used as a guide for interpretation should there emerge any ambiguity or absurdity. The new transitional provisions would not apply to those few relatively minor policy changes that we made intentionally and were subjected to public consultation well before the bill was introduced into Parliament. These are the two main changes the committee has recommended. As an extra safeguard it has also recommended that an independent committee be set up to consider any unintended changes for the meaning application and operation of the law as a result of the rewrite and it sees the current advisory panel given its background expertise and composition as the right entity to undertake the task. 
I thank the committee for its thorough consideration of this massive bill. I thank the Institute of Chartered Accountants the Law Society the committee’s tax advisers and the many others who made significant contributions to the proposed legislation throughout its development. I recognise in particular two current members of the House the Hon Peter Dunne and the Hon David Carter who also played a role in this rewrite as previous Ministers of revenue. I finish by thanking all the parties in the House for their cooperation in the orderly management of the passage of this bill.