Cosgrove Clayton: Taxation (Bright-line Test for Residential Land) Bill — In CommitteeText is incorporated into the Bound VolumeCosgrove Clayton: Taxation (Bright-line Test for Residential Land) Bill — In Committee[Sitting date: 10 November 2015. Volume:710;Page:7851. Text is incorporated into the Bound Volume.]Hon CLAYTON COSGROVE (Labour): I just want to raise a couple of very quick questions. They may seem simple on the face of it in regard to clause 16 inserting new section 43B et al but could the Minister in the chair or officials advise us as to whether any of these provisions in terms of non-active trusts being excused from filing returns differ from the status quo? Because as I understand it a non-active trust—that is a trust that is not making income—would simply advise the Inland Revenue Department commissioner in writing that for instance it owned a property that perhaps the beneficiary or settlor lived in and that there was no rent being charged there was no money changing hands. It just simply owned an asset on behalf of the beneficiary. Therefore there was no income being made nothing being charged no expenses—zero. It was non-active by definition and it would advise the Inland Revenue Department in writing and that would be it. It would not have to file a return until it did become active. If I am wrong please feel free to correct me but that is my limited understanding.My question simply is: are there any deviations from either my interpretation of what the status quo is or if the status quo is different is there any difference from that? Because as we have pointed out without labouring the point in Part 1 there are substantial differences in definitions that do not exist or are not consistent or coherent with other tax Acts—the Income Tax Act and the Land Act. My question simply is: do these differ from the status quo? Because on the face of it—and my colleagues have raised some valid points—there is an advantage as we have tried to communicate in some sort of consistency between the Income Tax Act and this piece of legislation. It would give some comfort if the Minister could advise whether the same scheme of arrangement that has existed outside this piece of legislation in terms of non-active trusts exists within it. If it does I suppose that at least it is consistent with the case law and it is consistent with other pieces of legislation. I mean that in good faith. I think it would be helpful to get it on the record of the House.Likewise in respect of the other matters here in terms of deductions and other bits and pieces are they consistent with existing law other than obviously dollar amounts? My colleague David Cunliffe raises an interesting point about the 50 bucks. I note that in the report to the Finance and Expenditure Committee from submitters—KPMG submitted on the net filing income threshold for individuals and said that the $200 non-filing income threshold for individuals had been unchanged for over 15 years. It made the same point I think as my colleague did. Therefore it is timely it said that the threshold increased to take inflation into account. It proposed a net income threshold of $500. Again in respect of trusts is there any movement in that? What is the justification for the $50 or has it just been plucked out of thin air or is it consistent with any other pieces of legislation? In essence those are the basic questions.As I say I do note Trevor Mallard’s ruling from the Chair that debates continued—maybe it was a ground-breaking ruling; I do not know. Last week he made it very clear that if Ministers were prepared to answer questions then that may aid in the efficiency of debate and its conclusion. But where Ministers did not then—these are very serious questions—that did not aid the debate or contract its longevity. So as I said the simple question is: are these provisions for non-active trusts consistent with the status quo? It is very simple.I think it would be helpful to actually get that on the record of the House—that these issues are in Hansard. Hansard is quoted in case law and is quoted in the courts. If it is not consistent then what would be helpful is to outline what the changes are and why and what the justification for those changes is.I think that is a reasonable request to make given that there is a plethora of family trusts around the country. Many folks have them. Again one or two people pull the wool but family trusts are normally set up for very very good reasons in respect of protection of family assets protection against being sued or whatever—risk management. It is very difficult now I would argue—not wholly not totally difficult but it is reasonably difficult—to pull the wool if the Inland Revenue Department is actively looking at these trusts. On that point it would be helpful to know whether if these rules differ from the status quo the Inland Revenue Department going to embark on any special policing any special auditing or any special legitimate interrogation of trust arrangements to ensure especially under this piece of legislation that if they are non-active they really are non-active.You can make an argument and say well if you put it in writing to the Inland Revenue Department that it is non-active you are not making income and you are just like any other taxpayer you are committing fraud and you are lying if you say “no income” and there is income. That is true but I would have thought given that this is a new piece of legislation that the Inland Revenue Department—if again it is very serious about cutting down on speculative investment—would be running the ruler over many of these entities not in a nefarious way but to ensure that people are complying with their obligations.So I simply raise those questions and I would hope that the Minister may be able to give us some sort of answer to them.