Watts SimonThird ReadingHon SIMON WATTS (Minister of Revenue): I present a legislative statement on the Taxation (Annual Rates for 2023-24 Multinational Tax and Remedial Matters) Bill.ASSISTANT SPEAKER (Maureen Pugh): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon SIMON WATTS: I move That the Taxation (Annual Rates for 2023-24 Multinational Tax and Remedial Matters) Bill be now read a third time. I wish to acknowledge the House for their time devoted to ensuring that this bill passes through this morning. This bill is an important bill as it confirms the tax rates that will be applicable for the current tax year. And as you know this Government relies on this tax bill to ensure that the services and functions that this Government provides are delivered and the Government does obviously run on the tax dollars collected through this. Without that the Government and the services and functions it provides would grind to a halt. The New Zealand tax system is a progressive low rate - broad based tax system. The measures within this bill which have been recently added by Amendment Paper contain changes that New Zealand needs now. It is crucial that this bill passes promptly to ensure that New Zealanders reap the benefits of the changes as soon as possible. I will provide in my third reading speech an overview of some of these key matters for the benefit of this House.The first Amendment Paper aspect that was added as part of this bill is a proposal to add back the ability to phase back the ability to claim interest deductions for residential investment properties. Tax settings generally allow for deductions for business expenses to be claimed against income so that overall taxation is imposed on a net profit basis. However the current situation is that interest limitation settings for residential investment properties do not allow interest to be claimed as a deduction for tax purposes. The reality of the setting has provided upward pressure on rental costs. Depriving landlords of the ability to be able to claim mortgage interest deductions has made residential property less attractive as an investment and this is simply a matter of supply and demand as with more landlords offering properties upward pressure on rents will resolve. The ability to be able to claim interest deductions for residential investment properties will be phased back over two years with 80 percent of the deductions allowed from 1 April 2024 and 100 percent of deductions allowed from 1 April 2025. The second measure added as part of the Amendment Paper on this bill that will have a positive implication for renters is a proposal to repeal and replace the current 10-year brightline test and replace it with a two-year brightline test. A shorter brightline test reduces the compliance burden on taxpayers and makes residential property more attractive as an investment opportunity. Making investment in residential property more attractive can incentivise more housing construction and as I have already mentioned a greater supply of housing will reduce the upward pressure on rents and everyone wins.Another measure by the Amendment Paper is to remove the ability to depreciate commercial and industrial buildings at the current rate of 2 percent of the diminishing value from the start of the 2024-25 tax year. For most taxpayers that's from 1 April 2024. The ability to claim depreciation for buildings was an economic stimulus intervention designed to increase cash flow in the COVID response. We are obviously well beyond that and we are removing it because it is no longer needed and the tax dollars saved are better utilised for other purposeful matters that this coalition Government is relentlessly focused on delivering in particular ensuring that hard-working New Zealanders can keep more of what they earn.The situation that arose out of COVID the next measure in the proposed amendment is one that came into force during COVID and this specific aspect was around the current rule that treats a person who disposes of trading stock for a price below market value to a derived income on the market value of that trading stock and as such that amount was taxable. It is an anti-avoidance rule but it does not take into account the real charitable reasons for which these transactions were undertaken—particularly where a business during some of the challenges we saw in the floods and other natural disasters donates trading stock to other entities which we saw during the COVID response also. It also didn't take into account that a business could also dispose of trading stock at a lower value as part of its ordinary business activities—for example when a business could be doing this as part of a publicity or marketing approach. The bill therefore takes steps to address this overreach to those limits and the application of those anti-avoidance rules.The bill also addresses a loophole in taxation favouring offshore gambling casinos. Casinos in New Zealand currently pay a higher tax than online casinos based overseas. This is not fair. The only tax that applies to offshore casinos currently is goods and services tax. Under this coalition Government and as a result of this bill from 1 July 2024 offshore operators will be required to pay a gambling duty of 12 percent of gross betting revenue.Finally this bill contains a proposed transitional rule to ensure that operators of electronic marketplaces do not have to account for GST on contracts for short stay and visitor accommodation entered into before 1 April 2024. This will mean that those contracts will not be subject to the new GST rules for the platform economy.All of these measures all of these amendments that have been added as a result of this paper strengthen this bill and New Zealanders as a result will be better off for the changes led by this coalition Government. The bill will help pave the way for the ability to provide tax relief. It reduces the upward pressure on rents and it removes a number of inconsistencies and improves fairness. It also does away with a number of unnecessary expenditure aspects within the provisions that were in place before. These are good things for New Zealanders. These are good things for the New Zealand economy and it will make it more productive. I am proud of the measures that are included within this taxation bill. I acknowledge the select committee and the members who participated in a comprehensive exercise to ensure this bill was appropriately drafted and I also acknowledge the significant work by Inland Revenue officials who work tirelessly in the background to ensure that we have what is required for an integral and important and world class tax system. I commend this bill to the House.ASSISTANT SPEAKER (Maureen Pugh): The question is that the motion be agreed to.