Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
[Volume:656;Page:5990] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to rise in the Committee stage of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. I firstly acknowledge the huge contribution of officials to the bill in its passage to this point. If the Finance and Expenditure Committee and parliamentarians are pleased to see the bill in its latter stages I can only believe that the Inland Revenue Department and other officials are delighted to see this mother of all bills start to make its way through the process. 
I take a slight point of difference with the Minister in the chair in respect of the issue of the size scope and rushed nature of this bill. I quote from our select committee report in respect of the bill: “The size of the bill and the depth and breadth of the material it covers have made our consideration more difficult than it might have been otherwise. In trying to meet the report due date for the bill we and our committee consideration processes have been put under considerable pressure. We do not consider it desirable to put a number of very distinct and significant proposals into one bill simply because they relate to one area of law.” I think that deserves some underlining. Particularly in a select committee where most of the members were new getting to grips with a hugely complex bill in a matter of just a few months certainly presented its challenges. Unfortunately that situation will inevitably present itself again in this Parliament because of the process and the complexity. We will revisit some of these issues; that is already signalled by a significantly sized Supplementary Order Paper that the Minister has indicated and I also propose to table a Supplementary Order Paper later on. 
That said the bill is important legislation making changes to the area of taxation law. It provides for significant reforms in a number of areas including international tax rules. It aligns life insurance taxation rules closer to the accounting treatment of life insurance profits. It provides for payroll giving. I am particularly pleased to see this measure in the bill at a time when charities in this country are under considerable pressure. The capacity for good-natured people to be able to pay charities through their salary and payroll on a weekly fortnightly or monthly basis is good for them and certainly good for the charities they wish to support. The bill also tackles the complex area of associated persons; I will comment a little more on that area in a moment. It erases tax thresholds for compliance costs for small and medium businesses. It deals with the tax treatment of revocation payment and overtime meal allowances clarifying it for employees. 
Labour supports this bill and has done all the way through. But again I note that when we have large and complex legislation we compound problems for ourselves as a Parliament and a nation. The process was not perfect because of the breadth and depth of the bill at 800-odd pages. Even if this is how it had to be it is a reality that the National-led coalition Government will bear the unintended consequences of the fact that some of these issues have not been given the scrutiny they truly deserve. 
I turn now to the issue of associated persons. This aspect of the bill received considerable scrutiny from the select committee as time provided. We wrestled with the risk that in relaxing the rules it would be possible for the resulting law to not catch people who should be caught by an associated persons rule. We all acknowledge that in the implementation of this provision that will be very important and ongoing supervision and monitoring by officials will be vital. I guess the reality of tax law is that no matter how one writes or defines it—no matter how well one does that job—there is an army of people whose job it is to provide the loopholes and exploit them on behalf of clients. Certainly in this area they are already at work no doubt. But we have proposed amendments to reduce uncertainty and to narrow the scope of the proposed test on associated persons to exclude truly arm’s-length transactions. Narrowing the scope of the tripartite test excludes relatives from that test and creates an additional exception to the test relating to companies. We also recommend that the test not apply for the purposes of land provisions.