Dunne Peter: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — Second Reading 
Dunne Peter: Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill — Second Reading 
[Volume:664;Page:12179] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Annual Rates Trans-Tasman Savings Portability KiwiSaver and Remedial Matters) Bill be now read a second time. 
 The bill proposes a number of taxpayer-friendly measures. 
The first of these is a very positive change that will allow New Zealanders to bring their retirement savings with them when they return home from Australia permanently. This will be very good news for the many New Zealanders who work in Australia and who under Australian law currently have their compulsory superannuation contributions locked into an Australian complying fund until they reach retirement age. For New Zealanders wishing to return home after a number of years in work in Australia the prospect of leaving behind these contributions can and does present a significant financial dilemma. For some it may mean the difference between bringing their skills and experience back to New Zealand or deciding to remain in Australia. 
The changes in this bill will help to overcome that problem by allowing New Zealanders with retirement savings in certain Australian superannuation funds to transfer those funds to KiwiSaver when they return home permanently. Similarly KiwiSaver members who move to Australia will be able to transfer all their savings in the scheme to an Australian complying superannuation scheme including contributions from the Crown and any member tax credits. Even New Zealanders who have already returned from working in Australia may now be able to retrieve the contributions they were required to make to Australian superannuation funds. 
The ability to transfer superannuation funds across the Tasman will apply once both Australia and New Zealand have enacted the necessary legislation. The New Zealand experience is contained in this bill and notwithstanding events in Australia today it is understood that Australia will introduce its complying legislation later this year. This change is a major step forward. It is the result of an agreement with Australia that was signed in July last year to recognise the close relationship that we share and the benefits that a skilled mobile labour force can bring to our two countries. 
The remainder of the bill focuses on a number of technical or remedial measures to improve the way the tax rules work and to reduce compliance costs for taxpayers. These technical measures include changes to the KiwiSaver rules to make them easier for people to understand and to ensure that the rules work in the way that they were intended to. In particular the enrolment rules for those under 18 years of age are being clarified so that young people and guardians have greater certainty about their obligations under the scheme. 
The bill also clarifies the gift duty rules around gifts such as amenities and art work made to local or central government or to approved donee organisations by making it clear that such gifts are exempt from gift duty. This change will be welcomed by those who want to contribute to their communities by gifting items such as art works or other items for public benefit. I have recently announced that the Government is intending to repeal gift duty altogether if concerns about creditor protection and social assistance targeting can be addressed. Officials are currently consulting on those matters. My expectation is that if gift duty is to be repealed the provision will be included in the November tax bill later this year. In the meantime the provisions in this bill tidy up the operation of the existing gift duty rules. 
The bill also sets composite tax rates for 2010-11 which are based on an average of the old and the new rates to take account of the substantial personal income tax reductions that take effect on 1 October this year. 
Other technical amendments that the bill contains are intended to make the tax laws easier to apply. They include changes to the legislation on binding rulings which set out how the Inland Revenue Department will apply tax laws to give greater certainty about the tax implications of business decisions. 
Other changes in the bill are of a remedial nature. They remove certain unintended consequences following earlier reforms. Further to those changes I advise the House that at the Committee stage I shall release a Supplementary Order Paper relating to several other measures. The most important of those will be to remove the taxation impediments for banks and their covered bond programmes. The rest will be of a more remedial nature but all of them need to be legislated for as soon as possible. Included amongst those other matters is an adjustment to the prospect of tax treatment of certain optional convertible notes and minor changes to the transitional life insurance rules. These are both changes that taxpayers have asked for. 
In bringing the bill to its second reading I want to record my thanks to all the members of the Finance and Expenditure Committee for their consideration of the bill and for their work in further refining and clarifying its content. The result of their efforts is a package of measures that will help to improve the way the tax rules work across a number of areas and in so doing will reduce compliance costs for taxpayers. I therefore with pleasure commend this bill to the attention of the House.