Adams Amy: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
Adams Amy: Taxation (Tax Administration and Remedial Matters) Bill — In Committee Third Reading 
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AMY ADAMS (National—Selwyn) 
: 
 I will take just a brief call tonight on the Taxation (Tax Administration and Remedial Matters) Bill third reading. Before I touch on gift duty which is obviously a pretty contentious issue in this debate I will reflect on some of the other things this bill does because people listening to the debate this afternoon could be forgiven for thinking that that was pretty much all that was in the bill. 
I acknowledge the comments of the previous speaker Stuart Nash who made the point that there are a lot of good tax changes in this bill and I think they deserve to be put on record although I know that the Minister of Revenue referred to them of course. One of the key changes we looked at was the information-sharing powers that the Inland Revenue Department holds and the restrictions on its ability to do that. The Finance and Expenditure Committee certainly came to the view that the law was overly restrictive the way it was. We have come up with what I think is a good framework going forward to enable sensible sharing of information between the department and other Government agencies. As a member of the Finance and Expenditure Committee I certainly look forward to reviewing how that change operates in the years to come if I am lucky enough to stay on that committee. 
The bill improves the tax disputes process tidies up tax pooling rules and deals with some overtaxation of non-resident investors in portfolio investment entities ensuring effectively that people are taxed in broadly the same manner that they would be taxed if they invested directly in those domestic assets. The Minister also mentioned tonight in his contribution the further Supplementary Order Papers we have seen that tidy up some other tax issues relating to insurance payouts and the rebuild in Canterbury. Of course this House is always very supportive of any aid in that direction. 
Just coming back to gift duty very briefly I touch on the fact that although it has been well traversed that this is a tax that raises very little in revenue terms—$1 million gross; half a million dollars or less net and something like 98 percent of all compliance that goes through the department in relation to this results in no tax payable—it is not unfair to say that there are issues that have to be looked at in relation to how people can divest themselves of assets and ensure that that is not done in an inappropriate way and that it is not done to defeat creditors. But I think the point that has been missed in the debate so far is that this is tax legislation and tax law is not the place to ensure that the legislation is correct around asset transfers and the protection of creditors. Those provisions do exist and the contentions from Labour members that suggest that now it will be all on for man and beast and everyone can pass assets off to anyone they like and avoid anything with impunity are frankly wrong. There are significant powers already in the insolvency legislation and in wider legislation to ensure that gifts that are made solely with the purpose of defeating a creditor or solely with the purpose of entitling oneself to more Government assistance are able to be set aside. 
If the ongoing monitoring of the position post the abolition of gift duty suggests that more work is needed then certainly we will be very happy to look at that. But as a matter of tax law this tax is defunct it is obsolete and all it does is create an industry of compliance with tax lawyers and accountants. It serves no net purpose to the Government’s fiscal books and its time has come. I think the Minister was absolutely right when he said that there is no rational reason for keeping it as a tax law any more. 
Can I also touch on the fact that under existing structures assets can be divested instantaneously. A debt back is created and then that debt back goes through a process of forgiveness over a period of years at $27000 a year per person or $54000 a year per couple. The asset itself goes on day one with or without gift duty. If there is concern about protection of specific assets under current laws that asset—with gift duty without any penalty or payment—can be divested immediately with all capital gained from that date. The only asset that remains as I say is a financial one which at day one is reduced usually by $54000 across a couple and that amount reduces in time. 
To suggest that the picture will change significantly as one might have thought from listening to this debate I think is misleading. I think this is the right step as a matter of tax reform. We will continue to monitor it to see how it evolves but my guess is that the change will not be anything like as significant in terms of asset divestment and avoidance as has been suggested in this debate. The biggest change that we will see is the people of New Zealand no longer having to pay out $70 million to lawyers and accountants to do something that has no public good. For that reason I am very happy to commend the bill.