Cullen Michael: Taxation (Disaster Relief) Bill — Procedure First Reading Second Reading Third Reading 
Cullen Michael: Taxation (Disaster Relief) Bill — Procedure First Reading Second Reading Third Reading 
[Volume:616;Page:11671] 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 I move  
That the Taxation (Disaster Relief) Bill be now read a second time 
. I want to thank all members and all parties for their cooperation in dealing with this bill expeditiously. I think members understand the necessity to get this bill through the House quickly. 
The bill is very specific in its focus. It gives the Inland Revenue Department greater legislative flexibility to deal with business taxpayers who were badly affected by last month’s severe weather and who as a result may be having problems in meeting their tax deadlines. The taxation Acts already provide a number of discretions that can be applied when taxpayers are involved in adverse events. The Inland Revenue Department has said that it will use the full flexibility that the legislation allows if tax obligations remain outstanding as a result of the floods and will remit penalties as appropriate to the extent that the law allows. However the floods and high winds that occurred in February were so extreme that it is necessary to legislate to provide flexibility beyond the norm. We are not speaking here of adverse events that may occur every few years which the present taxation rules cater for pretty well but of events that are predicted not to repeat themselves again for 100 years—though having said that I am conscious that 100-year events have a tendency to come back after a couple of years and then not to appear for a long time thereafter. We saw that with the Clutha flooding not so long ago. 
The bill not only relates specifically to the recent events but also covers similar natural disasters in the future. It allows the Inland Revenue Department to remit use-of-money interest on tax payments that are late as a result of the flooding and bad weather whether that is because taxpayers’ records have been destroyed or because they cannot gain access to their records or did not have time to pay their taxes because of higher priorities created by the emergency. The change is necessary because under current law the Inland Revenue Department does not have clear authority to remit use-of-money interest in those cases although clearly it can remit penalties arising from the late filing of returns and from late payments. The bill also allows the Inland Revenue Department to accept estimates of provisional tax that are late because of the floods. The problem with business taxpayers here is that they want early refunds of overpaid provisional tax. They had to re-estimate their income for the year and file that information by the due date of their third instalment for the year which was 7 March for most taxpayers. The bill will also amend the law to allow the Inland Revenue Department to accept verbal applications for remittance as well as written ones. 
In relation to future disasters of this sort the bill specifies several criteria for qualifying for relief. First a state of civil defence emergency must be declared in relation to the event. That does not mean however that the relief will be limited to those who live in the emergency area; all significantly affected taxpayers will qualify. Second the Governor-General must specify by Order in Council that the event is significant enough to justify invoking relief. Third the taxpayers concerned must be significantly affected by the event. Finally the taxpayers concerned must apply for the relief. That may seem overly bureaucratic but I am sure members will be aware that even in such extreme circumstances some people sometimes find loopholes in the law to exploit even when they should not be qualifying for this kind of relief. The qualifying hurdle has been set high because use-of-money interest is a very important concept in the administration of taxation law. 
Just as there was a great deal of cooperation and coordination on a national level when the disaster occurred so we have had significant cooperation from several agencies in preparing this urgent legislation. In particular I want to thank the Institute of Chartered Accountants of New Zealand and Federated Farmers of New Zealand who helped to form a quick tax response to the disaster. I acknowledge that a tax response is for the present of relatively low importance to people who may have lost their livelihoods and are more concerned about immediate problems. However the measures introduced in the bill will help to reduce some of the worries that people will face in the coming weeks and months as they deal with the situation that has occurred to them. 
I also acknowledge that I have received a specific set of recommendations and requests in relation to these sorts of issues from Mr Gerry Eckhoff. In acknowledging that they are issues that do not need to be dealt with immediately in this particular bill I undertake that I will refer those matters to my officials for consideration as to whether we should try to introduce them by means of the next major tax bill due to be introduced soon and passed by the end of this year. 
Again I thank all members for their cooperation. I also want to apologise to the member following me; I have to leave the Chamber for a somewhat delayed meeting. I commend the bill to the House.